The suspicion that cooperative banks are among several safe havens for people evading income tax appears to be true. The Directorate of Income Tax (Intelligence and Criminal Investigation) looking into accounts of 25 banks across the State has found thousands of deposit entries each worth over Rs. 50 lakh, but these were not reported as required under the IT Act.
A cooperative bank in Dakshina Kannada tops the list with 2,500 entries amounting to Rs. 4,500 crore while the other 24 banks account for deposits amounting to Rs. 3,500 crore. There were totally 59,000 entries in these banks.
When notices were issued to the 2,500 account holders of the bank in in Dakshina Kannada, around 100 opted for the Income Declaration Scheme to regularise unaccounted-for money. Around 200 revised their I-T returns, according to R. Ravichandran, Director of Income Tax (I & CI), Karnataka-Goa.
Though banks are mandated to file a statement of financial transactions every year to the directorate, few cooperative banks fully comply with the law. The directorate smelt a rat and inspected several banks, only to find gross violations and opaque transactions that shielded the depositors, Mr. Ravichandran said. Now, the heat would be on the heads of such banks who could face a penalty and prosecution, he said.
The directorate is empowered to inspect any bank at any time. The Karnataka-Goa directorate is said to be the first in the country to scan cooperative banks following frequent complaints that they keep unaccounted-for money.
Mr. Ravichandran says the department plans to take the initiative across India and also turn their focus on nationalised banks.
