Be vigilant with shell companies, says SIT on black money

The Special Investigation Team (SIT) on black money on Tuesday asked the law enforcement agencies including tax department to be more vigilant with regard to shell companies especially firms with same addresses.

The SIT in its third report on black money dealing with 'Shell Companies & Beneficial Ownership' noted that 2,627 people are directors on more than 20 companies in violation to Companies Act, 2013.

A total of 345 addresses have at least 20 companies operating from the same place. Also, the total number of firms sharing their address with at least 19 other companies are 13,581, the SIT report said.

As per the provisions of Section 275 of the erstwhile Companies Act, 1956, as many as 77,696 companies were found violating the norms related to directorship.

The twin strategy suggested by the SIT, headed by a retired Supreme Court judge M B Shah, is proactive in detection of creation of shell companies and deterrent penal action against persons involved in such activities.

“The SIT has requested the Ministry of Corporate Affairs to take necessary action with respect to violation of the Companies Act noted above. The SIT has further requested CBDT, CBEC and Enforcement Directorate to undertake due diligence on the Companies data referred to above,” said a Finance Ministry statement.

It has also asked the Special Fraud Investigation Office (SFIO) to mine MCA-21 data to “red flag” the indicators that may lead to violation of the norms, the statement added.