TaxTMI 
TaxTMI 
2026 (7) TMI 1679
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....e representing the petitioner submits that the bank has issued the show cause notice on the basis of the Forensic Audit report but the Forensic Audit report is not conclusive and the Auditor has mentioned in the report that the report has been prepared solely for the purpose of providing selected information on a confidential basis to which it is issued and should not be used for any other purpose without their consent. 3. Mr. Kar submits that initially on 18th November, 2025, the respondent no. 2 has issued show cause notice to the petitioner with respect to the transactions from 1st April, 2013 to 31st March, 2018, on the basis of the Forensic Audit report dated 4th June, 2025. On receipt of the said notice, the petitioner has submitted a detailed reply on 29th November, 2025, stating that the M/s. Pincon Spirit Limited (hereinafter referred to as "PSL") had been conducting its business activities with due diligence, integrity and best efforts. It was informed to the bank that the petitioner and other Directors of PSL had been arrested on 2nd November, 2017 and 19th April, 2018, respectively and all supporting documents with regard to the operation of PSL and the petitioner ha....
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....e hypothecated to the consortium as prime security. He submits that the company has been impleaded in a number of litigations with reference to its operation. The alleged corporate debtors have also initiated Corporation Insolvency Resolution Process (CIRP) against the company before the National Company Law Tribunal, Kolkata. The said application was taken up for consideration on 30th September, 2019, along with other applications wherein it is mentioned that the DEO, West Bengal had attached the property of the corporate debtor (PSL) as if it is the proceed of crime under the provisions of West Bengal Protection of Interests of Depositors in Financial Establishment Act, 2013. 8. Mr. Kar submits that the Tribunal by its order dated 19th February, 2020, observed that the contention that the assets attached by the respondent therein are assets obtained by the corporate debtor company out of the funds collected illegally by the group company under the contrail of Pincon Groups seems to be devoid of any merit in the absence of any supporting evidence and materials. The Tribunal also observed that the property of the corporate debtor attached by the respondent is liable to be detach....
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....e Time Settlement, the bank requested the petitioner to submit the offer of One Time Settlement to the Official Liquidator appointed by the Tribunal. 15. Mr. Pramanik submits that as per Master Directions on Fraud Risk Management in commercial bank, reasonable time of 21 days was provided to the petitioner for submission of his reply to the show cause notice and only after receipt of notice, the bank shall consider the request of the petitioner and after giving an opportunity to the petitioner, the bank will consider whether the entities will be declared as fraud or not. He submits that instead of waiting for the decision of the bank, the petitioner has filed the instant writ petition, thus the writ petition is not maintainable. 16. Mr. Pramanik in support of his submissions, has relied upon the judgment in the case of Union of India and Another Vs. Kunisetty Satyanarayana reported in (2006) 12 SCC 28 and submits that in some very rare and exceptional cases, the High Court can quash a show cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal. 17. Initially the respondent bank has issued show cause notice to the peti....
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....records by the Directorate of Economic Offences (DEO)- does not absolve the company from the responsibility of maintaining backups or duplicate records. As per standard accounting and statutory compliance practices, listed companies are required to maintain backups, digital records, audit trails, and file statutory returns (e.g., GST returns, ROC filings) which remain accessible through respective portals or backups. No such attempt to produce secondary or corroborative evidence has been made by the management. The management response provides broad, generic justifications about normal business transactions but fails to address specific transaction-level observations made in the forensic audit. Statements such as "transactions were in the ordinary course of business" or "accounting lapses were inadvertent" are unsupported by verifiable facts or documentation. Despite the lapse of more than seven years, the management has not pursued any legal remedy to regain access to its own records from DEO, nor taken steps to reconstruct the books of accounts - a minimum expected effort from a listed entity. The continued inaction indicates wilful negligence or a deli....
