I-T notice submitted in court reveals sellers deposited notes in bank accounts by falsifying their business dealings

A 60-page Income Tax notice issued to former Chief Minister Jayalalithaa’s close aide V.K. Sasikala on October 15 and produced by her before the Madras High Court on Friday brought to the fore several startling claims of how she used demonetised currency notes worth ₹1,674.50 crore to purchase immovable properties and how the sellers deposited the notes in bank accounts by falsifying their business dealings between November 8 and December 30, 2016.

The notice first refers to a statement obtained from Naveen Balaji, director of Bonjeur Bonheur Private Limited, associated with Pondicherry Lakshmi Jewellery, which runs a resort at Puducherry in the name of Ocean Spray.

In his statement, Mr. Balaji said his business was not doing well in 2016 and his total debt was around ₹100 crore in March 2016. Hence, his family decided to sell the resort and focus on the jewellery business.

He met Kumar, personal assistant to then Industries Minister M.C. Sampath and requested his help to sell the property. Mr. Kumar introduced him to Ms. Sasikala’s advocate S. Senthil, who negotiated the deal with her and finalised it for total consideration of ₹168 crore, of which ₹148 crore was paid in demonetised notes on November 22, 2016. “The cash was brought in three TATA ACE mini trucks at around 10.30 p.m.,” he had said.

Properties reportedly purchased by V.K. Sasikala using demonetised notes

Name of vendor Codes used for the properties in seized documents Actual name of the property Cash paid (in ₹ crore) towards part payment Surana Group OMR commercial building Commercial building off Old Mahabalipuram Road 70 Surana Group Windmills 45 X 250 kW windmills 19 Surana Group Windmills 9 X 1500 kW windmills 7 Mekala, Coimbatore 650kw X 5 5 X 6500 kW windmills 10.5 Marg Group OMR IT company Marg Realties Limited 135 Patel Group Sugar factory Padmaadevi Sugars Limited 386 Patel Group Hill Padmaadevi Sugars Limited 96 Patel Group Ennore port Padmaadevi Sugars Limited 101 M/S. Milan Textile Enterprises Private Limited Madurai Millenum Mall Millenum Mall, Madurai 35 Senthil & Arumugasamy Senthil Paper Board Senthil Paper & Boards Pvt. Ltd 400 Ganga Foundations Private Limited Perambur Spectrum Mall S2 Spectrum Mall, Perambur 247 Pondicherry Sri Lakshmi Jewellery Pondicherry Ocean Spray Beach Resort 168 TOTAL 1,674.50

(Source: Income Tax notice issued to Sasikala on October 15, 2019)

Of the ₹148 crore, ₹12 crore was paid as commission to Mr. Kumar and there was a shortage of ₹75 lakh while counting the cash.

“Hence, we had ₹135.25 crore with us on November 22, 2016,” he supposedly told the I-T department sleuths. He also conceded that he deposited ₹97 crore in various bank accounts belonging to his business establishments by falsifying the business dealings and also in individual accounts of his family members.

A similar sworn statement from Ramakrishna Reddy of Marg Realities Limited stated that he had received demonetised notes worth ₹115 crore in lieu of sale of assets and shares of the distressed companies in Marg Group. However, ₹10 crore was taken away by some brokers and he was left with only ₹105 crore, of which he deposited only ₹6 crore in his bank accounts and distributed the rest to seven individuals.

Stating that he initially refused the offer from Mr. Senthil to accept the demonetised notes, Mr. Reddy supposedly said: “Later with a view to protecting my other business interests and to safeguard the interest of my employees, I agreed to do so.”

Further, a statement obtained from Shivgan Patel of Prabhat Group of companies read that he had been negotiating with Mr. Senthil regarding the sale of a few of his family’s assets including a 137-acre Thoothukudi yard worth ₹200 crore; a 1,897-acre estate in Theni worth ₹100 crore, a 16.6-acre Ennore yard worth ₹60 crore and a sugar factory in Kancheepuram worth ₹450 crore.

Finally, a deal was struck with respect to sale of the sugar factory for ₹386 crore while negotiations continued with respect to other properties. On November 22 and 23, 2016, he supposedly agreed to have received ₹286 crore in the denomination of ₹100 and ₹500. Further, an additional amount of ₹164 crore in demonetised notes was delivered to him between December 3 and 23, 2016.

A similar statement was obtained from Arumugasamy, director of Senthil Paper Boards Limited, who reportedly sold his paper mill in Coimbatore for a total consideration of ₹600 crore of which ₹400 crore was paid in demonetised currency notes.

He claimed that the cash was received in 400 boxes, each containing ₹1 crore and they were transported from the Kodanad Estate by its manager Natarajan. A statement from S. Senthil Kumar, managing director of Ganga Foundations, which owns Spectrum Mall in Chennai, stated that he wanted to sell his company’s stake in the mall for ₹120 crore.

However, after a real estate broker arranged a meeting with Ms. Sasikala’s nephew Vivek Jayaraman, he was offered ₹192.5 crore in the negotiations held with Mr. Senthil and paid ₹ 130 crore in demonetised notes. He also stated that though he was not inclined to sell his shares to Ms. Sasikala, the inspections carried out by the PWD, Chief Electrical Inspector General, Fire Service, Chennai Corporation and CMDA on the mall premises and the threat of such inspections forced him to agree to the deal.

The statement of Amar Lalji Vora of Milan Textile Enterprises Limited of Madurai, read that he was looking for a buyer to sell the Milanem Mall at K.K. Nagar in Madurai as it was not doing well since 2014-15. When he did not receive the intended price, a local builder suggested that only a politician could buy the property and introduced him to Mr. Senthil, who offered ₹57 crore. In November 2016, he was reportedly paid an advance of ₹30 crore in cash. All of those whose sworn statements had been recorded by the I-T sleuths claimed that they had entered into MoUs for selling their properties but the name of the purchaser was left blank and not mentioned in any of those documents.

“The above said seized materials along with the incriminating sworn statements were confronted with you on the premises of Central Prison, Parapana Agragara, Bengaluru on December 13 and 14, 2018. However, for all the questions put to you in this regard, you simply denied having any knowledge of any of the fact/issue without giving any valid and satisfactory explanation regarding your role as alleged by the vendors,” the notice said and sought her explanation for the undisclosed income of ₹1,674.50 crore.