Description

SEBI issues recovery notice demanding Rs. 6,66,000 (penalty plus interest) from Investment Research Advisor (Amit Gangrade) and Algo System (Sudeep Gangrade) with 15-day payment deadline, warning of attachment and sale of properties, bank account freezing, and potential arrest for non-compliance.

Summary

SEBI has issued a Certificate and Notice of Demand under Section 28A of the SEBI Act, 1992 read with Section 222 of the Income Tax Act, 1961 (Certificate No. 8972 of 2025) against Investment Research Advisor (Proprietor: Amit Gangrade, PAN: AVRPG8196P) and Algo System (Proprietor: Sudeep Gangrade, PAN: GDTPS4158F). The notice demands payment of Rs. 6,66,000 comprising penalty of Rs. 5,00,000 imposed by Quasi Judicial Authority vide Order No. QJA/GG/QJC/QJC-2/25931/2023-24 dated April 26, 2023, interest of Rs. 1,65,000 (calculated at 1% per month from April 2023 to December 2025), and recovery costs of Rs. 1,000. Non-payment within 15 days will result in coercive recovery measures including property attachment and sale, bank account freezing, and potential arrest and detention.

Key Points

  • Total amount demanded: Rs. 6,66,000 (Rs. 5,00,000 penalty + Rs. 1,65,000 interest + Rs. 1,000 recovery cost)
  • Original penalty imposed by QJA on April 26, 2023 in matter of Investment Research Advisor
  • Interest calculated at 1% per month from April 2023 to December 2025
  • 15-day payment deadline from receipt of notice
  • Payment methods: EFT/NEFT/RTGS to ICICI Bank A/c No. SEBIRRDPEN8972 (IFSC: ICIC0000106) or online through SEBI portal
  • Property transfers to spouse, minor child, son’s wife, or son’s minor child after April 26, 2023 deemed as defaulter’s property for recovery purposes
  • Defaulters prohibited from mortgaging, charging, leasing, or dealing with any property without Recovery Officer permission

Regulatory Changes

No new regulatory changes introduced. This is an enforcement action implementing existing recovery provisions under Section 28A of SEBI Act, 1992 read with Sections 220-227, 228A, 229, and 232 of Income Tax Act, 1961.

Compliance Requirements

For Named Entities (Investment Research Advisor and Algo System):

  • Pay Rs. 6,66,000 within 15 days of receipt through specified payment channels
  • Submit payment confirmation to Recovery Officer, SEBI at email: recoveryofficer@sebi.gov.in with details: Name of defaulter, PAN, Certificate/Recovery Certificate number, amount paid, date of payment, transaction reference/UTR number
  • Obtain Recovery Officer permission before any property transactions (mortgage, charge, lease, or transfer)
  • Any property dealings without permission will be void under Rule 16 of Second Schedule to Income Tax Act, 1961

Addresses on Record:

Investment Research Advisor (Amit Gangrade):

  • 403, Shrinath Avenue, Kibe Compound, Indore, MP - 452001
  • 27-B, Ganga Colony, Near Apna Palace, Indore, MP - 452001

Algo System (Sudeep Gangrade):

  • S/o Girdhar Gangrade, Ward 01, Shashtri Ward, 62 Mahatma Gandhi Marg, Bhikangaon, Khargone, MP - 451331
  • Office No. 401-403, 4th Floor, Fortune Business Center, 165 RNT Marg, Indore - 452001

Important Dates

  • April 26, 2023: Original QJA penalty order issued
  • December 12, 2025: Notice of Demand issued
  • 15 days from receipt: Payment deadline
  • Interest period: April 2023 to December 2025 at 1% per month
  • Property transfer cutoff: Transfers after April 26, 2023 to relatives deemed as defaulter’s property

Impact Assessment

Market Impact: Negligible. This is an entity-specific enforcement action with no implications for broader market participants or operations.

Operational Impact: High impact on named individuals/entities who face:

  • Immediate financial liability of Rs. 6,66,000
  • Severe restrictions on property transactions
  • Risk of coercive recovery measures including property attachment/sale, bank account freezing, and potential arrest if non-compliant

Recovery Measures Available to SEBI:

  1. Attachment and sale of movable property
  2. Attachment of bank accounts
  3. Attachment and sale of immovable property
  4. Arrest and detention in prison
  5. Appointing receiver for property management

Legal Framework: Demonstrates SEBI’s use of tax recovery provisions (Income Tax Act Sections 220-232 and Second Schedule) for enforcement, providing powerful coercive tools beyond traditional securities law remedies. The deeming provision for family property transfers prevents asset dissipation strategies commonly used to evade recovery.

Impact Justification

Entity-specific enforcement action against two proprietors for penalty recovery. No market-wide impact or regulatory changes affecting broader market participants.