Income tax sleuths unearthed under-invoicing and tax evasion of around Rs 86 crore by Obulapuram Mining Company (OMC), run by Karnataka’s Reddy brothers and also their trusted confidante and state health minister B Sriramulu. The scam that can further embarrass Karnataka’s BJP government is said to have alarmed top guns in the state. The CBI is investigating illegal mining transactions in Andhra Pradesh, where the Reddy brothers have mining business.
According to an internal report of the I-T department, the Reddys came under the scanner after the department analyzed the information, documents and case records available in the I-T and sales tax department related to the OMC. The company had evaded Rs 86,42,88,802 during 2007-08.
Official sources said they found the OMC had entered into an MoU with one-dollar company, GLA Trading International, of Singapore to camouflage the company’s income suppression. GLATI, presumed to be named after Janardhana Reddy’s wife Gali Laxmi Aruna, has offices in Singapore, Dubai and the British Virgin Islands, which is a ‘tax haven’. “OMC’s transactions through the MoU with GLATI are convoluted and devised to evade tax payment in India,” assessing officers said in the report.
A comparative study of shipping bills for export with other companies, which are exporting the same grade ore, confirmed OMC’s malpractice. According to the report, OMC signed the MoU with GLATI to sell iron ore only to evade tax payment in India.