New Delhi: Countering the Income Tax Department's claim, retail outlets chain The Coffee Day Enterprises on Tuesday confirmed the authenticity of the letter its missing founder V.G. Siddhartha wrote to the company's board of directors on July 27.
"The board also reviewed a copy of the letter purportedly signed by Mr V. G. Siddhartha dated July 27, 2019, and has shared a copy of the letter with relevant authorities," the city-based firm said in a regulatory filing on the Bombay Stock Exchange (BSE).
It also admitted that the note or letter circulating on social media was the last letter Siddhartha wrote to the board.
Suspecting that its founder-chairman could have committed suicide on Monday night on the basis of the complaint his driver filed with police, the company said the board had sought the assistance of local and state authorities in tracing him or his body, which seems to have sunk or been swept away in the Netravathi river after he jumped off the bridge.
"Our officers are also cooperating with the authorities as requested," added the filing, which was in response to the I-T Department's statement to the media here that Siddhartha's signature in the note to his company's board does not tally with the signature in his annual reports.
Income Tax Department's statement
The Income Tax Department on Tuesday denied charges of harassment during their probe against Cafe Coffee Day promoter V G Siddhartha and official sources pointed out that the signatures of the entrepreneur available with them were different from those on a letter being widely published on social media.
They said the businessman had admitted stashing income after raids were conducted against him and his concerns.
In the unverified letter, Siddhartha, who has gone 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.
Refuting the charges, the official sources said the the provisional attachment of shares was made by the department to protect the "interests of revenue" in cases of large tax evasion and 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 he was found with unaccounted cash of Rs 1.2 crore and the person told tax officials that it belonged to Siddhartha, they claimed.
They alleged that 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.
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.
KKR says still owns over 6% in CCD
Global buyout major KKR has said it is "deeply saddened" by the disappearance of V G Siddhartha.
In a purported letter sent to the company board and the employees of the coffee chain he founded, Siddharth had on July 27 said he was under pressure from one of the private equity partners to buy back shares.
KKR in a statement Tuesday said it had invested in the popular coffee chain nine years ago and part-exited the investment last year.
The fund statement added that it continues to hold about 6 per cent in the company now down from 10.3 per cent earlier.
"We are deeply saddened by the developments and our thoughts are with his family at this time. We believe in VG Siddhartha and had invested in the company about nine years ago," KKR said in a statement.
It can be noted that generally, private equity funds have a shorter investment horizon of say one to seven years wherein they help an invested company grow and exit.
Meanwhile, mortgage major HDFC denied it has any exposure to any of the companies associated with Siddhartha. "HDFC had disbursed lease rental discounting loans to Tanglin Developments (CCD) for its project Global Village Tech Park in Bangalore. The entire loan was repaid in January 2019 and has no exposure to the Coffee Day Enterprises group as on date," an HDFC spokesperson said.
(With inputs from IANS and PTI.)
