Thiruvananthapuram: Kerala Chief Minister Pinarayi Vijayan is facing another storm as the Income Tax Interim Settlement Board in New Delhi has disallowed claims by Cochin Minerals and Rutile Ltd (CMRL) to exempt payments of Rs 1.72 crore made to his daughter Veena Vijayan and her company, Exalogic Solutions Pvt Ltd.
The payments were listed as genuine business expenses to avail of the input tax credit.
According to a report published in The News Minute, the I-T Department, during its 2019 investigation into CMRL's finances, uncovered a web of inflated expenditures and cash payments to various individuals, including media houses and politicians, amounting to a staggering Rs 134.27 crore in fictitious expenses.
The company's attempts to claim Rs 73.38 crore as eligible expenses during settlement proceedings were also flagged.
The Interim Board for Settlement (IBS)– II, New Delhi, found that Exalogic Solutions had not provided the software support or services as claimed. The evidence presented, including statements from key individuals within CMRL, contradicted the company's assertions. The board thus rejected input credit for the alleged software expenses.
According to the Principal Commissioner of Income Tax, CMRL had engaged Veena Vijayan as an IT and Marketing Consultant, agreeing to pay her Rs 5 lakh per month from January 2017. An agreement was signed in March 2017, stating that Exalogic Solutions would provide software services to CMRL for a monthly remuneration of Rs 3 lakh.
However, CFO KS Suresh Kumar and CGM P Suresh Kumar stated in January 2019 that no software development had been witnessed to date.
Sasidharan Kartha, MD of CMRL, confirmed that payments were being made despite a lack of services rendered. While transactions were conducted through banks, the board deemed them "illegal transactions" due to the absence of actual services. The discrepancies spanned Assessment Years 2017-18 to 2019-20.
Out of the total sum, Veena received Rs 55 lakh personally, while Exalogic Solutions received Rs 1.17 crore. Attempts by CMRL's MD, CFO, and other officials to retract their statements via affidavits were unsuccessful, as the IT department remained steadfast in its findings.
The establishment of Interim Boards for Settlement (IBS) in 2021, following the abolishment of the Settlement Commission, aimed at resolving Income Tax disputes. The bench of IBS– II, including members Amrapalli Das, Rameswar Singh, and M Jagadish Babu, settled the dispute raised by CMRL for the Assessment Year 2019-20.