‘We did not evade cash transaction’

Development Credit Bank denies that the bank did not comply with the rules of the banking cash transaction tax (BCTT), and there was no question of anyone evading the tax. The bank was reacting to a report in DNA (“IT department unearths Rs500 crore scandal in city bank”) published on Wednesday.

The tax, says the bank, “is being deducted from customers as applicable and remitted to the income-tax department on a monthly basis.” The core banking solution implemented by the bank automatically deducts this tax whenever cash withdrawals above a certain limit take place.

An I-T official had on Tuesday told DNA that the department was taking a close look at cash transactions adding up to over Rs 500 crore to check for their legitimacy, the reasons for large withdrawals, and whether tax could have been evaded by the holders of these accounts.

The department routinely receives information on large cash transactions from the economic offences wing, and not the Reserve Bank, as stated in the report. Information on large cash withdrawals comes primarily from the BCTT reports filed by the bank itself. DCB has said that the Reserve Bank has not found “any anomalies” in the bank’s transaction detail reports.

I-T officials maintain that they are checking to see if any of the cash withdrawals could have been used for illegal or unreported property transactions, or purchase of jewellery and imported cars. “The focus of our investigation centres on a section of the accounts (involving large withdrawals) and the people holding them,” a tax official added.