CCD founder VG Siddhartha was probed by I-T department, had alleged harassment

New Delhi: V G Siddhartha, founder of Cafe Coffee Day (CCD), who has been missing since Monday, had alleged harassment by the Income Tax department over filing of returns as well as coercive blocking of Mindtree deal and then taking possession of CCD shares.

Siddhartha's tax controversy first surfaced in September 2017 when he was accused of evading taxes. Following this, raids were conducted by the Income Tax department of Karnataka and Goa regions at over 20 locations in Mumbai, Bengaluru, Chennai and Chikmagalur.

During the raids the IT department found found Rs 650 crore of undeclared income from the Coffee chain while the department seized documents relating to it.

Siddhartha had been selling assets in the recent past in order to cut debt. In May, he exited from his 20.32 percent holding in Mindtree by selling the entire stake to construction major Larsen and Toubro through a block deal worth around Rs 3,200 crore.

L&T bought 3.27 crore shares held by Siddhartha and Cafe Coffee Day at Rs 980 per share, as per a BSE data.

In January this year the company wrote to the stock exchange saying that 74.90 lakh shares of Mindtree have been affected by the provisional attachment by the Income Tax Department over a potential tax demand, where 22.20 lakh shares are held by Coffee Day Enterprises in Mindtree and 52.70 lakh shares by Siddhartha.

The company also mentioned that it had already discharged its tax liability along with the revised returns stating that there  was no pending tax liability by the company following the filing of the revised returns.

The filing said the attachment also "prohibited for transfer or charge" of 22.2 lakh equity shares of Coffee Day Enterprises Ltd, and 52.7 lakh shares held by Siddhartha.

Meanwhile, in a letter, written to the board of directors and CCD family on July 29 (Monday), the same day when the CCD founder went missing, he alleged that there was a lot of harassment from the previous DG income tax in the form of attaching shares on two separate occasions to block Mindtree deal and then taking position of our Coffee Day shares, despite the filing of revised returns .

He termed this action as “unfair” that has led to “a serious liquidity crunch”.