Govt orders shuttering of 1.75 lakh shell companies found to be funneling black money: Modi

The government has deregistered and shuttered more than 1.75 lakh 'shell' or paper companies with doctored accounts based on data mined from demonetisation, Prime Minister Narendra Modi said on Tuesday, signalling the government’s intent to go after tax dodgers.

“The drive against black money has led to the discovery of many shell companies. Following demonetisation, over three lakh companies have been found, which are nothing but shell companies,” Modi said in his Independence Day speech from the ramparts of Red Fort.

“Of these, the registrations of 175,000 companies have been cancelled,” he said. These companies were used to funnel black money by obscuring the source of slush funds. As many as 400 bogus firms were found to be operating from a single address.

Modi also said that an additional individual income tax assessees have more than doubled to 56 lakh this year, from 22 lakh last year. More than 18 lakh people have so far been found whose income disclosed in tax returns are lower than their actual earnings. About 1 lakh people, who had never filed returns, have filed their tax returns for the first time this year. Benami properties worth Rs 800 crore have been identified so far, he said.

The government has been collating data on bank deposits and other transactions after November 8, 2017, when Modi announced demonetisation that outlawed Rs 500 and Rs 1,000 notes as part of a broader strategy to clamp down on corruption and black money.

The government has been collating data on concealed assets of people who are suspected to have under-reported their incomes. The income tax department has also been collating data on property deals, a source of rampant black money transactions.

Moneycontrol has learnt that as of July 14, 2017, the total number of cash deposits exceeding Rs 10 lakh in a financial year in one or more accounts was 36,06,269.

Of these, cumulative cash deposits of more than Rs 25 lakh were made in about of 4.62 lakh accounts during November 8 to December 30, 2016. Cash deposits of more than Rs 5 lakh were made in 23.87 lakh accounts during these 50 days.

Banks have also reported accounts that show “unusual activity compared with past transactions,” sudden activity in dormant accounts, and fund movement in accounts that are inconsistent, with what would be expected from declared business.