MINI CASE 2: FOUL PLAY BY SOUNDCRAFT INDUSTRIES’ PROMOTER
The Ministry of Company Affairs, on 24 January 2006, proposed to initiate prosecution against Raj Basantani, promoter of SoundCraft Industries Ltd and its auditors. The ministry decided to prosecute the auditors after consulting with the Institute of Charted Accountants of India (ICAI) and Serious Fraud Investigation Office (SFIO). The main business of SoundCraft Industries Ltd. on paper was export of diamond and local trading of diamond. The company reported INR 2,110 million worth of diamonds on its books as stock. Income tax raids, however, confirmed that there was no stock. The company was found to misrepresent the financial position and collect huge amounts of deposits (worth INR ...
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