Rs 13,300 cr transacted via 1,155 shell companies in last 3 yrs: I-T dept

The Income Tax Department has detected over 1,155 shell companies in the last three years through which non-genuine transactions of more than Rs 13,300 crore were carried out, Parliament was informed on Friday.

"During last three financial years (2013-14 to 2015-16), investigations by the Income Tax Department have led to detection of more than 1,155 shell companies/entities which were used as conduits by over 22,000 beneficiaries," Minister of State for Finance Santosh Kumar Gangwar told the Lok Sabha in a written reply.

"The amount involved in non-genuine transactions of such beneficiaries was more than Rs 13,300 crore.

"Criminal prosecution complaints have been filed by the Income Tax Department against 47 persons. Action against such companies, the beneficiaries of non-genuine transactions and other persons associated there with under the direct taxes law is a continuous process," he added.

Enforcement Directorate conducted nationwide searched in 16 states on April 1 in respect of shell companies and related professionals who were behind their creation and operation.

"The CBI has registered 30 cases against 201 shell companies during the last 3 years — 2014, 2015, 2016 and the current year till February 28," said Gangwar.

Out of these, charge-sheets have been filed in 17 cases, he added.

With a view to have consolidated relevant information at one place and based upon inputs from all law enforcement agencies, the Serious Fraud Investigation Office (SFIO) has undertaken the exercise of preparing comprehensive digital database of shell companies and their associates that were identified by various law enforcement agencies.

As on July 12, the Corporate Affairs Ministry has removed 1,62,618 companies from the Register of Companies by following the due process under Section 248 of the Companies Act, 2013, Gangwar said.

Further, the exercise of identification of the directors of the companies defaulting in filing of financial statements or annual returns for continuous period of three financial years has been undertaken as part of the ongoing process for disqualification for reappointment as director in that company or in other company for a period of five years, he said.

A 'Task Force on Shell Companies' under the joint chairmanship of Revenue Secretary and Secretary, Corporate Affairs was constituted in February for effectively tackling the malpractices by shell companies/ponzi companies/'khoka' companies in a comprehensive manner.

Other members of the Task Force are from the Department of Financial Services, Central Board of Direct Taxes, Central Board of Excise and Customs, Central Bureau of Investigation, Enforcement Directorate, Serious Fraud Investigation Office and Financial Intelligence Unit.

The Task Force has held five meetings so far. Decisions taken by the Task Force focusing upon most effective and expeditious actions against shell companies and associated persons by the agencies concerned have duly been taken forward, he said.

The government had requested the Reserve Bank of India (RBI) for freezing of accounts of the defaulting companies who have long exceeded the stipulated time limit, for filing of financials statements and returns, under the Companies Act.

The RBI has informed that, at present, it has no powers to freeze such accounts. Moreover, freezing orders issued by the government as per the provisions of the relevant statutes such as Unlawful Activities Prevention Act or Foreign Contribution Regulation Act, are communicated by the RBI to the banks.

Further, the government has requested the RBI to circulate the details of defaulting companies to all the banks with the advice to exercise enhanced due diligence while dealing with these companies, said Gangwar.