The Income Tax department has carried out search operations on certain share-brokers and traders for allegedly executing fraudulent trades in illiquid stock options.
Over 39 locations spread across Mumbai, Kolkata, Kanpur, Delhi, Noida, Gurugram, Hyderabad and Ghaziabad were covered under the operation, the department said in a statement on Saturday.
These brokers were involved in facilitating accommodation of profits/loss through reversal trades in illiquid stock options in equity derivative segment and also currency derivative on the BSE, it said.
The search or survey action has unravelled the entire modus-operandi which has been adopted by the share-brokers and traders to trade into the illiquid stock options in equity derivative segment and thereby generate artificial losses or profit by executing reversal trades in a very short period.
"By this contrived methodology, the unscrupulous entities have secured desired profits/losses, which is estimated to be more than Rs 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 Rs 2,000 crore," it said.
The search action has resulted in the seizure of unaccounted cash of Rs 1.20 crore.
The number of beneficiaries who have been benefitted 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.