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Shell firms: PAN, audit reports under government lens

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New Delhi : The income tax department and the ministry of corporate affairs (MCA) have signed a pact to regularly share data, including PAN and audit reports of firms, to crack down on shell companies, the government said Thursday. The pact aims at curbing the menace of money laundering, black money and misuse of corporate structure by shell companies, a finance ministry statement said. The MoU for Automatic and Regular Exchange of Information between was signed between the MCA and Central Board of Direct Taxes (CBDT) on September 6 and took effect the same day, it said.

Under the pact, tax authorities will now relay audit reports of corporates and specific information from their I-T returns along with PAN data to MCA. Besides, financial statements filed by corporates with the Registrar of Companies, returns of allotment of shares and statement of financial transactions received from banks will now be shared between the two departments. “A Data Exchange Steering Group has also been constituted for the initiative which will meet periodically to review the data exchange status and take steps to further improve the effectiveness of the two agencies,” it added. The MoU will ensure that both MCA and CBDT have seamless PAN-CIN (Corporate Identity Number) and PAN-DIN (Director Identity Number) linkage for regulatory purposes.

       “The information shared will pertain to both Indian corporates as well as foreign corporates operating in India,” the statement said.      The data will also be shared for the purpose of carrying out scrutiny, inspection, investigation and prosecution. The government has already said that over 1.06 lakh directors will be disqualified for their association with shell companies. The MCA is in the process of cancelling the registration of 2.09 lakh companies that have not been carrying out business activities for a long period.


  Besides, banks have been asked to restrict operations of these companies’ bank accounts by their directors or their authorised representatives. Following deregistration of over two lakh companies currently there are about 11 lakh companies with active status.

Forensic audit of 3 firms

Markets regulator Sebi has ordered forensic audit of three firms — Trinity Tradelink, Info-Drive Software and Edynamics Solutions — which figure among 331 suspected shell companies that are under its scanner. These are in addition to Sebi ordering forensic of four other such firms — IRIS Mediaworks, Hit Kit Global Solutions, Kavit Industries and GV Films.

 

Fight against black money

  • Now, income tax department and the ministry of corporate affairs (MCA) have signed a pact to regularly share data, including PAN and audit reports of firms, to crack down on shell companies
  • The information shared will pertain to both Indian corporates as well as foreign corporates operating in Indiadirect tax and indirect tax, officials said
  • Earlier, govt has said that over 1.06 lakh directors would be disqualified for their association with shell companies