The searches at the premises of these banks were started on March 31. (Representative)
New Delhi:
The CBDT (Central Board of Direct Taxes) today said that the Income Tax Department has detected “fictitious” expenditure and alleged financial irregularities to the tune of Rs 1,000 crore after raiding some cooperative banks in the poll-bound state of Karnataka sometime back.
Searches at 16 premises of these banks were initiated on March 31 as the department suspected that they were “indulging in routing funds of various business entities of their customers in such a manner so as to evade their tax liabilities”. can be provoked”.
The CBDT said in a statement that over Rs 3.3 crore in cash and jewelery worth Rs 2 crore were seized during the searches.
CBDT is the administrative body for the IT department.
“Seized evidence revealed that these co-operative banks were involved in large scale discounting of bearer checks issued by various business entities in the name of various fictitious non-existent entities,” the CBDT said.
These business entities include contractors, real estate companies etc. and KYC norms were not followed while discounting such bearer cheques.
The tax department found that the amount after exemption was deposited in the bank accounts of some cooperative societies maintained with these banks. “It is also learned that some co-operative societies later withdrew the money in cash from their accounts and returned the cash to the business entities.” “Such discounting of large number of checks was intended to conceal the actual source of cash withdrawal, and enable business entities to book bogus expenses,” it said. In this modus operandi, the department said, cooperatives have been used as “conduit”. It added that these business entities were also circumventing the provisions of the Income Tax Act, which limits allowable business expenditure other than account payee cheques.
“The bogus expenditure incurred in this way by these beneficiary business entities may amount to approximately Rs 1,000 crore,” the CBDT said.
The taxpayer also found that these banks allowed opening of FDRs using cash deposits without adequate due diligence, and subsequently sanctioned loans using the same as collateral. The evidence seized during the search revealed that unaccounted cash loans of more than Rs 15 crore have been given to certain individuals/customers.
The CBDT said that the management of these cooperative banks were involved in generating “unaccounted” money through their real estate and other businesses. “This unaccounted money, through these banks, at multiple levels, has been brought back into the books of account.” “Furthermore, the bank funds were routed through various firms and entities owned by the management persons, for their personal use, without following due diligence.”
Karnataka will vote for its 224-member assembly on May 10 and the counting of votes will take place on May 13.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)