As the Karnataka police recovered the body of Cafe Coffee Day owner VG Siddhartha, a letter written by him now sheds light on the intense financial distress the coffee magnate was under.
Siddhartha blames private equity investors and tax officials for his financial condition.
“There was a lot of harassment from the previous DG income tax 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 the revised returns have been filed by us. This was very unfair and has led to a serious liquidity crunch.”Excerpt from VG Siddhartha’s letter
The Income Tax Department, meanwhile, stated that it has acted as per the povisions of the Income Tax Act. The tax department wrote that Siddhartha and CCD were investigated based on the ‘unearthing of a credible evidence of financial transactions done by the CCD in a concealed manner.’
The department stated that they recovered unaccounted cash worth Rs 1.2 crores from a person holding a citizenship of Singapore, who claimed that the money belonged to VG Siddhartha.
“In the search action, after considering the evidences gathered by the department, Shri VG Siddhartha admitted the unaccounted income of Rs 362.11 crores and Rs 118.02 crores, in the hands of Shri VG Siddhartha and M/s Coffee Dat Enterprises Ltd respectively in the sworn statements.”Office of the PR-Chief Commissioner of Income Tax
The coffee tycoon’s income tax woes began in early 2017 when he was accused of tax evasion.
February 2017
In February 2017, NGO Samaj Parivartan Samudaya, which is known for fighting illegal mining cases in Karnataka, requested a Special Investigation Team (SIT) on black money to launch a probe into Siddhartha’s accumulation of wealth.
The NGO alleged that Siddhartha accumulated wealth from the fake stamp paper scam, also known as the Telgi stamp paper scam, reported The Hindu. SR Hiremath, the founder of the NGO, claimed that a study conducted by them found that this was allegedly aided by Siddhartha’s father-in-law SM Krishna, who was the then chief minister of Karnataka.
September 2017
After tax-evasion claims, Income Tax officials conducted raids at VG Siddhartha’s residence and 20 other locations in Bengaluru, Chennai, Mumbai and Chikmalagur. Other locations raided included, Cafe Coffee Day headquarters in Bengaluru’s UB City, and the corporate office of the Amalgamated Bean Coffee (ABC) Trading Company, which runs the CCD's retail outlets across the country.
Once the raids concluded, the I-T department claimed that they found concealed income worth Rs 650 crore from the documents seized from the Café Coffee Day offices and its group companies.
"Though we have found and seized a number of documents related to properties, business transactions and other dealings, they are subject to scrutiny for violations, if any," reported Firstpost, quoting an I-T official’s e-mail to IANS.
25 January 2019
In January 2019, the Income Tax department dealt a heavy blow to Siddhartha by ‘provisionally attaching’ shares held by the entrepreneur and Coffee Day Enterprises Ltd in the IT firm- Mindtree.
Shares worth about Rs 665 crore owned by Siddhartha were attached by the tax officials to cover any tax liabilities of the entrepreneur.
The I-T department’s move came at a time when the coffee magnate was in talks with companies to sell his 21 percent stake in Mindtree.
As per the restrictions, a total of 7.49 million shares held by Siddhartha and Coffee Day Enterprises faced the prohibitory order for six months, starting 25 January 2019.
28 January 2019
Following the I-T crackdown on his shares in Mindtree, Siddhartha planned to offer alternative security to the I-T Department in order to gain back control of his shares in the tech company, reported The Economic Times.
18 March 2019
The Cafe Coffee Day owner finally managed to sell his 20.4 percent stake in Mindtree to L&T for approximately Rs 3,269 crore. He earned a profit of over Rs 2,850 crore in the transaction, reported Business Today.
The deal helped Siddhartha repay his debt of about Rs 2,900 crore, reported LiveMint.
Apart from the Income Tax department, Siddhartha has also blamed some of his investors for his financial woes in the letter.
“I fought for a long time but today I gave up as I could not take any more pressure from one of the private entity partners forcing me to buy back shares, a transaction I had partially completed six months ago by borrowing a large sum of money from a friend. Tremendous pressure from other lenders lead to me succumbing to the situation.”Excerpt from VG Siddhartha’s letter
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