Income Tax Department Freezes Over Rs 53 Crore Deposits Of Maharashtra-Based Urban Credit Cooperative Bank

The Income Tax Department has frozen deposits worth over Rs 53 crore of of a Maharashtra-based Urban Credit Cooperative Bank after it found "glaring irregularities" in the opening of the bank accounts in a recent search operation, the Ministry of Finance said on Saturday (6 November).

The IT department carried out search and seizure operations at the headquarters of the bank and the residence of its chairman and a director on 27 October, said the Finance Ministry.

"The analysis of bank data on Core Banking Solutions (CBS) and the statements of key persons recorded during the search action has revealed the glaring irregularities in opening the bank accounts," the ministry said.

"More than 1,200 new bank accounts were opened in the said branch without PAN," it added.

The investigations, the ministry said, have revealed that these bank accounts were opened without following KYC norms and all account opening forms are filled in by the bank staff and they have put their signature or thumb impressions.

"In these accounts, multiple cash deposits each of exact denomination of Rs. 1.9 lakh, were made totalling to Rs. 53.72 crore. Out of these, more than 700 bank accounts have been identified which were opened in series, where cash deposits of more than Rs 34.10 crore were made immediately within seven days of opening of bank accounts mainly during the period August, 2020 to May, 2021," the ministry said.

These deposits have been structured to avoid mandatory PAN requirement for cash deposits over Rs 2 lakh. The money has been subsequently converted into fixed deposits in the same branch, it added.

The ministry said the local enquiries in few cases of such account holders, has demonstrated that these "persons are not aware of cash deposits in the bank and categorically denied any knowledge of such bank accounts or even the fixed deposits".

"The Chairman, CMD and the manager of the branch, could not explain the source of cash deposits and accepted that these were done at the behest of one of the directors of the bank, who is a prominent local businessman engaged in trading of grains," the ministry said.

"On the basis of the evidences gathered and statements recorded, the entire amount of Rs 53.72 crore has been restrained," it added.