Govt. sets up inter-departmental task force to crack down on benami firms

A task force comprising members of various regulatory Ministries and enforcement agencies has been set up on Prime Minister Narendra Modi’s directions for a major crackdown on shell companies, which are used for large-scale money laundering and tax evasion. About 560 beneficiaries, who laundered Rs. 3,900 crore, and 54 chartered accountants, who were involved in the racket, have already been identified.

The task force has been constituted under the co-chairmanship of the Revenue Secretary and the Corporate Affairs Secretary to monitor the actions taken by various agencies.

Under stringent Act

The agencies will invoke the stringent Benami Transactions (Prohibition) Amendment Act against the shell companies, freeze their accounts and strike off the names of dormant companies. Disciplinary action will be initiated against professionals abetting the companies and entry operators, who are used to launder unaccounted-for incomes into the banking system for projecting them as white money.

There are about 15 lakh registered companies in India and only 6 lakh of them file their annual returns, raising suspicion that a large number of these companies are indulging in financial irregularities.

In the first major post-demonetisation move for unearthing black money, the Prime Minister’s Office on Friday held a meeting with top functionaries of the departments concerned to review the functioning of shell companies. The move comes days after the government, during a small sample analysis of such companies, found that Rs. 1,238 crore in cash was deposited in these entities during the November-December period, after demonetisation.

The Serious Fraud Investigation Office filed criminal prosecutions for cheating the national exchequer after a probe against the entry operators running a group of 49 shell companies and other proprietorship concerns.

It has been found that 559 beneficiaries laundered money to the extent of Rs. 3,900 crore with the help of 54 professionals, who have been identified.

The inputs have been shared with the Special Investigation Team, the Income-Tax Department, the Enforcement Directorate, SEBI and the Institute of Chartered Accountants of India (ICAI).

Credible deterrence

For credible deterrence, the government has adopted a “Whole of Government Approach,” through coordinated efforts and by leveraging technology. Appropriate red-flag indicators will be used to identify these companies and a database of their directors will also be built.

The database will capture Aadhar number of individual directors.

Keywords to Remember

1.     Benami Transactions (Prohibition) Amendment Act

2.     Serious Fraud Investigation Office

3.     Chartered Accountants of India (ICAI)

Notes Compiled by : Karthik SMK

Source: The Hindu