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CCD founder missing: Signature on note does not tally with Siddhartha's signature in annual reports, says I-T Dept


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The authenticity of the note allegedly written by founder-owner of Cafe Coffee Day (CCD) V G Siddhartha, who is missing since Monday, is not known and the signature on it does not match with Siddhartha's signature as available in his annual reports, said the Income Tax (I-T) Department on Tuesday.
"A note said to be written by VG Siddhartha (VGS) of CCD is doing the rounds. Among others, it was mentioned in the note about the attachment of Coffee Day shares by the Income Tax Department. The authenticity of the note is not known and the signature does not tally with VGS's signature as available in his annual reports," read a statement from Bengaluru I-T office.
In the note, which surfaced on Tuesday, Siddhartha allegedly apologised to the people who "put their trust" in him and said that he failed to create the right profitable business model despite his best efforts.
The letter was addressed to the 'Board of Directors and Coffee Day family'.
The Income Tax Department stated that the investigation in a case pertaining to Siddhartha and Cafe Coffee Day (CCD) "arose from the search in the case of a prominent political leader of Karnataka."
"It (the case) is based on the unearthing of credible evidence of financial transactions done by the CCD in a concealed manner," it stated.
The Income Tax Department stated that a person holding Singapore citizenship was also covered in the search action. He was found with unaccounted cash of Rs 1.2 crore and admitted that the cash belonged to Siddhartha.
"In the search action, after considering the evidence gathered by the department, Siddhartha admitted the unaccounted income of Rs 362.11 crore and Rs 118.02 crore, in the hands of Siddhartha and Coffee Day Enterprises Ltd respectively in the sworn statement," the statement read.
"Siddhartha subsequently filed the return of income but did not offer the above-undisclosed income as admitted in the sworn statement in both the cases except the sum of around Rs 35 crore in his individual case. Further, one of the group company Coffee Day Global Ltd has not paid the Self-Assessment Tax of Rs 14.5 crore on the returned income. Coffee Day Enterprises Ltd did not offer the admitted income in its part," the statement added.
The I-T Department stated that on January 21 earlier this year media reports suggested that Siddhartha is planning to sell the equity shares of Mindtree Ltd held by him and his company immediately.
"Based on this report, an immediate verification of the facts was carried out. It was found that the assessees V G Siddhartha, Coffee Day Enterprises Ltd, and Coffee Day Trading Ltd together held nearly 21 per cent of the shareholding in Mindtree Ltd. It was also gathered that the deal for sale of shares is set to be finalised in January 2019," the statement read.
"The tax effect along with interest and penalty based on the outcome of the search action runs into hundreds of crores. On the other hand, there was no application filed by the assessees concerned before the assessing officer as required under the statutory provision before transferring any assets when the income tax proceedings are pending," the statement added.
The I-T Department stated that in order to protect the interests of revenue, the "provisional attachment of 74,90,000 shares of Mindtree Limited owned by V G Siddhartha and Coffee Day Enterprises Ltd under Section 281 of the Income Tax Act was made (though they together held 2,29,31,518 shares). This action is a normal requirement to protect the interests of revenue."
When Siddhartha filed a request letter to release Mindtree shares and in turn offered other security of shares of Coffee Day Enterprises Ltd against the expected demand, his request was accepted and the attachment of Mindtree shares were revoked on February 13, 2019 with specific condition that the sale proceeds will be utilized only for repayment of loans availed against the Mindtree Ltd shares by opening escrow account and the remaining balance will be provided for attachment under Section 281B against the tax liability to arise, the statement stated.
"The alternate attachment of 46,01,869 unencumbered shares and 2,04,43,055 encumbered shares of Coffee Day Enterprises Ltd under section 281B was also made on February 13 and 14," the statement read.
"The assessees had transferred the Mindtree Ltd shares to L & T Infotech Ltd 28.04.2019 and received around Rs 3,200 crore. Out of this consideration, the assessee had repaid the loan of around Rs 3,000 crore and paid expenses related to transfer of 154 crore and the balance of Rs 46 crore was paid towards the first installment of Advance Tax of estimated MAT liability of around Rs 300 crore in the case of shares of Coffee Day Enterprises Ltd. As against the balance MAT liability of Rs 250 crore and tax liability arising based on search findings to the tune of approx 400 crore, the provisional attachment made by the department is less than 40 per cent of the likely tax liability," the statement added.
It went on to add that the provisional attachment was made to "protect the interests of revenue out of the income admitted by assesse based on credible evidence gathered in a search action."
"The Income Tax department has acted as per the provisions of Income Tax Act," the statement from I-T Department concluded.
The 58-year-old businessman is the son-in-law of former Karnataka Chief Minister SM Krishna and has been missing since last evening from Mangaluru.
Siddhartha was spotted last Monday evening at the Netravati Bridge where he had gone for a stroll, Commissioner of Police, Mangalore, Sandeep Patil said on Tuesday.

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First Published: Jul 30 2019 | 10:40 PM IST

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