The IT department's probe follows the capital markets regulator Securities and Exchange Board of India's (SEBI) investigation on 14,720 entities, as part of its efforts to clamp down on fraudulent activities in the securities market.
As many as 21,900 entities are under the scanner of Income Tax Department for allegedly evading taxes of approximately Rs 3,200 crore between 2014 and 2016 through non-genuine trades in the illiquid stock options contract segment of the Bombay Stock Exchange (BSE) Ltd. Of the total 21,900 entities that are being probed by the IT department, around 11,000 based located in Kolkata alone, the Indian Express reported citing sources.
The tax agency is looking to draft a Standard Operating Procedure (SOP) for its assessing officers to assess tax liabilities and to deal with each of these cases. “There is a need for the similarity of approach in taking action against these entities so we need an SOP,” the source told the paper.
The IT department’s probe follows the capital markets regulator Securities and Exchange Board of India’s (SEBI) investigation on 14,720 entities, as part of its efforts to clamp down on fraudulent activities in the securities market.
After the investigation, SEBI found that 14,720 entities violated the provisions of Sebi (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 by executing manipulative transactions in BSE’s stock options segment between April 2014 and September 2015. Thereafter, the tax agency found out another 6,000 entities for allegedly executing similar trades in violation of Sebi norms.
The sources told the paper that while one set of these entities were making significant by becoming their counterparties in alleged orchestrated trades, with a common aim to execute the non-genuine trade, another set of these firms “repeatedly incurred significant losses” by executing reversal trades.
In the financial year 2015, the average daily turnover in stock options segment of BSE was about Rs 720 crore, in the financial year 2016 it was reported at Rs 300 crore. The capital markets watchdog has already started taking actions against all these entities in a phased manner. In the first phase, it has also initiated adjudication proceedings against 567 entities involved in non-genuine trades.