I-T dept probing Axis Bank staff for allegedly facilitating benami deals

Tax sleuths have detected over Rs 520 million of unexplained cash in jewellers' bank accounts

The income-tax (I-T) department is probing the role of some Axis Bank employees for allegedly facilitating cash deposits of over Rs 520 million and benami transactions for half a dozen jewellers based out of Zaveri Bazaar in Mumbai. 

According to sources in the I-T department, the complaint has been referred to by the Prime Minister’s Office (PMO), which has asked tax officials to look into the charges of Axis Bank employees being hand in glove with some jewellers to facilitate illegal activities. 

The bank’s spokesperson said an enquiry by the tax authority did not necessarily indicate any culpability on the part of the bank. Also, the incidents were of an earlier period and the bank had conducted an internal inquiry.

“The complaint was against half a dozen jewellers indulging in hawala transactions, money laundering, multi-million cash transactions, high-value cash deposits made in their bank accounts facilitated by an Axis Bank employee named Joel Joseph D’Souza and other staff of the bank,” said an I-T official. 

“The examination of the bank accounts and other records has resulted in the detection of more than Rs 520 million of undisclosed income in the form of unexplained cash deposits in the bank accounts of these jewellers with Axis Bank,” he added.

Besides, tax sleuths also found at least seven benami accounts of around Rs 50 million. It was also alleged that Axis Bank staff was receiving "illegal gratification" in the form of gold coins, cash gifts, and expensive ornaments for facilitating such illegal activities, according to the investigation report. 

"The department has thoroughly examined the charges levelled on the bank employees and jewellers and had shared the findings with the Central Board of Direct Taxes, PMO, and the bank. The report has been submitted by the department last week," said a source. 

Sources said the tax department detected various other discrepancies during the survey operation on the jewellers. 

The I-T department during its probe has collected details from Axis Bank and conducted extensive enquiries about D'Souza and other staff of the bank, who it has alleged of facilitating the bullion entities to park unexplained cash.

Sources in the department said it had sent its findings to the bank's chief vigilance officer (CVO), who would then examine the role of the staff as per the bank's rules and any procedural violation in the operation of these accounts. 

 "Tax authorities during the normal course of its operations initiate enquiries on various issues from time to time. Such enquiries do not necessarily indicate any culpability on the part of the bank, Axis Bank spokesperson said." 

The bank further said the matter relates to "incidents of an earlier period, for which an internal inquiry was conducted by the bank and appropriate measures taken". The spokesperson added that the bank and its CVO would fully cooperate with relevant authorities in case any inquiry into this matter is presently under way.

"The bank has always adhered to the highest standards of regulatory compliance and will continue to work towards maintaining a strict code of conduct in all spheres of business that it undertakes," the spokesperson further added. 

Industry experts said there is a need of periodically reviewing banks' procedures and to nudge them to be more proactive while dealing with frauds, especially when it involves their employees. 

The banking industry has been under the spotlight due to bad loans, the Rs 143-billion scam at Punjab National Bank by jeweller duo Nirav Modi and Mehul Choksi, the quid pro quo allegations against former ICICI Bank managing director Chanda Kochhar, and the central bank's leadership concerns at YES Bank.  

Axis Bank was under the market regulator Securities and Exchange Board of India's scanner in onnection with the earnings leaks of its September 2017 quarter results.
 

AXIS OF TROUBLE

• Axis Bank accounts are in the name of 6-7 jewellers based in Zaveri Bazaar
• Bank executives allegedly facilitated bullion traders to park unexplained cash
• Seven benami accounts of Rs 50 million also detected
• Bank executives allegedly received illegal gratification from jewellers
• PMO receives complaint against bank employees and jewellers, refers matter to I-T wing