Rs 122 crore I-T notices to Jagan-owned company

The Income Tax department has slapped show cause and demand notices of Rs 122.8 crore to a publication company owned by former Congress MP Y S Jaganmohan Reddy for mismatching amounts reported in its records.

Last Updated: Mar 15, 2011, 18:56 PM IST

Hyderabad: The Income Tax department has
slapped show cause and demand notices of Rs 122.8 crore to a
publication company owned by former Congress MP Y S Jaganmohan
Reddy for mismatching amounts reported in its records.

According to the notice issued by an Assistant
Commissioner level officer on January 31 to Jagathi
Publications (JPPL), there could be interest chargeable and
also penalty in case of deadline default.
However, when contacted, a senior official of JPL said
the I-T notice is a procedural one.

"The notices were issued pointing some flaws as the
department calls them. We have approached the Income Tax
Appellate Tribunal and the matter is pending before the
tribunal," JPL`s Editorial Director Ramakrishna Reddy told
PTI.

Jagathi Publications is into various media activities
like publishing a Telugu daily Sakshi and running a 24-hour
news channel TV also named Sakshi. The company which was
incorporated in 2006 launched the newspaper in March 2008 and
the channel in 2009.

Jagan Reddy reportedly paid Rs 84 crore as advance tax
last September anticipating an income of Rs 500 crore.

Jagathi Publications had declared a loss of nearly Rs
20 crore in its tax returns filed for the 2009 fiscal.
"During the year under consideration, the holding
company Caramel Asia Holding Pvt. Ltd was allotted share of
23525000 at par rate of Rs 10 and has paid nil premium for a
total consideration of Rs 23,52,50,000 whereas other
shareholders were allotted around 83,47, 201 shares at par
value of Rs 10 with a premium rate of Rs 350 the total of
which works out to Rs 300,49,92, 360 i.e., a share capital of
Rs 83272010 and a premium of Rs 292,15,20,350," the IT report
said.

The I-T department is of the opinion that the premium
amount can be treated as other income from other sources to
the company and hence liable for tax with penalty.

The I-T department found that the company could not
provide details of investors from Mumbai, Rajkot, Hyderabad,
Kolkata and Bangalore.

"It is more than coincident that those who purchased
stakes in Y S Jagan Monhan Reddy`s businesses were allotted
land, projects and contracts including SEZs by Andhra Pradesh
government by his father," the report said.

The notices were returned unclaimed by some of the
companies who have invested in JPL.

The I-T department said after investigation it came to
a conclusion that these firms are merely "briefcase
companies".

PTI