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Taxman enters Nirav Modi-PNB fraud drama; slaps notices on banks that loaned money

It's the worst of times for most leading banks in the country. Already reeling under the pressure of the still-unravelling $2 billion PNB fraud thanks to the fraudulent LoUs, they have now reportedly come under the taxman's scanner, which will further hurt their bottomline.

It's the worst of times for most leading banks in the country. Already reeling under the pressure of the still-unravelling $2 billion PNB fraud thanks to the fraudulent LoUs, they have now reportedly come under the taxman's scanner, which will further hurt their bottomline.

According to The Economic Times, banks that loaned money to companies run by Nirav Modi and Mehul Choksi - the jewellers in the eye of the storm - have recently been slapped with tax notices from the revenue department. The ones sent out to the banks that loaned money to Choksi-owned Gitanjali Gems seeks Rs 305.12 crore as pending dues, apart from any money that may "subsequently become due". Let's not forget that the probe into account books of Choksi's companies have shown loans worth over Rs 5,280 from a consortium of 34 banks led by ICICI bank, which has an exposure of Rs 773 crore.

The notice reportedly warns banks that they will be "deemed to be an assessee in default" should they fail to cough up the tax dues and that their officials will be held responsible if Choksi is allowed to withdraw money from accounts.

The daily added that the income tax department had been scrutinising Modi-owned Firestar Diamond's records between 2012 and 2018, and on February 16, it issued notices to 21 banks that had loaned money to the company. "To protect the interest of revenue [department] it is necessary to provisionally attach the following bank accounts of the above tax payer for which approval of CIT (appeals) has been obtained," said the notice.

Meanwhile, a local court in Mumbai issued summons against Nirav Modi yesterday in connection with an income tax evasion probe against him and his companies. Officials said the court of Additional Chief Metropolitan Magistrate issued the summons and asked the diamantaire-turned-con artist extraordinaire to appear before it on March 12.

The court issued the notice after the Income Tax Department filed a charge sheet against Modi under sections 276 C (1) (wilful attempt to evade tax), 277 A (false statement in verification), 278 B (offences by companies) and 278 E (presumption as to culpable mental state) of the Income Tax Act, 1961.

With PTI inputs