Mumbai: The income-tax department has initiated an intensive probe against several domestic and overseas entities for alleged tax evasion related to profits from short-selling shares of companies within the Adani Group, following the controversial Hindenburg Research report.
"Most of the short sellers did not report their windfall gains during the period to the income-tax department. The case is under investigation by the income-tax department as agencies have arrangements for real-time exchange of intelligence," confirmed a senior IT official.
Short-selling of Adani Group stocks
The market regulator Securities and Exchange Board of India (Sebi), based on a report from the Enforcement Directorate, has launched an investigation, suggesting that certain entities appeared to possess prior information about the report and consequently garnered significant profits through short-selling Adani Group stocks.
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The Hindenburg report alleged "brazen accounting fraud" and "stock manipulation" by the Adani Group, which swiftly rejected the report as "unresearched" and "maliciously mischievous."
The release of the report triggered a massive decline in Adani Group stocks, leading to a loss of approximately $150 billion within days. This setback even led to the cancellation of a ₹20,000 crore share sale in the group's flagship company, Adani Enterprises.
Delhi & Mumbai firms among top short sellers
Among the 'top short sellers' identified were two Indian companies – one registered in New Delhi, against whose promoter SEBI had issued an order for misleading investors and engaging in stock market manipulation; the other company is registered in Mumbai.
The income tax probe follows the ED investigation report, which named a dozen companies, including foreign portfolio investors and foreign institutional investors (FPIs/FIIs) based in tax havens, as the "top beneficiaries" of short selling in Adani Group companies' shares.
ED's investigation revealed securities firms, foreign portfolio investors (FPIs), and foreign institutional investors (FIIs) based in London, Ireland, France, Mauritius, Hong Kong, and the Cayman Islands. This information was shared with SEBI and the income-tax department.
