Tamil Nadu-based bank red flagged for keeping Income Tax Dept. in dark on Rs 3,610 crore deals

The Income-Tax Department has in the course of its verification process found that a prominent Tamil Nadu-based Bank has failed to comply with the statutory requirements of filing correct and complete Statements of Specified Financial Transactions (SFTs) of its customers. These transactions relating to large cash deposits, credit card payments and shares add up to Rs 3,610 crore.

“During the course of verification, several discrepancies were found. It was seen that the bank had not filed SFTs in certain cases and in some others, had not filed complete/accurate particulars,” the Income Tax Department said in a statement issued on Friday.

“SFTs were not filed in respect of Cash deposits of over Rs 2,700 crore involving more than 10,000 accounts; specified Credit card payments involving total transaction value of over Rs.110 crore;  Dividend distributed of more than Rs.200 crore and Shares issued of over Rs.600 crore,” the statement explained.

Further, SFTs already filed by the Bank were found incomplete in several respects. The bank had failed to report major transactions which included Interest paid of more than Rs.500 crore; Time deposits; Cash deposits and withdrawals in current accounts, the statement added.

However, the statement does not specifically name the bank. The Income Tax Department had carried out searches at  the cooperative bank in Pudukottai district and also conducted raids at the headquarters of Tamil Nadu Mercantile Bank in Thoothukudi. But the statement does not mention any names.

The verification also revealed defective filing of Form 61B for Automatic Exchange of Information (AEOI) about account holders “resident” in other countries.

In the recent past too, verification was conducted by the Department on two cooperative banks in Uttarakhand and transactions exceeding a few thousand crores, not reported by the banks, were identified.

The Income Tax Department has been focusing its efforts on promoting voluntary compliance. In this endeavour, information is received about financial transactions of taxpayers from Reporting Entities, such as Banks, Forex Dealers, Sub-Registrars, etc. The information furnished by the Reporting Entities is used for display to the taxpayer, through the e-filing account, in the form of the Annual Information Statement (AIS). This is an important step towards facilitating taxpayers for filing their Return of Income accurately, the statement added.