The agency said a FEMA probe was initiated against the MP, a businessman from Tamil Nadu, his family members, and a related Indian entity.
Published Aug 28, 2024 | 5:26 PM ⚊ Updated Aug 28, 2024 | 6:54 PM
S Jagathratchakan.
The Enforcement Directorate (ED) on Wednesday, 28 August, said a penalty of about ₹908 crore has been slapped against DMK MP S Jagathrakshakan and his family members in a case related to violating the Foreign Exchange Management Act (FEMA).
The federal agency issued a statement that said that properties worth ₹89.19 crore, seized in September 2020, have been confiscated following an adjudication order issued on 26 August under the FEMA.
Jagathrakshakan (76) represents the Arakkonam Lok Sabha seat.
The agency said a FEMA probe was initiated against the MP, a businessman from Tamil Nadu, his family members, and a related Indian entity.
“On 1 December, 2021, FEMA complaint u/s 16 of FEMA, was filed by ED before the Adjudicating Authority against Jagathrakshakan, his family members and a related company, charging them for violations of various FEMA provisions, particularly in respect of their investment to the tune of ₹42 Crore into a shell company incorporated in Singapore during the year 2017, and acquisition/holding of Singapore Foreign Shares and its subsequent transfer amongst the family members in defiance of extant provisions of FEMA, and also with regard to the investment of around ₹9 crore made into a Sri Lankan entity. The complaint was also with a prayer to confiscate the properties seized under the 0rder dated 11 September, 2021,” the ED statement said.
The ED said an opportunity for a personal hearing was offered to the noticees on various dates, which was attended by their counsel.
The properties worth Rs. 89.19 Crore which was seized in terms of Section 37A of FEMA was also ordered for confiscation, and penalty of Rs.908 Crore (approx.) is levied vide Adjudication Order passed on 26/08/2024.
— ED (@dir_ed) August 28, 2024
Jagathrakshakan had bought 70 lakh shares of a private company from Singapore. Later, he changed it to the name of his wife, son and daughter.
Alleging that all these transactions were illegal and without the permission of the Reserve Bank, the ED issued a notice to Jagathrakshakan and sought an explanation.
In 2020, the ED raided Jagathrakshakan’s house and other properties belonging to him in connection with illegal money transfers. The agency also froze assets worth ₹89.19 crore, alleging illegal investments abroad.
In this context, in October last year, the Income Tax Department Investigation Division officials raided more than 40 places including Chennai, Kanchipuram, Puducherry, Thiruvallur and Tirupur.
The agency alleged that Jagathrakshakan engaged in tax evasion by not properly accounting for the income earned by his educational institutes and business enterprises.
In particular, Ilamaran and Narayanasamy, sons-in-law of Jagathrakshakan, were investigated by Income Tax officials. After the raid on Jagathrakshakan’s house in Adyar in Cheanni property documents were seized.
The raid at some of his properties lasted for five consecutive days. While the money and important documents were confiscated, it was said that the Income Tax Department officials also conducted a forensic audit.
The investigation agency said the Madras High Court dismissed a writ petition filed by the MP against the probe.
“Noticees had filed individual Writ Petition before the High Court of Madras. Hearing both sides, a single bench vide order dated 30 November, 2023 holding inter alia that the order passed by the Competent Authority vis-à-vis the seizure of the assets will not interfere with the power of Adjudication of the Adjudicating Authority,” it said.
“Subsequently, noticees preferred writ appeals before the High Court of Madras. A division bench, after hearing both sides, also dismissed the writ appeals vide order dated 23 July, 2024,” the ED added.
This investigation, it said, resulted in the passing of a seizure order, dated 11 September, 2020 under section 37A of FEMA, for various movable and immovable properties in the name of the MP and his family members. They are valued at ₹89.19 crore.
“The properties worth ₹89.19 crore which were seized in terms of section 37A of FEMA were also ordered for confiscation, and penalty of ₹908 crore is levied vide Adjudication Order dated 26/08/2024,” the ED said.
(With inputs from Baskar P)
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