VG Siddhartha found dead in Mangaluru: No one was harassed, claims Income Tax dept; CCD founder had tax liability of Rs 447.47 crore

The income tax (I-T) department sources rejected the allegations of harassment saying they only followed laid down tax norms in their probe against Cafe Coffee Day (CCD) and its promoter VG Siddhartha, whose body was found early on Wednesday after 36 hours of an intensive search operation after he went missing in Mangaluru. Sources also questioned his signature in the purported letter , which surfaced hours after the business tycoon went missing, saying it does not match his signature in the company’s annual reports. “The investigation had started after a search in September 2017 and VG Siddhartha himself had admitted the income of Rs 362.11 crore and Rs 11.62 crore. Thereafter, income tax investigation wing in appraisal report had estimated undisclosed income of Rs 364.46 crore in case of VG Siddhartha and Rs 118.02 Crore for Coffee Day Enterprises Limited,” sources said, adding that tax liability of Siddhartha was around Rs 447.47 crore and for Coffee Day Enterprises Limited it was around Rs 188.69 crore. Siddhartha, in his letter, also mentioned about the attachment of ‘Mindtree Ltd’ shares by the income tax department which led to a “serious” liquidity crunch. Sources in the income tax department refuted the charges saying the limited provisional attachment order under section 281B of the Income Tax Act was carried out to protect the interest of revenue as Siddhartha and his company did not file any application before the assessing officers seeking permission since proceedings were pending. LIVE UPDATES: CCD FOUNDER VG SIDDHARTHA'S BODY FOUND “The order was issued on 25 January 2019 to provisionally attach 52.70 lakh and 22.20 lakh shares of Mindtree Limited in the case of VG Siddhartha and M/S Coffee Day Enterprises Limited respectively only to the tune of estimated tax liability of Rs 447.47 crore and Rs 188.69 crore respectively. The total number of 74.90 lakh shares were only attached out of 2.29 crore shares held by both Siddhartha and the company," sources said. Officials also pointed out that before the provisional attachment was made, major newspapers on 21 January had reported about Siddhartha planning to sell the equity shares of Mindtree Ltd by him and his company and the deal was said to be in the final stage. Based on the report, an immediate verification was carried out by income tax officials. “They did not file any application before the assessing officer seeking permission under section 281 of Income Tax Act as required before transferring any assets when the proceedings pending. Income Tax officials had gathered inputs that his company Coffee Day Enterprises Ltd and probable buyer L&T Infotech were scheduled for board meetings on 25 January 2019 to finalise the sale of shares of Mindtree Ltd held by Siddhartha and the company,” department sources told Firstpost.

Income Tax sources said Siddhartha, through three letters in January and February 2019, had requested the Income Tax department to revoke the attachment of Mindtree Ltd shares as entire Mindtree shares were already pledged against the loan of around Rs 3,000 crore. He had offered alternate attachment of 46 lakh shares of Coffee Day Enterprises Ltd worth Rs 146 crore.

Sources further said his request was considered as an attachment of Mindtree Ltd shares was revoked on 13 February 2019 with specific conditions that the sale proceeds will only be utilised for repayment of loans availed against Mindtree Ltd. Shares and the remaining balance will be given for tax liability. Department sources said he paid only Rs 46 crore out of a total of Rs 300 crore payable on Mindtree deal. “Siddhartha had transferred the Mindtree Ltd shares to L&T and received around Rs 3200 crore out of which Rs 3000 crore was used for repaying the loan and Rs 154 crore was paid as expenses related to the transfer. Only Rs 46 crore was paid towards the first installment of estimated minimum alternate tax liability of around Rs 300 crore,” sources added.