I-T RAIDS

I-T dept seizes Rs 11cr from entities in NSE co-location case

nse-raid-file-reuters [File photo] Certain brokers are said to have allegedly got preferential access to servers of the exchange | Reuters

The income tax department on Friday seized about Rs 11 crore cash as part of its multi-city raids at 44 premises in the tax evasion probe against a broker and others said to be involved in the high-profile co-location case, official sources said.

They said the cash, hidden in various wooden cavities of furniture and other items, was recovered and seized from the Delhi premises of a broker, identified as Sanjay Gupta, and his business partner.

A major chunk of the Rs 11 crore seizure from three locations in Delhi was from the place of Gupta's business partner.

Nearly Rs 10 crore was found in a cavity beneath a staircase at one of the premises that was searched, officials said.

The notes were stashed in wooden cupboards and are largely in the denomination of Rs 2,000, they said, apart from Rs 500 and others.

Besides Delhi, searches were also conducted at Gurugram, Mumbai, Kolkata and Bengaluru.

Sources said while 27 locations were covered as part of the searches (where sleuths raid both home and business premises), the rest 17 were surveyed (raids at business premises only).

"Certain other incriminating documents have also been seized. The raids are still on," a senior official said.

The department has been conducting searches in Delhi and Mumbai on few brokers linked to the NSE for the last three days and the tax sleuths have said they recovered a number of documents and computer peripherals till now.

The premises of Chitra Ramkrishna, former MD and CEO of the exchange, as also that of others formerly associated with NSE were also searched, they added.

In the NSE co-location case, certain brokers, including Gupta's OPG Securities, operating on its trading platform allegedly got preferential access to servers of the exchange.

A co-location facility provides early login and faster access to data feed of the exchange. Even a split-second faster access can yield huge gains for a trader.

The NSE and brokers being raided by the department have not commented on the action till now.

Officials had said the action is based on "actionable inputs" suggesting tax evasion by a few entities linked to the NSE and also the co-location issue, where it is alleged that certain brokers operating on the trading platform allegedly made abnormal profits as a result of getting preferential access to the servers of the exchange.

The co-location case is under the scanner of Securities and Exchange Board of India (SEBI) while the National Stock Exchange (NSE) earlier this week had submitted the forensic audit report on the issue, prepared by auditing firm Ernst & Young, to the markets regulator.

EY was entrusted with carrying out the forensic audit into cash markets, currency derivative and interest rate futures platform.

The nation's largest bourse had earlier engaged Deloitte for a forensic audit of its equity derivatives platform.

In July, the NSE had approached the SEBI to settle the case through consent mechanism. The regulator has not responded to the proposal as yet, though.

The controversy has delayed NSEs IPO plans. Its rival BSE already went public in January.

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Topics : #Income Tax | #I-T raids

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