I-T Department Denies 'Harassing' CCD Promoter Siddhartha During Probe, Says He Admitted To Holding Blackmoney

The department added the businessman had admitted to holding stash income after raids were conducted against him and his concerns, news agency PTI reported.

In an unverified letter, Siddhartha, who went missing on his way to Mangaluru from Bengaluru in Karnataka, said there was a lot of harassment from the previous DG of the Income Tax Department in the form of attaching "our shares on two separate occasions to block our Mindtree deal and then taking position of our Coffee Day shares, although revised returns have been filed by us (sic)".

"This was very unfair and has led to a serious liquidity crunch," the letter, bearing a purported signature of Siddhartha, said.

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Refuting charges, the official sources said the provisional attachment of shares was made by the department to protect the "interests of revenue" in cases of large tax evasion, adding the action was based on "credible evidence" gathered in the search or raid action that was undertaken against the Bengaluru-based group in 2017.

"The department has acted as per provisions of the Income Tax Act," one of sources told PTI.

The authenticity of the note circulating on the social media cannot be vouched for as Siddhartha's signature "does not tally" with what is available with the department in the form of annual reports of the company, the source said quoting official records.

They said Siddhartha fetched Rs 3,200 crore from the sale of Mindtree shares, but has paid only Rs 46 crore out of the total Rs 300 crore minimum alternate tax (MAT) payable on the deal.

The raids against the group were carried out as a result of a similar action against a prominent Karnataka politician and sources said Siddhartha, in a sworn statement, "admitted" unaccounted income of Rs 362.11 crore and Rs 118.02 crore in his hands and that of Coffee Day Enterprises Ltd respectively.

They alleged that tax sleuths recovered numerous messages from his mobile phone that indicated his "active involvement in cross-border hawala transactions."

A Singaporean citizen was searched in this case and was found with unaccounted cash of Rs 1.2 crore. The person told tax officials that it belonged to Siddhartha, they claimed.

They alleged the CCD promoter filed his IT returns but "did not" mention the undisclosed income, as admitted in the sworn statement, in both the cases except an amount of around Rs 35 crore in his individual case.

"Even on this admitted sum, Siddhartha did not pay the self-assessment tax of Rs 14.5 crore as quantified by him as on date. Coffee Day Enterprises Ltd did not offer the admitted income in its part," the source said.

They said the department got to know through media reports in January this year that Siddhartha was planning to sell the equity shares of Mindtree Ltd, held by him and his company, on an immediate basis.

Tax officials found that Siddhartha and Coffee Day Enterprises Ltd together held nearly 21 per cent of shareholding in Mindtree Ltd and it was also found that the deal for sale of shares was set to be finalised within that month, they said.

As the tax revenue ramification in this case was worth crores and the assessee had not taken permission from the I-T authorities for selling these shares, they were attached as per the norm, they said.

Mindtree Ltd's 74,90,000 shares were attached and such an action is a normal requirement to protect the interests of revenue in big cases of tax evasion, they said.

They said Siddhartha then filed a request letter to release these shares and offered other shares of Coffee Day Enterprises Ltd as security against the expected demand.

The department accepted this request and the attachment of Mindtree shares were revoked on February 13 this year, they said.

However, a specific condition was put by the department that the sale proceeds will be utilised only for repayment of loans availed against the Mindtree Ltd shares by opening escrow account and the remaining balance will be provided for attachment to the department against the tax liability to arise.

"The alternate attachment of 46,01,869 unencumbered shares and 2,04,43,055 encumbered shares of Coffee Day Enterprises Ltd was made on February 13-14," they said.

The assessee (Siddhartha) had transferred the Mindtree Ltd shares to L&T Infotech Ltd on April 28 and received around Rs 3,200 core, they said.

Out of this consideration, they said, Siddhartha and his company repaid loan of around Rs 3,000 crore and paid expenses related to transfer of Rs 154 crore and the balance of Rs 46 crore was paid towards first instalment of advance tax of estimated MAT liability of around Rs 300 crore in the case of shares of Coffee Day Enterprises Ltd.

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The CCD promoter is the son-in-law of former Karnataka chief minister and BJP leader S M Krishna and was last seen near a bridge on Netravati river in Kotepura area in Dakshina Kannada district on Monday night.

Authorities have launched a massive search for him.

I-T Dept Press Release on CCD Owner on Scribd

(With PTI inputs)