Of the 331 ‘shell’ companies recently flagged by the Securities and Exchange Board of India (Sebi), nearly 150 are from the West Bengal capital alone.
The capital markets regulator directed stock exchanges on Monday to immediately restrict trading in these firms, identified as “shell companies” by the Ministry of Corporate Affairs in consultation with the Serious Fraud Investigation Office (SFIO) and the I-T department.
The I-T department had initiated investigations into shell companies in Kolkata about three years ago, and much of the probe has been completed by now. A large number of cases pertaining to such firms are now pending with appellate authorities.
Since the beginning of this year, particularly after demonetisation, the I-T department has further tightened its noose around shell companies in the city.
Meanwhile, the department has also initiated action against chartered accountants involved in promoting shell companies. It is also in touch with Institute of Chartered Accountants of India (ICAI) regarding the issue.
A large number of accounting professionals involved in creating shell companies are entry operators. According to informal estimates, about 75 per cent of the professionals involved in opening shell companies in Kolkata are not even professional CAs.
Earlier this year, Arijit Pasayat, vice-chairman of a Special Investigation Team (SIT) appointed by the Supreme Court, visited Kolkata to undertake a coordinated action against shell companies.
The reason why Kolkata had been a preferred choice of shell companies is said to be easy availability of accounting professionals, with an established network to set up a shell company.
Last year, the Prime Minister’s Office formed a task force to prevent the formation of shell companies. In a statement, it had said a sample survey found Rs 1,238 crore in cash was deposited in these entities during November-December. And, that 559 beneficiaries laundered money to the extent of Rs 3,900 crore with the help of 54 professionals.