Chief secretary removed from post as raids continue for the second day

Chennai:

Raids by Income Tax department continued for the second day to probe bureaucrat P Rama Mohan Rao's alleged links with sand mining baron and Tirumala Tirupati Devasthana member Shekar Reddy as state government removed him from the office and appointed Girija Vaidyanathan as new chief secretary of Tamil Nadu.

Meanwhile, CBI arrested Shekar Reddy and his associate K Srinivasulu besides his partners in sand mining Rathinam and Ramachandran.

Rama Mohan Rao, who is set to retire in September 2017, is being detained and quizzed at his residence in Anna Nagar. Similarly, Income Tax officials have quizzed officials of State Environmental Impact Assessment Authority. It is learnt that the officials have confessed their links with sand mining baron.

All eyes will also on the report filed by Income Tax department which could decide the fate of Rama Mohana Rao.

Enforcement Directorate sources said that only after the report by Income Tax department is filed then it will be decided on the nature of criminal charges and whether it will entail investigation by Central government enforcement agencies. Meanwhile, state government has removed P Rama Mohana Rao from the post of Chief secretary following the investigation by income tax department.

Income Tax evasion can't be called a criminal offence. "Only if the charges are serious in nature and case is made out by CBI or event the state law enforcement agencies then Enforcement Directorate will enter the investigation," sources added.

Meanwhile, Income Tax department said that the report will be filed within two months. Currently, income tax is collecting evidence pertaining to tax evasion as Tamil Nadu chief secretary was grilled for the second day.

The case against Reddy gained pace with the seizure of Rs 130 crore of cash (Rs 34 crore in new currencies issued after demonetisation) and 177 kg of gold from his premises. He is believed to be close to politicians and bureaucrats. His firm JSR Infra Developers is the Class One Contractors for Tamil Nadu and is executing a variety of projects funded by World Bank and Asian Development Bank. It's clients include Public Works Department, state highways department, Tamil Nadu Road infrastructure Development Corporation and other government agencies.

Sources said the role of SEIAA, which gives licence for sand mining is also being probed as Income Tax has also conducted raids on the top office-bearers who have links with the sand baron.

The case had gained prominence after Central Bureau of Investigation and Enforcement Directorate have also been roped in to probe the link of banks in providing demonetised currency to Shekar Reddy. Already An Enforcement directorate official confirmed to Express that investigation is currently on against Reddy under Prevention of money laundering Act. It is learnt ED is also looking at the pattern of cash flow from the Central bank to sand mining baron by checking the serial numbers of the seized new currencies with RBI.

Sand mining in the state is allegedly controlled by people close to bureaucrats and state politicians. The sand mining baron is alleged to have brought sand from government mines which are the cheapest. The profit is maximised by under-reporting the quantum of sand taken from the mine. The sand is then sold to builders and others at a much higher rate, without any receipt. This not just increases the income, but also evasion of taxes that run to several crores every year.​​