Hyderabad: Show cause and demand notices of Rs 122.8 crore have been slapped by the Income Tax department on a publication company owned by former Congress MP Y S Jaganmohan Reddy. The notices were issued in view of mismatching amounts reported in the records.

According to the notice issued by an Assistant Commissioner level officer on January 31 to Jagathi Publications (JPPL), there could be interest chargeable and also penalty in case of deadline default.

When contacted, a senior official of JPL said the I-T notice is a procedural one.

JPL's Editorial Director Ramakrishna Reddy said, "The notices were issued pointing some flaws as the department calls them. We have approached the Income Tax Appellate Tribunal and the matter is pending before the tribunal."

Jagathi Publications is into various media activities like publishing a Telugu daily Sakshi and running a 24-hour news channel TV also named Sakshi. The company which was incorporated in 2006 launched the newspaper in March 2008 and the channel in 2009.

Jagan Reddy reportedly paid Rs 84 crore as advance tax last September anticipating an income of Rs 500 crore.

Jagathi Publications had declared a loss of nearly Rs 20 crore in its tax returns filed for the 2009 fiscal.

"During the year under consideration, the holding company Caramel Asia Holding Pvt. Ltd was allotted share of 23525000 at par rate of Rs 10 and has paid nil premium for a total consideration of Rs 23,52,50,000 whereas other shareholders were allotted around 83,47, 201 shares at par value of Rs 10 with a premium rate of Rs 350 the total of which works out to Rs 300,49,92, 360 i.e., a share capital of Rs 83272010 and a premium of Rs 292,15,20,350," the IT report said.

The I-T department is of the opinion that the premium amount can be treated as other income from other sources to the company and hence liable for tax with penalty.
The I-T department found that the company could not provide details of investors from Mumbai, Rajkot, Hyderabad, Kolkata and Bangalore.

The notices were returned unclaimed by some of the companies who have invested in JPL.