What is the Karnataka Double Compensation Scam?

Bengaluru, June 17 (NationPress) - The Directorate of Enforcement (ED) from the Bangalore Zonal Office has successfully attached funds amounting to approximately Rs 1.80 crore linked to Tax Deducted at Source (TDS), which was credited to a fraudulently obtained PAN as part of the Karnataka double compensation scam, the ED announced on Tuesday.

The funds were seized in accordance with the Prevention of Money Laundering Act (PMLA), 2002. This fraudulent activity occurred within the Karnataka Industrial Area Development Board (KIADB), located in Dharwad, according to the ED.

Furthermore, the ED highlighted that nearly Rs 46 crore had been withdrawn in cash from bank accounts that were established using fictitious PANs. The TDS deducted during these cash withdrawals, under section 194-N of the IT Act, has been recorded against these fraudulent PANs, marking it as Proceeds of Crime, which has now been provisionally attached.

According to the ED, this scam was orchestrated by V.D. Sajjan, a retired Special Land Acquisition Officer from Dharwad, in collusion with various other individuals.

The investigation by the ED under the PMLA, 2002 has revealed the modus operandi utilized by the accused to unlawfully claim and withdraw double compensation from KIADB on behalf of individuals who had either already received compensation or had passed away, as stated by the ED.

Previously, the ED had already attached properties worth Rs 11 crore in connection with this case.

The ED elaborated: “The accused employed fake identities for the withdrawal of fraudulent compensation in collusion with officials from KIADB and bank personnel. They submitted applications to the Unique Identification Authority of India (UIADI) to modify their demographic information such as name, address, and mobile number in the Aadhar database to impersonate legitimate landowners, for whom preliminary notifications for land acquisition were issued and subsequently accepted.”

As a result, fake Aadhar identities mimicking the genuine landowners were created. Using these false identities, which had updated Aadhar details, fictitious PANs were acquired. These PAN cards were then utilized to open bank accounts with the assistance of bank officials, according to the ED.

Applications were once more submitted to KIADB for claiming second-time compensation using these fake identities. KIADB officials sanctioned these illegal second-time compensations in collaboration with the accused. These compensations were transferred to the bank accounts associated with fictitious PANs, which were then swiftly withdrawn in cash with the help of bank officials, the ED affirmed.

During cash withdrawals, TDS as mandated by section 194-N of the IT Act, 1961, was deducted and credited to these PANs. The TDS attributed to these bogus PANs constitutes Proceeds of Crime (POC), as noted by the ED.

Subsequent to the withdrawal of the fraudulent compensation, the demographic details in the Aadhar database, such as name, address, and mobile number, were reversed to the original identity. This was corroborated by obtaining Aadhar records from several individuals via the Unique Identification Authority of India, as per a directive from the High Court of Karnataka, the ED stated.

The illicit compensation acquired through this scheme was shared among the accused. In certain instances, this entire operation was conducted in the names of deceased landowners who had already received complete and final compensation, the ED reported.

Investigations by the ED revealed that some genuine landowners also colluded with the accused to fraudulently claim second-time compensation, which was improperly sanctioned, and the proceeds were divided among the accused.

Ongoing investigations are currently in progress.