I-T Department had attached Mindtree shares held by VG Siddhartha without notice: Sources

  • In January this year, the Income Tax Department had attached 74.90 lakh shares of Mindtree

  • For a potential tax demand of Rs 625 crore, shares worth Rs 3,000 crore were attached

  • In February this year, the I-T Department had released 74.90 lakh attached shares of IT firm Mindtree

With the mystery deepening over the disappearance of Café Coffee Day (CCD) promoter VG Siddhartha, a letter reportedly written by him surfaced on Tuesday accusing the tax authorities of harassment. Siddhartha went missing from near Mangaluru in Karnataka on Monday (29 July) evening.

In January this year, the Income Tax Department had attached 74.90 lakh shares of Mindtree, in which 22.20 lakh shares belonged to Coffee Day Enterprises and 52.70 lakh shares belonged to its promoter Siddhartha, reported PTI.

Sources close to Siddhartha said that the I-T Department had attached Mindtree shares held by the CCD promoter without notice/demand.

 I-T Department had attached Mindtree shares held by VG Siddhartha without notice: Sources

Caffee Coffee Day founder VG Siddhartha. Photo credit Forbes India

There was no demand made by I-T Department before attaching Mindtree shares. For a “potential” tax demand of Rs 625 crore, shares worth Rs 3,000 crore were attached, sources said.

After this action by I-T Department, Siddhartha went back and forth to the I-T Department for about six weeks, the sources said.

In February this year, the I-T Department had released 74.90 lakh attached shares of IT firm Mindtree, owned by the company and its promoter Siddhartha, but attached Siddhartha's 46.01 lakh shares in Coffee Day Enterprises over potential tax demand.

"The company and the promoter, VG Siddhartha, have received orders dated 13 February 2019, for release of provisional attachment of Mindtree shares under section 281B of Income Tax Act, 1961 vide ordered on 25 January, 2019," Coffee Day Enterprises said in a regulatory filing.

In a separate filing, Coffee Day Enterprises, which operates popular coffee chain Cafe Coffee Day (CCD), said, "VG Siddhartha has received an order under section 281B of Income Tax Act, 1961 on 13 February, 2019, provisionally attaching 46,01,869 shares of Coffee Day Enterprises held...with Way 2 wealth Brokers of VG Siddhartha to safeguard the interest of the revenue in respect of likely future tax and penality obligations in respect of open assessments".

On Tuesday, official sources said that the I-T Department acted as per law in its probe against Siddhartha,  after a letter purportedly written by him accused tax authorities of harassment.

Refuting the charges, the sources said the provisional attachment made by the department was undertaken to protect the "interests of revenue" and was based on credible evidence gathered in the search or raid action.

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In May this year, engineering and construction major Larsen and Toubro (L&T) had acquired a 20 percent stake in Mindtree from Siddhartha, reported PTI.

L&T acquired around 3.27 crore Mindtree shares, or almost 20 percent of the stake, at Rs 980 per share (for a total of Rs 3,211 crore) from Siddhartha and Coffee Day Enterprises through block deals.

With PTI inputs

Updated Date: Jul 30, 2019 18:38:29 IST