TMI Blog2013 (12) TMI 1475X X X X Extracts X X X X X X X X Extracts X X X X ..... ot have carried on trade as sub-broker neither under SEBI (Stock-Broker and Sub-Broker) Regulations, 1992 (“1992 Regulations” for short) nor under 1992 Rules which was rescinded w.e.f. 07.09.2006. Therefore, the decision of AO that the appellant had traded as sub-broker in violation of Regulation 11(1) of 1992 Regulations which prohibits trading in securities without being registered as sub-broker, cannot be faulted. Non compliance of summons - First ground of AO that the appellant failed to furnish copy of income tax returns for Assessment Year 2006-2007 is contrary to facts on record, because, from appellant’s letter dated 07.09.2009 , it is seen that the appellant had forwarded the income tax return for Assessment Year 2006-2007 alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 lac under Section 15A(a) of the SEBI Act for non compliance of summonses is the question raised in this appeal. 2. SEBI conducted investigation in the trading of the scrip of Sumeet Industries Ltd. ( SIL for short) during period from 01.10.2006 to 12.03.2007 (Investigation Period for Convenience). Investigation revealed that the appellant, an individual vide letter dated 18th December, 2006 had applied for registration as sub-broker but had commenced trading for her clients w.e.f. 15th December, 2006 (See page 31 of the appeal paper book) through stock-broker Parasram Holdings Pvt. Ltd. Further according to SEBI appellant during the investigation had failed to furnish certain documents called for under the summonses issued. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of any Regulations made by SEBI could be up to ₹ 1 crore. In the present case, AO has imposed penalty of ₹ 3 lac under Section 15HB of SEBI Act upon the appellant which cannot be said to be unreasonable looking to the seriousness of the offence committed by appellant in carrying on business as sub-broker even before making application seeking registration as sub-broker. 5. As regards imposition of penalty of ₹ 2 lac under Section 15A(a) of SEBI Act is concerned, according to AO, appellant has failed to submit following documents inspite of repeated summonses:- a. Copy of income tax returns for the year 2006-07. b. Name and address of the counter party. c. Bank statements for the period August 1, 2006 to Decem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been furnished. Counsel for appellant could not demonstrate that all the documents were in fact furnished by the appellant. In these circumstances, finding of AO that the appellant failed to furnish documents inspite of serving summonses cannot be faulted. 7. Under Section 15A(a) of SEBI Act, penalty for failure to furnish any document or any return is ₹ 1 lac per day or ₹ 1 crore whichever is less. In the present case since the appellant has failed to furnish documents sought by the investigating officer, whether imposition of penalty of ₹ 2 lac under Section 15A (a) of SEBI Act is justified is the question. 8. Referring to Section 15J of SEBI Act, it is contended by counsel for appellant that since there is neithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext this Tribunal held that since the technical violation was not repetitive, the AO was not justified in imposing penalty. That decision cannot be construed to mean that penalty cannot be sustained for violations of the provisions contained in the SEBI Act and Regulations made thereunder unless the noticee has made unlawful gains or unless any investor has suffered loss or that the violations are repetitive in nature. In other words, a person who has violated provisions of SEBI Act and the Regulations made thereunder cannot escape penalty merely because that person has not made unlawful gains or that the investors have not suffered or that the violations were committed for the first time. Those factors are relevant for determining the qua ..... X X X X Extracts X X X X X X X X Extracts X X X X
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