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Government to Crackdown on 17,000 Cos for Funneling Dirty Money after Demonetization

Moneycontrol.com reported that a government dossier, prepared by the government’s financial watchdog agencies, has identified 16,794 companies as the main conduits for funneling money after the demonetisation of high denomination notes last year.

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Updated:August 28, 2017, 5:15 PM IST
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Government to Crackdown on 17,000 Cos for Funneling Dirty Money after Demonetization
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New Delhi: The government will soon crackdown on about 17,000 companies including some listed investment advisory firms, real estate businesses, hotels, grain mills, jewelry traders and film production and media houses for funneling thousands of crores of undisclosed money over the last several months.

Moneycontrol.com reported that a government dossier, prepared by the government’s financial watchdog agencies, has identified 16,794 companies as the main conduits for funneling money after the demonetisation of high denomination notes last year.

Moneycontrol has reviewed the dossier running into hundreds of pages that four government agencies—the Serious Frauds Investigation Office (SFIO), the Income Tax department (ITD), the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED)—have prepared based on payment records, tax returns, intelligence bureau inputs, foreign exchange deals and banks’ suspicious transactions reports.

The dossier lists 43 food companies, nine rice mills, five flour mills, 17 oil traders, 860 real estate, construction and infrastructure companies, about 150 steel and metal firms, more than 40 advertising and multimedia firms, two news media organisations, dozens of gems and jewelry traders, two broadcast houses and thousands of financial advisory and stock broking companies whose financial transactions show a mismatch.

ITD sleuths have found that 14,247 of these companies have disclosed income in their tax returns far lower than what their bank records and spending patterns suggest.

The government has said that after demonetization cash deposits of more than Rs 25 lakh were made in about of 4.62 lakh bank accounts from 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.

The government has signaled its intent to go after tax dodgers. Earlier this month, Prime Minister Narendra Modi said that the government has deregistered and shuttered more than 1.75 lakh `shell’ companies with doctored accounts based on data mined from demonetisation. As many as 400 bogus firms were found to be operating from a single address.

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