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Revenue Dept probing entities over penny stock misuse: Das

A day after Sebi clampdown on 59 entities misusing stock market for evading taxes, the government on Friday said the investigation wing of the Revenue Department is probing companies which use the penny stock route for tax evasion.

“Sebi has certain facts before it and it has enough proof to show that market rules and practices were not in line with legal provisions, but let me also mention that this is one area where the Revenue Department has been working on companies which use certain penny stocks to misuse provision of capital gains,” Revenue Secretary Shaktikanta Das said here.

“It’s a matter which our investigation wing is examining and taking a lot of action,” he said on the sidelines of a PHD Chamber event here.

Capital market regulator Sebi yesterday barred 59 entities, including HNIs, from securities markets and also referred the case to the Income Tax Department for further investigations.

The Securities and Exchange Board of India (Sebi) found that there were several entities which consistently suffered significant losses and others who consistently made significant profits by executing reversal trades in stock options on BSE.

The trading pattern of both loss-making and profit-making entities in this case fails to justify any of the normal strategies of hedging, speculation and arbitrage.

More than 950 entities have already been banned from the capital market by the regulator for suspected tax evasion of at least Rs 5,000-6,000 crore, Sebi Chairman U K Sinha had recently said.

Following the latest order, the number of barred entities in such matters has crossed 1,000. However, this was the first instance of action on tax evaders using stock options.

The banned entities include RiddiSiddhi Bullions, Woodland Retails Pvt, Mahakaleshwar Mines & Metals Pvt, Shir Commodities & Futures (P), Gyandeep Khemka, Ashok Kumar Damani, Jaideep Halwasiya, Swaran Financial, Gurmeet Singh and Vision Sponge Iron.

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