The Income Tax Appellate Tribunal (ITAT) has upheld the attachment of 900 suspicious accounts of Buldana Urban Cooperative Credit Society under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act (SAFEMA).
In November 2021, the Income Tax (IT) Department had frozen ₹54 crore in deposits in the Buldana Urban Cooperative Credit Society over alleged irregularities in the opening of accounts without following Know Your Customer (KYC) norms.The department identified 1,200 accounts where multiple cash deposits of ₹1.9 lakh each were made, totaling ₹54 crore, allegedly linked to Public Works Department (PWD) contracts. The funds were suspected to belong to Prashant Nilawar and Shri Jayant Hiralal Shah, middlemen and liaisons in the state PWD, who were reportedly managing transfers and postings of government officials. The suspicious accounts were attached under the Prohibition of Benami Property Transactions Act by the Nagpur unit of the IT Department.
The tax probe further revealed that over 700 accounts were opened in a series, with cash deposits exceeding ₹34.1 crore made within seven days of the accounts being opened. “The deposits were structured to avoid the mandatory PAN requirement for cash deposits over ₹2 lakh. The money was subsequently converted into fixed deposits in the same branch,” a senior tax official informed.
Tax officials found that out of the 900 suspicious accounts, 718 were newly opened non-PAN accounts, 53 were old inactive accounts, and 118 were non-PAN accounts in another branch—all with cash deposits ultimately credited to a beneficiary account named ‘Samrat.’
“It may be that ‘Samrat’ remained unknown and could not be traced, but the fact remains that the material available on record revealed the transfer of money to the cooperative society out of funds collected for transfer postings in the PWD,” the tribunal observed, while upholding the IT Department’s attachment of funds.
The bench also noted that 75 fixed deposits (FDs) linked to these fictitious accounts had been redeemed, and a sum of ₹67.85 lakh was withdrawn in cash. However, CCTV footage from the bank showed that none of the account holders visited the branch to redeem the fixed deposits.
