Kerala CM’s daughter received suspicious payments of Rs 1.72 cr, rules IT settlement board

Kerala chief minister Pinarayi Vijayan’s daughter T Veena had allegedly received Rs 1.72 crore from a private company called Cochin Minerals and Rutile Limited in monthly installments for the last three years

Chief Minister Pinarayi Vijayan's daughter T Veena has allegedly received Rs 1.72 crore from a private company Cochin Minerals and Rutile Limited (CMRL) in monthly installments during the last three years. This was revealed in the order passed by the New Delhi bench of the Income Tax Interim Settlement Board.

Veena and her firm Exalogic Solutions had entered into an agreement with the CMRL to provide IT, marketing consultancy, and software services to the latter. However, no services were provided, as the income tax investigation found. Veena was paid Rs 55 lakh in her personal capacity and Rs 1.17 crore for Exalogic. The allegations surfaced following an Income Tax Department investigation into financial transactions between T Veena and CMRL.

According to this contract, Veena was supposed to be paid Rs 5 lakh per month, and Exalogic was to receive Rs 3 lakh per month. CMRL Managing Director SN Sasidharan Kartha told the Income Tax Department that the money was, however, paid in monthly installments as per the contract. According to the contract, Exalogic was to provide services of “development, maintenance and management of softwares for daily business and operation of CMRL’s corporate office and factory located in Aluva”.

The issue came to the fore after Malayalam daily Malayala Manorama reported the issue.

A settlement board bench of Justices Amrapali Das, Rameshwar Singh, and M Jagadish Babu said the Income Tax Department has been able to establish based on strong evidence that the money was paid for unrendered services.

In December 2016, the CMRL entered into an agreement to get IT and marketing consultancy services from Veena. Another agreement was signed in March 2017 with Veena's company, Exalogic, for software services. The Income Tax Department argued that the Rs 1.72 crore was received by Veena and Exalogic between 2017 and 2020 in an "illegal transaction".

On 25 January 2019, the Income Tax Department conducted searches at the office and factory of CMRL and the residences of the MD and key officials. The searches were based on tax payment documents from 2013–14 to 2019–20.

During the searches, it was found that there was massive tax evasion by exaggerating the expenses of the company. The board passed the order on June 12 in a settlement application filed by CMRL and Sasidharan Kartha in November 2020.

CMRL CFO KS Suresh Kumar, chief general manager P Suresh Kumar and Company Secretary gave statements to investigators in January 2019 that they were yet to see any software development made by the company till date.

During a raid conducted at the residence of CMRL Chief Financial Officer KS Suresh Kumar, evidence of illegal payments of crores of rupees to some prominent political and trade union leaders, police, officials, and media houses was found. A record of the agreements made by Veena and Exalogic with CMRL was also obtained during this inspection.

The Interim Settlement Board is governed by Section 245A of the Income Tax Act. The board considers the settlement application filed by an individual or entity accused of tax evasion. The Income Tax Department will raise arguments as an opposing party. Applications are disposed of on the basis of evidence.