Nearly a week-long raids over 100 locations linked to former Union Minister and Dravida Munnetra Kazhagam (DMK) Arakonam Lok Sabha MP S Jagathrakshakan, Income Tax (IT) department has found tax evasion to the tune of Rs 1200 by him and Saveetha group of education institutions.
IT officials have conducted search operations at over 100 educational institutions, liquor factories, pharmaceutical companies, and four-star hotels related to the MP since October 5. The department also seized several crores of cash, foreign currencies, gold bars, and ornaments as the raids in the premises, owned and related to the politician and his family, entered its sixth days. The IT Department allegedly confiscated two bags from Jagathrakshakan’s residence on October 7, which was reported to contain foreign currency worth crores of rupees. A raid executed in a hotel owned by his daughter at Ekkaduthangal led to confiscating 7 Audemars Piguet Swiss watches, each worth Rs 2.45 crores. Further, Rs 2000 note bundles were also recovered. Unverified reports said 18 bags of currencies, both foreign and Indian, were concealed in gunny bags at a mortuary in one of his Dental College premises. It is alleged one of his distilleries does not have a license to manufacture liquor, which the IT department sealed after the raid.
Sacks and sacks of Indian and foreign currencies is been recovered from the mortuary of the medical college owned by the DMK MP pic.twitter.com/gyqpWsqgYy
— Vishwatma 🇮🇳 (@HLKodo) October 8, 2023
In a statement, the Income Tax department said the weeklong searches had yielded unaccounted fee receipts worth Rs 400 crores, bogus expenditure for Rs 500 crore in the distillery business and fund diversion of Rs 300 crore from trusts for personal expenditure. The IT department said they have seized unaccounted cash of Rs 32 crore and gold bullion worth Rs 28 crore. The statement did not name the entities but said the searched places included educational institutions, distilleries, pharmaceuticals, and hotels in Tamil Nadu and Puducherry. They have seized loose sheets, hard copies of documents, and digital data. The IT department said they had detected unaccounted fee receipts for more than Rs 400 crore and false claims of scholarship disbursement to Rs 25 crore. It said, “One of the groups used the services of agents for garnering students for which unaccounted commission payment of about Rs 25 crore had been given”.
The statement said, “The seized documents suggest that Rs 300 crore has been diverted from the respective trusts for personal expenses or deployment in diverse businesses. It includes payments made by one of the groups for acquiring an industrial entity in Andhra Pradesh”. It said a large amount of undiscriminating evidence in the form of lost sheets, hard copies of documents and digital data have been found and seized. The modus operandi of tax evasion detected in educational institutions includes concealment of fee receipts, bogus claims of scholarship disbursement, etc. In the distillery business run of the groups, it has been found that bogus expenditure has been claimed for about Rs 500 crore towards purchase inputs such as bottles, flavours, Extra Neutral Alcohols and freight charges. Such purchases are not corroborated with purchase invoices or entries in the stock register. Several pieces of evidence have been recovered showing that cheques issued to various non-existent entities have been received back in cash for making unaccounted investments and other expenditures which are not allowable business expenses”.
Enforcement Directorate (ED) officials and IT dept have joined the raids. They are also scrutinising the documents seized and shared by the IT wing.
Story of Rags to Rich
It is a meteoric rise or rag-to-rich type for this 10th standard school dropout Jagathrakshakan. With his submissive nature and loyalty, he became a Member of the Legislative Assembly (MLA) during the MGR-led All India Anna Dravida Munnetra Kazhagam (AIADMK) era and became MP. Until then, he was a Class-D employee with the TNEB. He was the first one allowed to start a self-financing medical college with a grant of 5 lakh and several acres of land by the MGR government to help Tamil Nadu students who were going to neighbouring state private colleges to get admission and, most of the time, denied seats.
Slowly, he expanded his business empire by promoting Engineering colleges, medical colleges, hospitals, universities, breweries, hotels, marriage halls, mining, cement, you name a business; Jagathrakshakan has his venture thriving in each business.
Following the demise of MGR, he chose not to continue his political journey with J Jayalalithaa and instead joined RM Veerappan to form a new party. Jagathrakshakan founded the Veera Vanniyar Peravai and the Jananayaka Munnetra Kazhagam (JMK). Later, he joined DMK and was elected member of Lok Sabha from ARakkonam.
His vast portfolio includes over 50 educational institutions including Bharath University, Jagath University, Bharath Medical College, Balaji Medical College, Tagore Medical College, and numerous others, over 6-star hotels such as Accord Hotel and Kaldan Samudhra – a Rajasthan-themed luxury hotel in ECR, coal mines, power generation stations, distilleries such as Elite Distilleries, Fortune Distilleries, and AM Breweries, and a myriad of other businesses. Three of these medical colleges constituted 950 medical seats.
His political proximity helped him sell 85-90 per cent of the liquor supplied to TASMAC from his distilleries, irrespective of whether the DMK or AIADMK was in power. His empire also encompasses hospitals such as Anusha Hospital, Shri Royal Blue Hospital, Jagath Super Speciality Hospital, and JR Super Speciality Hospital, pharmaceutical manufacturing firms for cancer drugs, cement factories, a sugar mill, and even a rumoured (in the works) private airline venture.
Income Tax Department officials conducted extensive raids at 40 locations in 2016, including residences, educational institutions, and business offices linked to S Jagathrakshakan of the DMK. He faced allegations related to the coal scam, wherein opposition parties accused him of securing coal allocations through illicit means for his company in 2007. He has invested in a Greenfield refinery of nearly Rs 26,000 in Sri Lanka through his family’s Singapore-based Silver Park International Pte Ltd.