Rs122 crore worth I-T notices to Jagan Reddy-owned company

The income tax department has slapped show cause and demand notices of Rs122.8 crore to a publication company owned by former Congress MP YS 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 said.

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 Rs10 and has paid nil premium for a total consideration of Rs23,52,50,000 whereas other shareholders were allotted around 83,47, 201 shares at par value of Rs10 with a premium rate of Rs 350 the total of which works out to Rs300,49,92, 360 ie, a share capital of Rs83272010 and a premium of Rs292,15,20,350," 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 YS 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".