The Income-Tax Department is ready to act against banks that collude with tax-evaders. The recently created Directorate of Income Tax (Criminal investigation), or DCI, will specifically look into these matters.

Official sources told Business Line that there are various ways that bank staff can help tax-evaders.

“They can flout the Know Your Client (KYC) norms and help tax-evaders open multiple accounts. Sometimes, by not reporting very large transactions, banks can help in money-laundering.

“There are numerous examples before us. We need to go all out against not just the staff but also against the banks,” a senior official said.

Action can be taken under Section 278 of the Income-Tax Act, 1961. This section states that person(s) found guilty of abetting or inducing tax evasion can be imprisoned.

If the tax evasion amounts to more than Rs 1 lakh, then the imprisonment could range from six months to seven years. However, if it is less than Rs 1 lakh, then the guilty could face a jail term of three months to three years.

Under the Prevention of Money Laundering Act, 2002, banks are required to submit every month, cash transaction report (CTR) and suspicious transaction report (STR) to the Financial Intelligence Unit of the Finance Ministry

“Failure in not abiding by the rules will invite action. We will initiate action not only against Indian public/private sector banks but also foreign banks,” the official said.

He indicated that some investigationsare on, but refused to give details.

There have been instances earlier of the CBDT (Central Board of Direct Taxes) taking up such investigations. In one case, the Board found a public sector bank had not reported very large cash transactions involving a former chief minister.

The Board did call the bank chairman for clarifications, but no action was taken against the bank itself.

>Shishir.s@thehindu.co.in

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