Shell Cos that Moved Money Post Note Ban to Face Strict Ac­tion

Such cos were used to laun­der nearly .₹ 4,000 crore, as per govt es­ti­mates

The Economic Times - - Companies - Our Bureau

New Delhi: The gov­ern­ment has said harsh steps will be taken against er­rant shell com­pa­nies, in which at least .₹ 1,200 crore was de­posited in cash dur­ing the de­mon­etis­tion pe­riod, and which were also used as fronts to laun­der nearly .₹ 4,000 crore.

A task force has been set up un­der the co-chair­man­ship of rev­enue sec­re­tary Has­mukh Ad­hia and cor­po­rate af­fairs sec­re­tary Ta­pan Ray to mon­i­tor the steps taken by var­i­ous en­force­ment agen­cies against the shell com­pa­nies.

“Harsh puni­tive ac­tions will be taken against the de­viant shell com­pa­nies, which will in­clude freez­ing of bank ac­counts, strik­ing off the names of dor­mant com­pa­nies and in­vo­ca­tion of Be­nami Trans­ac­tions (Pro­hi­bi­tion) Amend­ment Act, 2016,” a gov­ern­ment state­ment said.

The de­ci­sion came af­ter a meet­ing in the PMO called for a re­view of the func­tion­ing of shell com­pa­nies, and mea­sures to pre­vent their mis­use for money laun­der­ing and tax eva­sion.

Ac­cord­ing to sources, dis­ci­plinary ac­tion will also be taken against pro­fes­sion­als in­dulging in mal­prac­tices and abet­ting the en­try op­er­a­tors of the shell com­pa­nies.

The Se­ri­ous Fraud In­ves­ti­ga­tion Of­fice has filed crim­i­nal pros­e­cu­tion against en­try op­er­a­tors run­ning a group of 49 shell com­pa­nies and other pro­pri­etor­ship con­cerns, the gov­ern­ment said in the state­ment, adding that the wind­ing-up process of th­ese com­pa­nies has al­ready been ini­ti­ated.

Be­sides, in a small sam­ple anal­y­sis of shell com­pa­nies, it was found that .₹ 1,238 crore in cash has been de­posited in th­ese en­ti­ties dur­ing Novem­ber-De­cem­ber pe­riod.

“It has been found that 559 ben­e­fi­cia­ries have laun­dered money to the ex­tent of .₹ 3,900 crore with the help of 54 pro- fes­sion­als who have been iden­ti­fied. Th­ese in­for­ma­tion has been shared with SIT, In­come Tax De­part­ment, En­force­ment Direc­torate, Sebi and The In­sti­tute of Char­tered Ac­coun­tants of In­dia (ICAI),” the state­ment said. The In­come Tax De­part­ment has re­opened com­pleted as­sess­ment in th­ese cases while the En­force­ment Direc­torate has ini­ti­ated ac­tion un­der the Preven­tion of Money Laun­der­ing Act (PMLA), 2002. The ICAI has also ini­ti­ated dis­ci­plinary pro­ceed­ings against its mem­bers. The gov­ern­ment has also de­cided that ap­pro­pri­ate red flag in­di­ca­tors will be used to iden­tify shell com­pa­nies, and a data­base of such com­pa­nies and their di­rec­tors will be built by pulling in in­for­ma­tion from var­i­ous agen­cies. The data­base will also cap­ture Aad­har num­bers of in­di­vid­ual di­rec­tors of the com­pa­nies.

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