The income-tax department on Tuesday raided domestic brokerage firm Anand Rathi on alleged suspicion of tax evasion on investments in the National Spot Exchange Ltd (NSEL), which is caught in a payment crisis.
The firm has an exposure of Rs 629 crore with NSEL, the highest among all domestic brokerages. According to sources, the raids were conducted on 20 locations of the brokerage firm. The raids are part of the I-T department probe into the role of brokers and investors that traded through these brokerages.
The tax sleuths are examining the money trail to ascertain whether the money was properly audited in the books of the brokerages. The tax agency is especially looking into the proprietary trades of the brokers to ascertain the source of funds.
Recently, Motilal Oswal Financial Services clarified that out if its total exposure of R254 crore in the NSEL matter, a little over R57 crore was with respect to the proprietary positions undertaken by the group.
Meanwhile, the I-T department has already sought the details of all the investors from brokerages and will check if some of the larger entities have the money accounted in their books. Reports suggest that the I-T department will soon issue notices to more than 20 borrowers that entered into trades without being backed by commodities.
It is believed that the I-T department would soon conduct similar raids on the offices of other brokerages that have an exposure towards NSEL.
Apart from Anand Rathi, domestic entities such as India Infoline Commodities, Geojit Comtrade, Systematix Commodities Services, Motilal Oswal Commodities Brokers, AUM Commodity, Purvag Commodities and Derivatives and Emkay Commotrade also have substantial exposure in the spot exchange.
The tax department is not the only government agency that is currently probing the NSEL matter. The Economic Offences Wing (EOW) is looking into the aspect of criminal intent, cheating and misappropriation of funds.
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Financial Technologies India (FTIL) on Tuesday informed the stock exchanges that the accounts of the