NEW DELHI :
The income-tax (I-T) department on Tuesday denied harassing Café Coffee Day (CCD) founder V.G. Siddhartha, who went missing on Monday, and claimed that he had admitted to the unaccounted income of ₹362.11 crore during a probe.
“He was not harassed and due process was being followed. When a person is caught in wrongdoing, they often claim harassment. There is nothing new in it," an I-T official said, requesting anonymity.
Siddhartha, in an unverified letter, wrote: “There was a lot of harassment from the previous DG (directorate general) income tax in the form of attaching our shares on two separate occasions to block our Mindtree deal and then taking position (possession) of our Coffee Day shares, although the revised returns have been filed by us. This was very unfair and has led to a serious liquidity crunch."
In a press release, the principal chief commissioner of income tax of the Bengaluru division said the provisional attachment was made to protect the interests of revenue out of the income admitted by the assessee based on credible evidence. “The I-T department has acted as per the provisions of the Income Tax Act," it added.
However, the enforcement directorate (ED), which was also probing the entrepreneur, said the investigation against him “was not very serious and detailed".
A senior ED official, requesting anonymity, said: “The probe was largely being done by the I-T department and the ED probe was not very serious. It was on alleged tax irregularities, which the concerned tax department was looking into," he added.
The Bengaluru I-T office also expressed doubt on the authenticity of the letter by Siddhartha. “The authenticity of the note is not known and the signature does not tally with Shri VGS’s signature available in his annual reports." It claimed that a probe into a case involving a “prominent political leader" of Karnataka led to Siddhartha and CCD. “It is based on the unearthing of a credible evidence of financial transactions done by CCD in a concealed manner. A person holding citizenship of Singapore was also covered in the search action. He was found with unaccounted cash of ₹1.2 crore and admitted that the cash belongs to V.G. Siddhartha."
The I-T department claimed that after considering the collected evidence, Siddhartha admitted to the unaccounted income of ₹362.11 crore and ₹118.02 crore, in his hands and for CCD, respectively, in a sworn statement.
“Shri Siddhartha subsequently filed the return of income, but did not offer the above disclosed income as admitted in the sworn statement in both the cases except sum of around ₹35 crore in his individual case," it added.
Defending the initial attachment of Mindtree shares and subsequently shares of CCD, the Bengaluru I-T department said it was a “normal requirement" to protect the interests of revenue. Subsequently, the I-T office revoked the attachment on Mindtree shares on 13 February with the condition that the sale proceeds will be utilized only for repayment of loans.
Siddhartha and CCD sold a total 20.41% stake in Mindtree to L&T on 28 April for about ₹3,200 crore. From the proceeds, he repaid debt of around ₹3,000 crore, and ₹46 crore to the I-T department as the first instalment of his minimum alternate tax liability of about ₹300 crore. “As against the balance MAT liability of (around) ₹250 crore and tax liability arising based on search findings to the tune of approximately ₹400 crore, the provisional attachment made by the department is less than 40% of the likely tax liability," the I-T department said.
Shaswati Das contributed to this story