Rs 19 crore cash found at stock trader’s home in I-T search

AHMEDABAD: In one of the biggest cash hauls from a search operation for the Income Tax (I-T) department in Gujarat in recent times, a search at a Paldi residence fetched a total of Rs 19.3 crore cash, in Rs 2000, Rs 500 and Rs 100 notes.
I-T department sleuths carried out search and survey operations at six locations in Ahmedabad after questioning Jignesh Shah, a resident of Parshwa Apartment in Paldi, and Sanjay Shah, a resident of Prernatirth Bungalows in Satellite.The cash was found at Jignesh Shah’s residence.
“There were no hidden cavities at the residence and the cash was found in the bedrooms of the apartment, where it was stacked everywhere, from cupboards to cabinets. It took more than five hours for multiple teams of bank officials to count the cash,” said a senior I-T department official.
Officials said the two stock traders, identified as ‘entry providers’ in market jargon, are not related. But what they did was very similar. “They would provide ‘profit’ or ‘loss’ on demand to individuals and firms to show on their stock trading. They would deal in penny stocks of shell companies. For example, they could provide entries of purchase of a share not listed on the exchange at Re 1 a decade ago and then inflate its price to Rs 100 and then show it crashing to Rs 20, showing a notional loss of Rs 80 per share. The numbers of such shares can run into the thousands,” said an official, adding that the proceeds could have also been used to adjust long-term capital gains (LTCG) to evade tax.
Likewise, the notional profit could be obtained if individuals or firms wanted to improve their liquid assets in their books of accounts. I-T officials said that till Tuesday evening, they had found 18 demat accounts belonging to the duo.
Duo questioned for modus operandi
The duo was questioned on their modus operandi and the persons who used their services. Officials did not rule out the possibility of money laundering. They said they could have provided the penny stocks for cash, the shares which could have been transferred in a demat account, so the proceeds would convert ‘black money’ into ‘white’. It is suspected that they may have used other persons’ accounts for the purpose. Investigators said the I-T returns of the two persons under the scanner will be cross-checked with the find. Their earlier stock market transactions will also be scrutinized.
Six locations searched
“Search and survey operations were carried out at three locations for each of the accused. Three locations were residences and three were in commercial complexes. Apart from a large number of documents, receipts and transaction records, we have also seized digital data on laptops, hard drives and mobile phones. A team of forensic science experts will help retrieve the data. We have also got evidence of fixed -deposit receipts and National Savings Certificates (NSC) worth about Rs 70 lakh,” said an I-T official.