Income Tax authorities found “bogus” expenditure of Rs 1,000 crore during recent search and seizure operations in certain cooperative banks in election-bound Karnataka.
“These cooperative banks have been found to be engaged in routing of funds of various business entities of their customers, in a manner, so as to abet them to evade their tax liabilities,” said the Central Board of Direct Taxes in a statement on Tuesday. A total of 16 premises were covered in the search action conducted on March 31.
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The search action also resulted in seizure of unaccounted cash of over Rs 3.3 crore and unaccounted gold jewellery worth over Rs 2 crore, it said, adding that further investigations are underway.
The seized evidence revealed that these cooperative banks were involved in rampantly discounting bearer cheques issued by various business entities, in the name of various fictitious non-existing entities, the CBDT said, adding that these business entities included contractors, real estate companies. No KYC norms were followed while discounting such bearer cheques.
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The purpose of such discounting of large number of cheques was to mask the real source of the cash withdrawal, and to enable the business entities to book bogus expenses, it further said.
During the search, it was also found that these cooperative banks allowed opening fixed deposit receipts (FDRs) by using cash deposits without adequate due diligence, and subsequently sanctioned loan using the same as collateral. Evidence seized during the search revealed that unaccounted cash loans of over Rs 15 crore have been given to certain persons or customers.