Income-Tax report enters through BSY's false fronts
November, 24th 2010
B S Yeddyurappa may have successfully fended off the BJP leadership's attempt to turf him out, but the Karnataka chief minister may find it more difficult to ward off the prying eyes of the Income-Tax department.
A report based on Income Tax (I-T) investigation lists in detail cash transfers allegedly made to Yeddyurappa and his long-time associate Shobha Karandlaje.
Sources said the I-T report shows that while Rs 5 crore was allegedly paid to Yeddyurappa by a builder on November 3, 2008, his aide Shobha Karandlaje received Rs 1 crore a fortnight later. Besides these payments, there are three alleged front companies owned by the CM's sons and son-in-law, into which which huge payoffs were made.
I-T investigators came to know about the alleged transactions following raids on the premises of Trishul Developers and one of its promoters, Prakash Shetty, on November 21, 2009.
The search yielded diaries containing details of certain cash receipts and payments made by Shetty. The entries included payoffs to Yeddyurappa and Karandlaje, sources claimed.
Inquiries by I-T have also shown that payoffs were made also to the entities floated by the chief minister's kin -- Davalagiri Property Developers Pvt Ltd (DPDL), Bhagath Homes Pvt Ltd and Sahyadri Health Care and Diagnostics Pvt Ltd.
A senior officer associated with the probe claimed that these entities received payoffs in the form of loans and advances and share application money from various people who had indirectly benefited or received favours from Yeddyurappa.
The CM was not available for comment. When contacted, his office refused to comment.
I-T investigators also suspect that the chief minister denotified lands in key locations acquired by the Bangalore Development Authority, allotted industrial land to private builders and issued mining licences as part of quid pro quo.
One of the front companies DPDPL, allegedly owned by Yeddyurappa's sons and son-in-law, received Rs 75 lakh from Trishul Developers in connection with the denotification of a three-acre plot in Bangalore (valued at Rs 40 crore). This plot was denotified on December 14, 2009.
DPDPL also received an advance of Rs 3.5 crore from Praveen Chandra, whose firm was allotted an iron ore and manganese mining lease for 330 acres in Chitradurga through government orders of September 30, 2009, and October 12, 2010.
Bhagath Homes Pvt Ltd, run by Yeddyurappa's son-in-law and daughters-in-law, according to its March 2009 balance sheet, received an advance of Rs 2.50 crore from Praveen Chandra. The third alleged front entity, Sahyadri Health Care, allegedly received Rs 3.35 crore from Sagar Health Care as share application money, allegedly in exchange for denotification of lands.
On May 14, 2010, Yeddyurappa denotified 11 acres in the yet-to-be formed Arkavathy Layout. The request for denotification of the land was made by its owner B R Shetty, a Dubai-based Indian businessman, on August 18, 2008, for the construction of a hospital.
Interestingly, after it was denotified, 2.5 acres of the plot was sold for Rs 3.37 crore to a firm called Besto Infrastructure Bangalore Ltd. Besto is a subsidiary of Besto Ice Cream, a shareholder in DPDPL. The market value of the land is said to be anywhere between Rs 150 crore to Rs 180 crore. The land that was transferred was itself worth Rs 38 crore.