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IT Raids Conducted at Edelweiss Group's Mumbai Offices in Asset Reconstruction Campaign

In repercussion to this, Edelweiss Financial Services Ltd shares to drop more than 7%.

IT Raids Conducted at Edelweiss Group's Mumbai Offices in Asset Reconstruction Campaign
(File Image) IT Raids Conducted at Edelweiss Group's Mumbai Offices in Asset Reconstruction Campaign
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The Income Tax (IT) department carried out a raid on the Mumbai offices of the Edelweiss Group as part of its campaign against asset reconstruction firms on Thursday, March 2. The offices of several entrance operators were also searched in connection to the investigation into possible tax evasion by asset reconstruction companies (ARCs). While the IT department has not provided any further details on the searches, Edelweiss Financial Services Ltd shares dropped more than 7% on in response to the news.

The IT's search were related to suspicions of tax cheating, with the Mumbai and Delhi investigation wings involved in the operation. The searches took place at locations connected to the organisation in Mumbai, with the IT department team spending several hours at the Edelweiss Group offices.

The stock market impact of the news was significant, with the Edelweiss Financial Services Ltd shares recovering slightly to trade at INR 62.26, down just 1.88% after the initial drop. A total of 93,000 shares were traded on the Bombay Stock Exchange (BSE), with 94,783 shares worth of sell orders and 74,785 shares worth of buy orders. The stock is down 2.5% for the calendar year as of Friday's decline, with a 52-week high and low of INR 77.40 and INR 49.40, respectively.

This is not the first time Edelweiss Group has been involved in controversies. Prior to this, in 2020, the Group made headlines when its chairman and CEO were summoned by the Enforcement Directorate (ED) in relation to foreign exchange regulation violations. It remains to be seen how the IT's investigation into possible tax evasion will impact the organisation in the long term.

The lack of clarity provided by the Group on the matter has left investors uncertain about the situation. While the stock experienced a significant drop, it has managed to recover slightly, trading at INR 62.60 at 02:18 pm. However, the stock did drop to a low of INR 59 on the BSE, reflecting the unease surrounding the investigation.

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