The law provides for imprisonment of three to 10 years in case of fraud and can come with a penalty that is equal to the value of the offence. A "fraud" has been defined to include acts of omission and concealment.Sources said that the registrar of companies, which had de-registered the firms, will look into the issue and also examine the source of funds through a thorough investigation of the companies. The government suspects that many such companies were used to deposit cash during demonetisation, which was later withdrawn.Preliminary data accessed by the tax department had revealed Rs 4,600 crore routed through bank accounts of less than 6,000 companies. Some of the companies had over 900 bank accounts. They, however, pointed out that there was a spurt in the number of companies registered during the so-called boom years for the Indian economy.

Source: Times of India October 22, 2017 22:18 UTC