What Income Tax sleuths uncovered during a search and seizure operation on Vasavi Credit Cooperative Society was that while the institution claims to be a credit society, it runs all banking functions, including term deposits and locker facilities.
The society’s deposits added up to ₹200 crore as on March 31, 2016, and has been found to be violating multiple regulatory norms such as deduction of TDS and mandatory PAN card for transactions.
“Those approaching the society is first made a member by paying up a nominal fee. However, they are made members only for their names,” the IT department statement said.
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High and dry
This has left the depositors in the society facing the heat. The I-T department sources said it would now look into the depositors at the five branches of the society and see whether these deposits have been declared in their I-T returns. “Persons who have deposited money in such societies may consider availing of the ongoing Pradhan Mantri Garib Kalyan Yojana- 2016 scheme (PMGKY) to escape the high rates of tax, penalty, and from prosecution for tax evasion,” a statement from the I-T department said.
The PMGKY scheme is an ongoing voluntary disclosure scheme for those with undeclared assets and money post-demonetisation. The society counts over 30,000 customers as its members.
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Further, I-T sources said that during searches, substantial cash deposits and loan repayments were made post-November 8 and have come from undisclosed sources. The organisation had also entered into purchase and sale of capital assets, which is also being probed. Not only that, I-T sources said that the CEO of the society was running both registered and unregistered chits and finances from the same premises as the society.