Failure to Act on Identity Theft Violates KYC and Aadhaar Rules, Quashing Fraud-Linked Recovery Order

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....The HC found that statutory respondents, including the Income Tax Department, failed to discharge their duties by not initiating criminal proceedings or filing an FIR despite clear evidence of identity theft involving misuse of the petitioner's PAN and Aadhaar details. Respondent No. 6 breached its obligations under the Master Directions - KYC Direction 2016 and Aadhaar Authentication Regulations by failing to authenticate the petitioner's Aadhaar at account opening, contributing to the fraud. The court condemned the respondents' prolonged inaction and directed Respondent No. 1 to enhance public awareness and ensure compliance with Aadhaar authentication protocols. The petitioner was instructed to seek guidance from the Income Tax Authoriti.........