The income-tax department on Tuesday raided Mumbai-based 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 Rs629 crore with NSEL, the highest among all domestic brokerages.
The raids were conducted on 20 locations of the brokerage firm. They 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. They are especially looking into the proprietary trades of the brokers to ascertain the source of funds.
"Earlier, we conducted a survey on Anand Rathi Commodities in the NSEL scam case. After detailed questioning with officials of Anand Rathi Commodities and after getting some crucial evidences against the brokering firm, we have decided to conduct searches on its offices and residences," a senior I-T official told a TV channel.
The I-T Department believes that top brokers in the commodity market, including Motilal Oswal, Anand Rathi, IIFL and a few others were aware of insider trading and irregularities within the NSEL before the Rs5,600-crore payout crisis erupted.
Recently, Motilal Oswal Financial Services clarified that out if its total exposure of Rs254 crore in the NSEL matter, a little over Rs57 crore was with respect to the proprietary positions undertaken by the group.
Meanwhile, the I-T department has already sought the details of all 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.