Tax Department conducts Searches on Cooperative Banks Aiding Tax Evasion by Customers

Press Release, dated 11-04-2023

A search & seizure operation was conducted on some cooperative banks based in Karnataka on 31-03-2023. These Banks were engaged in routing funds of various business entities of their customers in a manner to abet them to evade their tax liabilities. A total of 16 premises were covered in the search action.

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. No KYC norms were followed while discounting such bearer cheques. It was also detected that some Cooperative Societies subsequently withdrew funds in cash from their accounts and returned the cash to business entities. Cooperative Societies have been used as a conduit.

Bogus expenditure booked in this way by these beneficiary business entities could be about Rs 1,000 crore. Evidence seized during the search revealed that unaccounted cash loans of over Rs 15 crore had been given to certain persons/customers, unaccounted cash of over Rs 3.3 crore, and unaccounted gold jewellery worth over Rs. 2 crore. Further investigations are in progress.

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