ITAT Confirms Freezing of Rs. 54 Crore in 900 Suspicious Buldana Urban Co-op Accounts

The Income Tax Appellate Tribunal (ITAT) has confirmed the attachment of 900 suspicious accounts of Buldana Urban Cooperative Credit Society under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act (SAFEMA).

The I-T Department blocked Rs. 54 crore in deposits at the Buldana Urban Cooperative Credit Society due to suspected irregularities in November 2021. Many accounts were opened without following proper Know Your Customer (KYC) rules. About 1,200 accounts had cash deposits of Rs. 1.9 lakh each, totaling Rs. 54 crore that were connected to Public Works Department (PWD) contracts.

It was suspected that the money was linked to Prashant Nilawar and Shri Jayant Hiralal Shah, middlemen in the state PWD, who were handling transfers and postings of government officials. The Nagpur unit of the Income Tax Department attached the suspicious accounts under the Prohibition of Benami Property Transactions Act.

The investigation also found that more than 700 accounts were opened in a sequence, with above Rs. 34.1 crore in cash deposited within seven days of the opening of the account. A senior tax official said the deposits were kept below Rs. 2 lakh each to avoid the PAN requirement for huge cash deposits in the bank account. Later, the money was converted into fixed deposits at the same branch.

It was also discovered that out of 900 suspicious accounts, 718 were newly opened without PAN details, 53 were old and inactive accounts, and 118 were non-PAN accounts from another branch. All of these had cash deposits that were transferred to a beneficiary account named ‘Samrat.’

The tribunal noted that while ‘Samrat‘ may remain unidentified and could not be traced, the available material clearly shows that the money transferred to the cooperative society came from funds collected for transfer postings in the PWD. This led the tribunal to uphold the I-T Department’s attachment of the funds. Additionally, the bench also observed that 75 FDs connected to these fake accounts had been redeemed along with Rs. 67.85 lakh cash withdrawn. But the bank’s CCTV footage revealed that no account holders went to the branch to redeem the fixed deposits.