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....p Markcom Pvt. Ltd. 24,99,870 10. Mahavir Tradimpex Pvt. Ltd. 74,99,815 11. Jai Santoshi Tradimpex Private Limited 29,99,970 12. D L S Export Private Limited 8,13,49,300 13. Vaibhavlaxmi Distributors Private Limited 7,00,18,884 14. Venera Property Private Limited 2,50,17,848 Total 27,03,42,087 Such payments without any visible economic rationale or documentation and directed towards non-operational, non-compliant and defunct entities represent a classis typology of fund siphoning and fraudulent activity conducted on the part of the Borrower. B) Questionable Payments to a Former Director: It has been observed that the Borrower have paid amount aggregating to Rs.40.00 lakhs to Mr. Raj Kumar Roy within a period of 5 days. The summary of payment made to him has been shown below: Date Amount Paid (Rs.) Amount Received (Rs.) Remarks 15-09-2017 10,00,000 - HDFC Bank 15-09-2017 10,00,000 - HDFC Bank 18-09-2017 10,00,000 - HDFC Bank 18-09-2017 10,00,000 - HDFC Bank Total 40,00,000 - Mr. Raj Kumar Roy was a director....
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....re are various suspicious transactions observed by us which could not be completely unearthed due to the absence of books of accounts. The Borrower has not provided its statutory books of accounts, ledger records, transactional invoices, agreements, etc. This non-cooperation hinders the transparency and traceability of financial conduct and itself raise red flags under forensic and regular scrutiny. FINAL OPINION In view of the foregoing, it is our categorical and professional opinion that the Borrower has engaged in a well-orchestrated scheme of financial misrepresentation, fraud and fund diversion, through a network of shell entities and through unauthorized individual payments, with the sole intention of defrauding institutional lenders. This conclusion is based on evidence available as on the date of this report and is subject to further findings upon production of the complete financial records and cooperation by the Borrower. DISCLAIMER & LIMITATIONS This report is to be read in totality, and not in parts, in conjunction with the relevant documents referred to in this report. While utmost care has been taken in carrying ou....
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.... the date of this report. This report has been prepared solely for the purpose of providing selected information on a confidential basis to which it is issued and should not be used for any other purpose without our consent in writing. FOR R DAKONIA & CO. CHARTERED ACCOUNTANTS Sandeep Agarwal SANDEEP AGARWAL Dated: 04.06.2025 UDIN: 25064912BMMIIB9150." 22. Directorate of Economic Offences, West Bengal, has initiated investigation with regard to the transactional operation of the PSL and seized the stocks and plants of the PSL. The DEO, filed an application before the Tribunal being CA (IB) No. 577/KB/2019 and prayed for dismissal of the CIRP proceeding initiated against the petitioner being C.P. (IB )No. 93/KB/2018. The Learned Tribunal by an order dated 30^th September, 2019, passed the following order: "14. A very look at the name of the company reveals that Sl. No. (e) (5th company) name is Pincon Infrastructure Ltd. The Corporate Debtor is Pincon Spirits Limited. The Corporate Debtor company was Incorporated under the provisions of the Companies Act, 1956 for carrying on business of manufacturing, importing, expo....
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....ion is allowed upon the following among:- ORDERS i. The Respondent Directorate of Economic Offences, Government of West Bengal, is hereby directed to de-attach all the properties attached vide notice dated 16/04/2018 and to restore possession thereof to the Liquidator within 15 days of the receipt of the copy of this order. ii. CP (IB) No. 93/KB/2018 connected with CA(IB) No.1741/KB/2018 is disposed of. However, no order as to cost." 24. Admittedly, Corporate Insolvency Resolution Process (CIRP) is initiated against the petitioner and Liquidator was appointed by the Learned Tribunal. Once liquidation proceeding is started, the power of the Board of Directors are suspended. The Liquidator is the sole custodian of the company's books of accounts, financial records and operational documents. The Forensic Auditor must submit a formal requisition list to the Liquidator specifying the exact financial years, ledgers and transactions to be examined. The Liquidator compiles the available documents and securely hands over to the Auditor. The Auditor may examine or request clarifications directly from the suspended directors/ management, but all formal document e....