Reddy firm gets Rs 130-cr Income Tax notice

Reddy firm gets Rs 130-cr Income Tax notice

A file photo of mines in Bellary.

Obulapuram Mining Company(OMC), the Andhra Pradesh-based mining firm owned by controversial minister G Janardhana Reddy, has received two tax notices, asking the company to shell out nearly Rs 130 crore for non-payment of income tax.

On February 21, the Income Tax department issued two notices to OMC: one for failing to pay self assessment tax of Rs 55.59 crore for 2010-11, and another to pay tax arrears amounting to Rs 73.37 crore upto 2008-09.

The first notice, issued by the Central Range office at Bangalore asks the OMC to pay up Rs 55.59 crore as self assessment tax for the assessment year 2010-11. Tax recovery officer Amar Nath Yadav wrote: "You are hereby directed to pay the above sum within 15 days of the receipt of this notice, failing which the recovery shall be made in accordance with the provisions of Section 222 to Section 232 of the Income Tax Act".

Tax arrears

The second notice, issued on the same day by Yadav, refers to the OMC's tax arrears of Rs 73.37 crore between 2004-05 to 2008-09, and directs the firm not to remove 2.5 lakh tonne of ore located at the stockpile at Obulapuram village.

Interestingly, before the notices were issued, the IT department also tried to recover the dues directly from the State Bank of India(SBI), where OMC operates two accounts. In a notice issued on January 31, the IT department asked the manager of SBI’s commercial branch in Bellaryto "pay to me forthwith any amount due as on date or held by you for or on an account of the said assessee upto the amount of arrears shown above".

The letter indicates that there was not enough money in the accounts. The two accounts listed show Rs 1.83 crore and Rs 6.17 lakh respectively as on January 19.

Out of money?

So is OMC out of money? In a filing before the Supreme Court, the firm has submitted that the virtual ban on its mining operations in Andhra Pradesh has hurt finances of the company.

It has also submitted that the firm has spent nearly Rs 1,500 crore for the setting up of the Brahmani steel plant. Therefore, it has pleaded with the Supreme Court to lift the stay on the sale of 2.5 lakh tonne of ore to make the payments.

Interesting, the ore is currently under the custody of the CBI, which is investigating allegations that the ore stocked is actually from mines based in Karnataka.