New Delhi: On 3 December, the Income Tax (IT) Department raided stock-brokers & traders who were involved in facilitating the accommodation of profits and losses through reversal trades in illiquid stock options in Equity Derivative Segment and also Currency Derivative Segment on Bombay Stock Exchange (BSE). Over 39 locations spread across Mumbai, Kolkata, Kanpur, Delhi, NOIDA, Gurugram, Hyderabad and Ghaziabad were covered, according to a Press communication from the Ministry of Finance.
The “search & survey” action has unravelled the modus operandi adopted by the stock-brokers and traders to trade in the illiquid stock options in Equity Derivative Segment and thereby generate artificial losses and profits by executing reversal trades in a very short span of time.
By this contrived methodology, the unscrupulous entities have secured desired profits and losses, which is estimated to be more than Rs. 3,500 Crore.
The Income Tax raid has also resulted in identification of wrongful long-term capital gains taken in at least 3 penny stocks listed on the BSE, where the manipulated profits utilized by the beneficiaries aggregate to around Rs. 2,000 Crore.
The search action has resulted into seizure of unaccounted cash of Rs. 1.20 Crore. The number of beneficiaries who have benefited from these manipulated transactions could be to the tune of a few thousand scattered across India and efforts are being made to identify them, as also the corresponding quantum of income evaded.
Incriminating evidence recovered during the course of actions is also being examined for determination of contravention of the various direct tax laws.