New Delhi, July 27, 2017

The tax authorities will now relay audit reports of corporates and specific information from their I-T returns along with PAN data to the Ministry of Corporate Affairs (MCA), as the government plans to crack down harder on shell companies.

The MCA has already come down heavily on shell companies by cancelling the registrations of over 1.62 lakh companies for not filing financial statements for the immediate two preceding fiscals.

The Central Board of Direct Taxes (CBDT) — the apex policy making body of the I-T department— in an order has asked the Principal Director General of Income Tax (Systems) to share “bulk information” to the MCA. This means that information like the Permanent Account Number (PAN) data of corporates, their Income Tax returns (ITRs), audit reports and statement of financial transactions (SFT) received from banks relating to corporates could be shared. Also the tax department would share identified PAN Challan Identification Number (CIN) as well as PAN Director identification number (DIN) with the MCA.

The Registrar of Companies (RoCs) has removed 1,62,618 companies from the register as on July 12, 2017 after following the due process under Section 248 of the Companies Act, 2013. This section provides powers to the RoC to remove the name of a company from the register on various grounds including not carrying out any business for two preceding financial years.

Out of the 1,62,618 companies that have been struck-off the register, 33,000 companies were cancelled by RoC (Mumbai). RoC (Delhi) has deleted 22,863 companies from the register and 20,588 firms were de-registered by RoC (Hyderabad).

To facilitate the process of furnishing information, CBDT would enter into a Memorandum of Understanding (MoU) with the MCA to detail “the mode of transfer of data, maintenance of confidentiality, mechanism for safe preservation of data, weeding it out after usage and information which shall be furnished by MCA to I-T Department”.

The MoU also includes details about the frequency and timeline for furnishing information which shall be decided by Principal Director General of Income-Tax (Systems) in consultation with MCA.

[The Hindu Business Line]