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4. Mr. Modi learned Senior Advocate and Mr. Chauhan, learned counsel for appellants and Mr. Mehta learned Senior Advocate for SEBI have extensively argued before us on behalf of their respective clients.

5. By the impugned order dated 12.01.2015 the AO of SEBI has imposed penalty on the appellants on ground that the appellants have committed the following violations:-

a) Appellants have fraudulently in complicit with Suryamukhi indulged in round tripping of funds and ultimately siphoned of ` 8 crore from the IPO proceeds in the guise of repaying the ICDs.

For all the aforesaid reasons, the AO has deemed it fit to impose penalty on each appellant in all aggregating to ` 11.80 crore.

6. In our opinion, decision of the AO that the appellants have indulged in round tripped of funds deserves to be upheld in view of facts and for the reasons set out herein below:-

a) During May-July 2011 the Board of Directors of the company resolved to borrow funds through ICDs from several entities including Shitalnath, Blue Print, Konark, Shardaraj and Sunshine.

n) Thus, funds received from Shitalnath were rotated through Suryamukhi and the four connected entities viz., Konark, Sunshine, Blue Print and Shardaraj who had common directors and had common address. In these circumstances, the AO was justified in holding that the appellants had indulged in round tripping of funds.

7. Decision of the AO that ` 8 crore paid from the IPO funds to the four connected entities towards repayment of the ICDs amounts the siphoning of the IPO funds cannot be sustained for the following reasons:-

12. To sum up,

a) Decision of the AO that the appellants have indulged in round tripping of funds is upheld.

b) Decision of the AO that receipt of ` 8 crore by way of ICDs from the four connected entities was a fictitious and illusory ICD and hence repayment of ` 8 crore to the four connected entities amounts to siphoning of IPO funds cannot be sustained.