Story of Krauncha Mountain is found in the Asura Khanda of Skanda Purana. Krauncha was a demon who led a wicked life. He attacked innocent beings and tormented them. One day he took the form of a mountain and blocked the way of Sage Agastya who was on his way from Kailash to South India.
Sage Agastya lost his way and wandered in the mountain under heavy rains. He could not find his path for several days. Finally, the sage realized that he was on a mountain made by Asura Krauncha.
He then cursed the Asura that he will stand there forever as a mountain. He would only get back his true form when Subrahmanya pierces the mountain with his arrow.