Opposition seeks probe over I-T charge against Kerala CM daughter receiving ₹1.72 crore for services not rendered

According to I-T Department sources, CMRL had shown the amount as genuine business expenditure to avail of an input tax credit. CMRL is an Aluva-based public limited company that deals in synthetic rutile — which is used primarily as a pigment.

PA Muhammed Riyas and Veena Vijayan on their wedding day in 2020. (Supplied)

CMRL, promoted by controversial businessmen SN Sasidharan Kartha and Mathew M Cherian, has been accused of illegally mining mineral sand from the southern coasts of Kerala to segregate and export synthetic rutile.

It has also been alleged that the company was pally with governments to act against environmentalists and other activists who voiced their concerns over the illegal mining of mineral sand.

Veena’s husband PA Mohammed Riyas holds the public works and tourism portfolios in the Pinarayi Vijayan Cabinet.

South First sent an email to CMRL asking about the latest allegation. Though the firm acknowledged the receipt of the mail, it did not respond to the query.

Veena and Riyas were not available for comments. The Chief Minister’s Office (CMO) said it had nothing to comment on.

I-T sources said CMRL had been inflating its expenditure since 2019. It paid huge amounts to several individuals, including politicians and media houses, in the state.

The amount thus paid would come to ₹1,34.27 crore. However, sources said the payment shown in the records could be bogus.

Also read: Why is Riyas attacking ‘image-conscious’ colleagues?

Defying logic

Going by the notes made by the principal commissioner of Income Tax, CMRL issued a letter to Veena on 20 December, 2016, saying the company was “pleased to engage” her as its IT and Marketing Consultant on a retainership basis with effect from 1 January, 2017.

It also said she would be paid a consolidated sum of ₹5 lakh per month for her services.

Veena and her company, Exalogic Solutions, also signed an agreement with CMRL on 2 March, 2017.

As per the agreement, Exalogic was to provide services of “development, maintenance and management of software for daily business and operation of CMRL’s corporate office and factory located in Aluva”.

Veena Vijayan with her father Pinarayi Vijayan, husband Mohammed Riyas and mother Kamala Vijayan. Photo: Facebook.

The agreement also mentioned that the service provider was entitled to a monthly remuneration of ₹3 lakh.

However, the company’s Chief Financial Officer (CFO) KS Suresh Kumar and Chief General Manager (CGM) and Secretary P Suresh Kumar gave statements to investigators in January 2019 that they were yet to see any software developed by Exalogic.

CMRL MD Kartha, in a sworn statement to the I-T Department, said, “Both these vendors (Veena Vijayan and Exalogic) have not provided any work, services, or any software maintenance or consultancy or any other form of services to our expectations till date. However, monthly payments are being made as per the agreements.”

Although the transactions were made through banks and such payments for business expenses were permissible, the board ruled that the transactions to Veena and Exalogic were “illegal” as no services were rendered.

The discrepancies were found in the assessment years 2017-18 to 2019-20.

“The department has demonstrated with clinching evidence that the applicant has made payments through banking channels to persons connected with a prominent person and thereby claim it as a deductible expense and claiming to compensate a service which has not been rendered or received,” the ruling said.

Of the total ₹1.72 crore, Veena received ₹55 lakh, while Exalogic received ₹1.17 crore.

Also read: Why is CPI(M) mum as Swapna Suresh keeps targeting Vijayan?

Bid to withdraw statements

The company’s MD, CFO, and other officials later tried to withdraw their statements through an affidavit, but the I-T Department stood firm on its findings that the money paid to Veena was illegal as there was no evidence for services rendered.

Multiple Interim Boards for Settlement (IBSes) were created in 2021 through the amendment of the Finance Act 2021 to settle I-T disputes after abolishing the Settlement Commission.

There are three such boards in Delhi, and the decision on disputes raised by CMRL for the assessment year 2019-20 was settled by the IBS– II bench, which has Amrapalli Das, Rameswar Singh and M Jagadish Babu as its members.

The I-T Department inspected the offices of the CMRL and the residences of the board of directors on tax evasion charges in January 2019. Kartha’s residence was also searched.

The IBSes are governed by Section 245AA of the Income Tax Act. Their decision is final, and there is no provision for appeal.

The boards consider the settlement application filed by an individual or entity accused of tax evasion. The I-T Department raises arguments as an opposing party. The applications are disposed of based on evidence.

Related: Meet Mathew Kuzhalnadan, who gets under Pinarayi Vijayan’s skin

Opposition parties demand probe

Meanwhile, the Congress-led Opposition UDF in Kerala was expected to raise the issue in the state Assembly in the coming days.

Congress MLA Mathew Kuzhalnadan said the chief minister should reply to the developments in which serious charges of misappropriation have been levelled against his daughter.

Pinarayi Vijayan, wife, daughter and grandson at the Karl Marx tomb in Highgate Cemetery in London. (File photo/CMO, Kerala)

“This payment is illegal, which was verified by the I-T Department,” Kuzhalnadan said. The UDF would demand an explanation from Vijayan on the issue.

On Wednesday, the Congress and the BJP demanded a clarification from the chief minister on the payment allegedly made to Veena.

BJP leader MT Ramesh wanted a response from her husband Riyas, since he had been holding important portfolios.

Union Minister of State for External Affairs V Muraleedharan also sought explanations from Vijayan and Riyas as the revelations involved corruption and nepotism.

“With Vijayan holding the Home and Vigilance portfolio, the need of the hour is a probe by an external agency. He often says when one has nothing to hide, one needn’t have any fear, and if that’s the case, we all are waiting to hear from him about the announcement of a probe,” he said.

Kuzhalnadan, a trenchant critic of the chief minister both inside and outside the Assembly, said the latest development could not be dismissed as an allegation as the tax authorities said it was based on documents that have now come out.

“Veena’s bank account has received the money, and Vijayan should come clean on why she had received this money,” the Congress MLA said.

Quoting former prime minister Manmohan Singh, Kuzhalnadan said Kerala was now witnessing “organised loot and institutionalised corruption”.

State Congress president and Lok Sabha member K Sudhakaran demanded a judicial probe.

“When an allegation involving ₹10 lakh was levelled against me, a probe was announced. When this runs into crores, in all fairness, Vijayan should announce a judicial probe,” he said, referring to the case about allegations that linked him with fake antique dealer Monson Mavunkal.

Veena has faced charges of financial misappropriation in the past as well. She was accused of accepting favours to protect the accused in the sensational diplomatic channel gold smuggling case that rocked Kerala.