Banned shell firms come under tax scanner; CBDT asks MCA to give details

The tax department has ordered its nodal officers to file cases against shell firms at NCLTs before the end of this month

Apprehensive that shell companies that have been struck off or are in the process of being so might dodge taxes, the Central Board of Direct Taxes (CBDT) has asked the Ministry of Corporate Affairs (MCA) and registrar of companies (RoCs) to give details relating to them.

It also asked the MCA to keep the tax department posted before striking off any company because the firm could have tax dues.

The tax department said it must have details relating to these companies, including their tax liabilities, by May 31.

In a recent communication to the MCA, the CBDT stated that RoCs should not oppose any application filed by struck-off companies for restoring themselves at the National Company Law Tribunal (NCLT) because tax proceedings are on for some of them.

In an internal communication, the CBDT said these companies should be under the tax scanner since it is a matter of revenue.

The CBDT has also written to all principal chief commissioners of income tax, expressing concerns that action against these dormant companies with tax liabilities has been limited.

The tax department has ordered its nodal officers to file cases against them at various NCLTs before the end of this month.

Sources say in a meeting of a task force on shell companies, set up by the Prime Minister’s Office, on November 30 last year, the director general of corporate affairs (DGCoA) suggested that the tax department approach RoCs for taking up the matter of reviving these companies.

It was also suggested that revenue considerations would weigh in favour of restoring them.

The MCA said these struck-off companies could file for condoning delays, submit documents and get back into the system.

Meanwhile, the government has clarified that a director who wants to reactivate his registration can do so once the NCLT proceedings are through and if he or she is not associated with any other shell company.

The RoCs had struck off 300,000 companies after it was found that those did not file their statutory returns. Directors of these companies have been prohibited from holding directorships in any other company. 

The government has moved to stop sales or transfers of immovable properties of these firms.

Apart from these companies, another lot of more than 200,000 companies has been sent notices and action will soon be taken against them.