Income Tax Dept Uncovers Alleged Kickback Scandal Involving Naidu

HYDERABAD: The income-tax department has found incriminating evidence that establishes siphoning off of public money by former chief minister and Telugu Desam president N. Chandrababu Naidu, by accepting kickbacks from top infra companies after awarding them contracts worth thousands of crores of rupees.

The department recently issued a showcause notice to Naidu, asking why Rs 118 crore, which it found to have routed to him allegedly by Shapoorji Pallonji and L&T through bogus companies, should not be treated as undisclosed income for the assessment year 2020-21.

As per rules, the assessee has to pay a penalty of at least one time the tax (42 per cent) on undisclosed income and 18 per cent interest per annum. There is a provision for imprisonment also in the Income-Tax Act for concealing income.

Shapoorji Pallonji and L&T were awarded works by the Chandrababu Naidu government in the proposed capital of Amaravati post-state bifurcation along with housing projects for poor. In return, the two companies allegedly released funds to companies including Phoenix Infra, suggested by Naidu’s personal secretary Srinivas, in the guise of a sub-contract. These companies in turn withdrew cash and handed it over to different persons in Hyderabad, Bengaluru and Dubai in the run-up to the 2019 polls.

“The siphoned off amount mentioned in one I-T notice is just tip of the iceberg. The kickbacks will run into thousands of crores of rupees. Besides, it is a fit case for the Enforcement Directorate to proceed against money-laundering. The gravity of the case is more because payments were made to Naidu in foreign currency also,” AP industries minister Gudivada Amarnath said.

In March, Deccan Chronicle, in a report, ‘Amaravati Secretariat bribe: IT starts probe against Naidu’  had reported the detailed trail of money and I-T department centralising his case, changing the jurisdiction from the ITO to the deputy commissioner, Central Circle.

The latest showcause notice, a copy of which is available with this newspaper, revealed that Naidu had been trying to halt further proceedings citing technical reasons rather than going into merits. Ironically, he had been quoting some provisions in the scrutiny guidelines which according to the ITD were completely non-existent. “It is quite natural that Naidu will try to hide under litigation rather than coming forward to prove his innocence,” said Amarnath.

The department, however, rejected outright another of Naidu’s contentions, that he was not provided with all the material that was seized in search operations.

“..The seized material contains the information pertaining to the projects awarded by you and thereby unaccounted income generated through bogus sub contractors was given back to you. Therefore the material seized read with the statements leads (to) the irresistible conclusion that you (Naidu) have earned unaccounted income out of the transactions contained in the material seized,” said the latest I-T notice served on the TD supremo.

It also referred to an “example of delivery of cash siphoned off from infrastructure projects to one of the senior TD functionary (Kilaru Rajesh) and close confidant of your (Naidu) son Nara Lokesh.”