Kerala coooperative banks have to answer

Co-operative banking in Kerala, sitting on a deposit kitty of Rs 55,000 crore, has put up a stiff resistance to the Income-Tax Department’s directive to furnish details of deposits as per provisions of the Income Tax Act, amidst strong indications that the co-operative sector, managed by powerful politicians, has become a safe haven for hoarding unaccounted money. As per Section 133(6) of the Income Tax Act, the Income-Tax Department is free to ask for names and addresses of the depositors who hold deposits above a particular sum in a banking institution. The sum referred to here is Rs 1 lakh or above. No banking firm, commercial or co-operative, enjoys immunity from furnishing such information. The objective of the Act is to tackle tax evasion and detect black money stashed in the banking sector. Although the private and public sector banks in Kerala generally comply with Section 133(6), the co-operative banks, mainly managed by politicians from the CPM and Congress, always opposed it. However, sensing the huge fund flow to the co-operative sector to enjoy insulation from banking and tax norms, the I-T Department last year targeted the co-operative sector.