The four Mahavaakyas

Sr.No. Vakya                                             Meaning                                     Upanishad                    Veda

1 . प्रज्ञानम् ब्रह्म (Prajñānam brahma)    Consciousness is Brahman   aitareya               Rig Veda
2. अहम् ब्रह्मास्मि (Aham brahmāsmi)    I am Brahman                        brihadāranyaka   Yajur Veda
3. तत्त्त्वमसि (Tattvamasi)                        That thou art                            chhandogya           Sama                                                                                                                                                         Veda
4. अयमात्मा ब्रह्म (Ayamātmā brahmā)  This Atman is Brahman        mandukya              Atharva                                                                                                                                                       Veda

Investigation of accounts

This is what I contributed to a publication on investigation of accounts. It is published in a CD which forms part of the all India Curricula in our IRS training Institute But I never got any acknowledgemnts


Kuri companies of Kerala
The chit fund companies of Kerala operate differently from the chit fund companies functioning in the other parts of the country. The Government of Kerala has passed the Kerala Chitty Act, according to which the auction amount is restricted to 30 per cent of the total prize amount. When there are more than one contender for the auction, the winner is decided by a lot. Thus, effectively the auction also turns out to be based on taking the lot. Majority of the chit fund companies in Kerala conduct kuri business by starting a branch in either Jammu or Faridabad thereby extricating themselves from the regulations of the Chitty Act. Only the government-owned Kerala State Financial Enterprises is conducting chitty business as per the provisions of the Chitty Act.
There are no restrictions on auctioning in respect of kuris started from branches in Jammu and Kashmir and Haryana. Hence, most of the kuri companies functioning in Kerala have a namesake branch in these places. The entire business activities are carried out in Kerala and there is only a name board in Faridabad or Jammu. As per the provisions of the Act if the Kuris are started from the Faridabad branch the prizing and auctioning also has to be done in that branch. But this is not observed by any of the chit companies although they are debiting travelling expenses and stay expenses once in a month resulting in generation of unaccounted income to that extent. Some of the kuri companies even claim plane charges for going to Faridabad and Jammu. The charges so debited though actually not incurred are shared among the directors of the kuri companies.
The kuris in Kerala have got total prize amount varying from Rs. 10,000/- to even Rs. 50 lakhs. The kuris are either monthly kuris or quarterly / pooval kuries in which subscriptions are to be paid once in a quarter or once in four months respectively. In kuris of bigger prize amount, called 'sala', the monthly subscription is as high as Rs. 25,000/-. For example; a kuri with monthly subscription of Rs. 25,000/- running into 200 installments (pooval kuri once in four months) the total sala is Rs. 50 lakhs. Out of the Rs. 50 lakhs the prize amount is Rs. 40 lakhs. The balance amount of Rs. 10 lakhs is divided into foreman commission of Rs. 4 lakhs, bonus for prompt payment to subscribers Rs. 2 lakhs and the balance amount of Rs. 4 lakhs is to be divided among non-prized and non-bid subscribers. The same scheme holds good even in kuris of smaller subscription.
The incomes derived by the kuri companies are chiefly the following -

• Foreman Commission
• Interest on delayed payment of monthly / quarterly subscription
• Premium on forfeited kuris

These incomes are invariably recorded in the books and reported for tax purposes. However, there are certain other incomes which go unreported. Expenses are sometimes inflated and a part of the income taken away from taxation.
Some of the ways in which concealment is attempted in these cases are-
Profit on transfer of prized / auctioned kuris - Most kuris started from Faridabad/ Jammu branches have got the system of prizing and auctioning simultaneously. In the case of prized subscribers the company offers premium for transfer of the prize amount to needy customers. This premium is shared between the company and the prized customer totally outside the books. If a kuri of prize amount of Rs. 1 lakh is prized by a subscriber during the early stages of the kuri, premium of upto Rs. 50,000/- is available. Even for auctioned kuris some kuri companies give premium and transfer the prize amounts to needy customers.
Subscription in company's own name - Usually, kuri companies subscribe to a large number of tickets in their own names. Some of the companies resort to unfair means in taking lots with the result that the winners of the lots are the company tickets. These are then transferred to needy customers on their paying hefty premiums.
Bogus liability claim - In almost every kuri there are a number of defaulters. As per the rules of the company, if there is continuous default for more than 3 months, the subscribers forefeet their subscription. At the closure of the kuri these amounts are supposed to be returned to the subscribers. In actual practice, the company claims the amount as liability but never returns it. After some time, it may show the amount as paid without making any payment at all.
Interest on passbook loans - Generally kuri companies grant loans on the security of non-bid / non-prized passbooks. The loan amount may be as much as 60 per cent of the actual amount remitted by the subscriber. The company charges interest on such loans at high rates. The books reveal only a nominal interest. Through enquiries the truth can be culled out.
Interest on advance payment of kuri prize / bid amount - As per the kuri rules, the prized / bid subscribers are entitled to profit the amount after ten days of the next installment, i.e. after 40 days in the case of the monthly kuri, 100 days in the case of the tri-monthly kuri and 130 days in the case of pooval kuri (kuri conducted once in four months). This period is provided for in the kuri rules in order to give time to submit adequate security by the subscriber, verification and acceptance of the same by the foremen and for executing necessary bonds. The traders who join the high denomination kuris are often in need of funds for their business purposes. Waiting for such long periods may not suit their business needs. They approach the foreman to realise the bid / prize money ahead of the due dates. Usually, the foreman allows the subscriber to draw the prize / bid amounts but charges interest @ 18 to 30 per annum for the period from the date of payment to the due date. Such interest is rarely offered for assessment. Hence, all cases of advance payments should be checked for the interest collection.
Profit on terminated kuri - The prized / bid subscriber loses the benefit of auction, discount, fixed discount and bonus when he fails to remit the subscription on due dates. In a case of three consecutive defaults, the ticket is treated as forfeited and such subscriber is entitled to get only the amount paid by him as reduced by the foreman's commission. All benefits accruing to his ticket are denied. All these discounts / bonus forfeited are the income of the foreman. However, in most cases no such income is disclosed. This is on the plea that under the scheme of the kuri, profit or loss can be ascertained only at the time of its termination. Even after the termination, the profit is not offered for assessment on the plea that large amounts are due from the subscribers and the profit can be brought to tax only after all the dues are collected. The final accounts filed along with the returns of income seldom disclose the fact of termination during the relevant year. The financial accounts are made by the companies usually in three parts -

