Bengaluru: The Income Tax raids on Vasavi Credit Co Operative Society Ltd has revealed that the society does not comply with statutory regulations and was reaping benefits of being classified as a society and carrying out banking operations. The investigation wing of the Income Tax department had conducted search and seizure operations on five the society's head office in Malleswaram, five branches across the city and the residence of the CEO of the society on Tuesday.
The Income Tax department officials stated on Friday that the organisation claims to have a total membership of around 30,000. “The total deposits mobilised as on March 31, 2016 is more than Rs 200 crore. It is noticed that whoever approaches the organisation for making the deposits, is first made a member of the society with a nominal admission fee. Subsequently, these persons can make time deposits, purchase cash certificate, operate the savings account, etc," they added. "The organisation does not comply with statutory regulations and does not take PAN from the account holders, nor carry out any tax deduction at source (TDS) on the interest payment to the account holders. Last year it also began offering locker facility for the members. During the verification, it was noticed that this organisation, in tie up with a nationalised bank, enabled the members to do electronic fund transfers and issue bearer cheques. All these facts indicate that, to reap the benefits of being classified as a society under State Registrations Act, the organisation was making the depositors into members for namesake. However, in reality, only banking operations are carried by it. This is being taken up with regulatory and enforcement agencies concerned," the officials said.
Further during the course of search proceedings, it was noticed that substantial cash deposits and loan repayments were made after the demonetisation on November 8.
