The Income-Tax Department has launched an investigation into the companies associated with National Spot Exchange Ltd.

A senior I-T Department official told Business Line that a ‘survey action’ has been launched against the companies. A number of teams have been sent to the offices and warehouses for probing the accounts. Full details of the action would only be known by Monday, the official said.

The survey action is not a full fledged I-T raid. In a survey, I-T officials examine the books of accounts, inventory, receivables and other financial dealings of the companies.

BJP leader Kirit Somaiya told Business Line that some companies in connivance with NSEL have perpetrated a fraud. In effect, the NSEL has become a ‘Ponzi company’ which is borrowing from the market at 14 per cent and creating fictitious assets, he said.

He added that some of the companies had claimed having sugar inventory of 32 lakh bags but upon visiting the warehouse it was found that they cannot accommodate more than two lakh bags. Some of the warehouses are vacant or hypothecated to banks, he said.

In a letter to the Finance Minister, Somaiya had alleged that thousands of crores of rupees have been given by NSEL management to companies without any networth. These companies have bogus warehouse stocks, receipts and manipulated audits. Therefore criminal complaints should be filed against NSEL promoters, officials and auditors, the letter had said.

Somaiya has also demanded immediate removal of Jignesh Shah and other directors from the board of NSEL, MCX and MCX-SX. The bank accounts and assets of NSEL board members should also be frozen, he demanded.

Meanwhile, Lotus Refineries Pvt. Ltd in a statement said that since March 2012, the company undertook trade worth over Rs 2,600 crore. It said that it conformed with all bye laws and rules of NSEL, and there was no ground to believe that the company has defaulted under the Rules and Bye Laws of the Exchange.

>rahul.wadke@thehindu.co.in

Related Topics