Income Tax Department has unearthed wrongdoing worth more than ₹5,500 crore by share brokers. It has also seized unaccounted cash.

According to a Finance Ministry’s statement, on December 3, the IT sleuths raided (technically called search and survey) share-brokers/traders who were involved in facilitating accommodation of profits/loss 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.

The search/survey action has unravelled the entire modus-operandi which has been adopted by the share-brokers/traders to trade into the illiquid stock options in Equity Derivative Segment and thereby generate artificial losses/profit by executing reversal trades in a very short span of time. “By this contrived methodology, the unscrupulous entities have secured desired profits/losses, which is estimated to be more than ₹3,500 crore. The search/survey action has also resulted into identification of the 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 ₹2,000 crore,” the statement said.

The search action has resulted into seizure of unaccounted cash of ₹1.20 c₹rore. The number of beneficiaries who have been benefited by 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 action is also being examined to determine any contravention of the various direct tax laws

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