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
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.