New Delhi: In a fresh clampdown on entities misusing stock markets for evading taxes, regulator Sebi on Thursday barred 59 entities, including HNIs, from securities markets and also referred the case to the Income Tax Department for further investigations.
The banned entities include Riddisiddhi Bullions, Woodland Retails Pvt Ltd, Mahakaleshwar Mines & Metals Pvt Ltd Shir Commodities & Futures (P) Ltd, Gyandeep Khemka, Ashok Kumar Damani, Jaideep Halwasiya, Swaran Financial, Gurmeet Singh and Vision Sponge Iron.
Securities and Exchange Board of India (Sebi) found that there were several entities who consistently made significant loss and others who consistently made significant profit by executing reversal trades in stock options on the BSE.
The trading pattern of both loss-making and profit-making entities in this case fail to justify any of the normal strategies of hedging, speculation and arbitrage. While, more than 950 entities have already been banned from capital markets by the regulator for suspected tax evasion of at least Rs 5,000-6,000 crore, Sebi chairman UK Sinha had recently said.
Following this order, the number of barred entities in such matters has crossed 1,000. However, this the first instance of action on tax-evaders using stock options. These large number of organised syndicates had set up 'shops' to convert black money into legitimate-looking funds through the stock market platform, he added.
In the latest order, Sebi found that "loss-making entities were deliberately making repeated loss through their reversal trades in stock options which does not make any economic sense, and the profit-making entities were facilitating them by becoming their counter-parties and were acting in concert with a common object of intended execution of these suspicious and non-genuine trades."
Sebi said that transactions were conducted to generate fictitious profits/losses for the purpose of tax evasion/ facilitating tax evasion, the matter may be referred to Income Tax Department for investigation and necessary action at their end.
It may also be referred to Financial Intelligence Unit and Enforcement Directorate for necessary action at their end.