{"id":7526,"date":"2019-06-28T16:03:23","date_gmt":"2019-06-28T16:03:23","guid":{"rendered":"https:\/\/sunkrish.com\/?p=7526"},"modified":"2019-06-28T17:09:17","modified_gmt":"2019-06-28T17:09:17","slug":"income-tax-department-eyes-over-rs-100-bn-from-struck-off-firms","status":"publish","type":"post","link":"https:\/\/sunkrish.com\/index.php\/2019\/06\/28\/income-tax-department-eyes-over-rs-100-bn-from-struck-off-firms\/","title":{"rendered":"Income tax department eyes over Rs 100 bn from ‘struck off’ firms"},"content":{"rendered":"
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\"\"<\/a>The income-tax (I-T) department is estimating\u00a0tax recovery\u00a0of over Rs 100 billion from companies that have been struck off from records of the\u00a0Registrar of Companies\u00a0(RoC) last year.<\/p>\n<\/div>\n

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The tax department is in the process of filing a petition before the\u00a0National Company Law Tribunal\u00a0(NCLT) for restoration of registration in as many as 50,000 such companies.<\/p>\n<\/div>\n

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The RoCs had struck off 300,000 companies after it was found they had not filed their statutory returns. Directors of these companies have been prohibited from holding directorships in any other company.<\/div>\n
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The move follows Central Board of Direct Taxes\u2019 (CBDT) directive to identify, process and file petition to restore these companies by August 31. The board also asked the\u00a0Ministry of Corporate Affairs\u00a0(MCA) not to oppose the restoration application in the tribunal, as such a move would refrain them from launching\u00a0tax recovery\u00a0proceedings against these firms.<\/div>\n
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\u201cSeveral of these companies are restricted to operate their bank accounts and movable and immovable properties until they are restored. The restoration will compel these firms to make relevant disclosures of credentials under Companies Act, and then accordingly tax proceeding will be initiated for tax recovery,\u201d said an I-T official.<\/div>\n
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Tax industry experts, too, believe that restoration is essential to recover taxes due from these firms.<\/p>\n<\/div>\n

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\u201cThe tax department is contesting the strike off of so-called companies as in several cases there would be pending tax demands that cannot be recovered if the company is not active. Also, even in cases where genuine companies have been struck off, with the best intentions, the companies would not be able to pay the tax dues as all their assets including bank accounts would be non-operational,\u201d said Amit Maheshwari, partner at\u00a0Ashok Maheshwary & Associates LLP.<\/p>\n<\/div>\n

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The I-T department is of the view that these companies abused their corporate structure by creating multi-layering during\u00a0 demonetisation\u00a0for cash deposits. I-T probe also reveals that many individuals have used these firms for siphoning money or converting undisclosed cash to legitimate money post the note ban.<\/p>\n<\/div>\n

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Official data say that 35,000 companies deposited and withdrew cash worth over Rs 170 billion after the note ban, through about 60,000 bank accounts.<\/p>\n<\/div>\n

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It was noticed that the accounts that had negligible balance on November 8, 2016, have seen significant cash deposits and withdrawal during this period.<\/p>\n<\/div>\n

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According to people with knowledge of the matter, along with restoration, the I-T department will also start issuing notices to these firms under Section 179 of the I-T Act, which makes the company\u2019s directors\/promoters liable to pay dues on behalf of the firm, without adjudication by the court.<\/p>\n<\/div>\n

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Further,\u00a0tax recovery\u00a0officers have been asked to conduct survey operations on select firms where the tax demand is high. In cases where assets or bank accounts are lying abroad, the department will seek the foreign tax authority\u2019s assistance to recover tax claims with the provisions in the relevant treaty, said another senior official.<\/p>\n<\/div>\n

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Sources said that in a meeting of a task force on shell companies set up by the Prime Minister\u2019s Office, on November 30 last year, the director general of corporate affairs (DGCoA) had suggested that the tax department approach RoCs for taking up the matter of reviving these companies. It was also suggested that revenue considerations should weigh in favour of restoring them.<\/p>\n

Apart from these companies, another set of above 200,000 firms have been sent notices and action will soon be taken against them. However, the tax department wants\u00a0MCA\u00a0to keep them posted before striking off any company, since there could be tax dues.<\/p>\n<\/div>\n

\u00a0Taxing Affair<\/strong><\/div>\n