Shell companies as black money channels: ED raids tax professionals, CAs in Delhi

New Delhi - The Enforcement Directorate (ED) on Thursday conducted massive searches against tax professionals and chartered accountants (CAs) here as part of its ongoing operation against shell companies, an official said.

The agency took the step under Prevention of Money Laundering Act to unearth the black money being channelled by the tax professionals using shell companies.

Separate ED teams raided over two dozen premises of chartered accountants, company secretaries and other tax professionals in west Delhi's Karol Bagh, Model Town and Azadpur; east Delhi's Dilshad Garden and Laxmi Nagar; central Delhi's Bahadur Shah Zafar Marg; and north Delhi's Rana Pratap Bagh and Dariba Kalan.

During the searches, the ED officials recovered incriminating documents and digital hard disks relating to beneficiaries' transactions.

Representational image

Representational image

"It is alleged that some tax professionals and chartered accountants channelled thousands of crores of rupees through shell companies. They also misused the banking channels in the financial fraud," the Enforcement Directorate official said.

Of the multiple raids across the national capital, the agency searched six premises of CAs in Delhi in connection with benami transactions involving over Rs 200 crore using shell companies formed by Jain brothers -- Surendra Kumar Jain and Virendra Jain -- who were arrested on 20 March.

The agency on 11 February registered a case following a criminal complaint filed by the Serious Fraud investigating Office (SFIO) in Delhi's Tis Hazari courts against the Jain brothers, Jagat Project Pvt Ltd and others for criminal conspiracy, cheating and forgery, and under provisions of the Companies Act, among others.

"Jain brothers are accused of providing accommodation entries by accepting funds from their beneficiaries through mediators and converting it into share premium transactions in the beneficiary company," the official said.

The SFIO in its investigation report also made the reference of the Income Tax assessment order, through whom the Jain brothers laundered Rs 3,790 crore for the beneficiaries from financial years 2004-2005 to 2010-2011, he said.

"The SFIO report is based on the cash-book seized from the residence of Jain brothers."

Jain brothers laundered Rs 561 crore for the 559 beneficiaries in the financial year 2009-10 with the help of 56 mediators, including CAs and company secretaries, the official added.

The SFIO has also filed criminal complaints against 11 companies, controlled and managed by Jain brothers, which were also used for laundering money of various other beneficiaries.

The Enforcement Directorate had also provisionally attached holding of Divine Infracon Pvt Ltd to the extent of Rs 64.70 crore in a hotel property located in west Delhi's Dwarka.

The agency's motive was to find out the funds channelled by the shell firms being run by such professionals through money laundering and Hawala channels, said another official, adding that the action was part of the country-wide operation.

Earlier this month, the agency conducted searches at 500 shell companies suspected to be channelling black money.

On April 1, the agency conducted raids at 100 premises in 16 states against 300 shell companies.

The shell companies are non-trading firms set up with nominal paid-up capital and used as a vehicle for various financial manoeuvrings or kept dormant for future use for some other purpose.


Published Date: Apr 14, 2017 08:45 am | Updated Date: Apr 14, 2017 08:45 am

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