The Income Tax Notices Referred To In The VG Siddhartha Letter
After VG Siddhartha, the founder of Cafe Coffee Day, went missing, a letter reportedly written by him to shareholders alleging harassment by the previous Director General of Income Tax has surfaced.
In the letter, posted by ANI in a tweet, Siddhartha alleged that the tax department had attached shares held by him despite filing revised returns as per the notices. BloombergQuint has not been able to independently verify the veracity of the letter.
But here are the details of income tax notices issued against Siddhartha:
Notices For Attachment of Shares
An order was passed by the Bengaluru circle office of the Income Tax Department Siddhartha in January and February 2019 under section 281B of the Income Tax Act, 1961.
Section 281B allows an assessing officer to provisionally attach an assessee’s property if:
- he believes that any income of an assessee in a previous year has escaped assessment.
- there is any pending proceeding against an assessee and;
- provisional attachment of the property is necessary for the purpose of protecting the interests of the tax department and such an attachment is approved by a designated authority above the level of commissioner or a director.
Any order issued by the assessing officer under this section becomes ineffective after a period of six months from its issuance, unless extended further by the prescribed authority.
According to stock exchange filings by Coffee Day in January and February, the income tax department directed to provisionally attach Siddhartha’s 2,04,43,055 shares in the company. Additionally, 52,70,000 shares of Mindtree held by Siddhartha were provisionally attached as well.
The order was passed by the revenue department subsequent to the tax notices under sections 148 and 153A.
These sections allow an assessing officer to direct an assessee to furnish a revised return of his income for a previous year in a prescribed form if:
- income of a previous year had escaped assessment and comes to the notice of the assessing officer later;
- due to this, the assessing officer believes that reassessment or recomputation of an assessee’s income for the previous years is necessary and the assessing officer records reasons for it in writing.
In its filing with the stock exchanges on Jan. 26, Coffee Day had disclosed that the company and Siddhartha had filed the revised returns with the tax department in accordance with the notices.