• Profit and loss account
• Kuri statement and
• Balance sheet

The kuri statement depicts the assets and liabilities of all chitties conducted. The statement is tallied with an item called 'company account' This item is brought to the balance sheet. On a perusal of the kuri statement one can see liabilities of crores of rupees under auction discount payable account, fixed discount payable account and bonus payable account. The statement never gives an item wise tally as to which kuris the payable account relates. If these payable accounts are analysed, one can see that a good portion of the credit balances of these accounts pertain to terminated kuris and are non-existent liabilities which should have been offered for taxation much earlier. After the termination of the kuris the foreman is not legally bound to give any discount or bonus and such liabilities cease to exist. They are his income.
In kuri business inflation of expenses takes place in the following ways –
Inflation of travelling expenses - As already mentioned, the kuris are shown as run from branches in Haryana and Jammu. To give a semblance of reality, the companies debit travelling expenses for their employees and directors which are not actually incurred. The bogus nature of the claims of the directors / shareholders that they have attended the kuri auction in Jammu or Faridabad can be exposed by a mere verification of the minute book. In all probability the board meeting of the company would have taken place in Thrissur on the date on which the directors / shareholders were supposed to have travelled to or on camp at Jammu or Faridabad. Besides, the director / shareholder may be engaged in other businesses or professions. The record of his activities vis-a-vis such business / profession may reveal that he was present in Thrissur on the date of his supposed tour.
Kuri canvassing commission - Whenever a kuri is started, commission is paid to the agents who canvass subscribers. Although it is claimed that the commission is paid to outsiders it is generally paid to the employees and directors of the company. Usually upto 20 per cent of the monthly or quarterly subscription is allowed as commission. A few companies may claim upto 40 per cent. The excess commission debited in the P & L account is shared among the directors and employees. Investigations done in kuri companies have exposed this practice which prevalent in most companies. In some cases where the subscribers directly join the chitty, canvassing commission is claimed under bogus names and appropriated by the employees.
Daily collection commission - Kuri companies generally sent their staff members called collection agents to collect kuri subscriptions from customers. A good number of subscribers remit subscriptions by way of cheques / drafts. For this no effort on the part of the company is necessary. Many subscribers remit their subscriptions in the company's counter directly. The collection agents need to contact, if at all, only a small number of customers. However, in its accounts, the company claims that all collections were made through the collection agents. It claims upto 2 per cent as collection commission. This is bound to be inflated. The extent of inflation can be checked with reference to the cheque / DD register, cashier's scroll and the records of the collection agents.
Business promotion expenses - Whenever kuris of bigger prize amounts are announced the company also announces cash incentives, gold coins, bumper prizes like Maruti car in order to attract more subscribers. Huge amounts are debited under the head 'business promotion expenses'. While a good chunk of the expenditure may be genuine, the remaining portion may not be so. This portion is appropriated by the directors. During some surveys conducted in kuri company cases this practice was detected. The genuineness or otherwise of the claim can be verified with reference to the pamphlets / leaflets published at the time of commencement of the chit.
- Certain expenses in the nature of incentives are stated to have been incurred as prizes to subscribers who remitted subscription in time. This outlay is supposed to induce all subscribers to remit installments in time. Such a claim should be viewed with suspicion. Non-bid / non-prized ticket holders who fail to remit subscriptions on due dates lose the bonus element and attract penal interest / fine. The prized / bid subscribers lose all discounts and bonus and attract fine / penal interest if they default. Thus, it is evident that no further inducement to subscribers is necessary, and in fact paid, to ensure timely payment. Moreover, the kuri rules printed in the chitty pass book do not provide for such inducement.
- There are no specific rules as to the periodicity of meetings of the directors. Some companies conduct meetings weekly, some fortnightly and some monthly. The directors are paid large amounts as sitting fees, but in the accounts only much lower amounts are recorded. The 'sitting fee' so paid is more a sharing of unaccounted money collected during the earlier period. The sitting fee apart, the director is paid conveyance allowance also. Sitting fee and conveyance allowance are but one item divided and called by two names. This artificial division is made to reduce the tax liability of the directors.
Inflation of other expenses like office expenses, kuri preliminary expenses, commission, etc. - Most of the companies inflate expenses under these heads with a view to reduce the profit. Proper vouchers are not kept in support of the expenditure claimed under the above heads. Due alertness on the part of the AOs will help greatly in checking and finding out the inflation in expenditure.

Let me live those few moments.

A dark apparition his head coverd in black hood
Wearing a flowing cossack covering his neck to feet, black again
Riding along with a black stilleto on a steed black as it could be And chasing me with intentions which cannot be but black

I am running in panic along the path paved with black stones
With my powerless and tired feet failing me
The black rider is sure to overtake me
It is only matter of a few moments, a few moments.

Let me live those few moments.

I am looking forward to be normal but fate is in a murderous pursuit behind me.

I am feeling sick sicker and sickest. The medicines I consume are of little help. In fact they worsen my health. I feel like a branded beast for slaughter. God, why should this happen to me of all the people? But I have to grin and bear it.