55 thousand masked companies has been canceled! Why?

The government on Friday, said that registration of about 55 thousand masked companies has been canceled in the second phase of efforts to curb illegal flow of money and these are being scrutinized by issuing notice to several companies.
In the first phase, the Ministry of Company Affairs has canceled the registration of more than 2.26 lakh masked companies who have not filed financial information or annual returns for two years or more.

"In the second phase, we have already canceled registration of about 55 thousand companies and many companies are under investigation," said Ministry of Corporate Affairs P.P. Chaudhary.
He said that the government does not want to misuse the corporate structure by manipulating money, funding drugs or any other illegal activities. He said that the Serious Fraud Investigation Office (SFIO) and other enforcement authorities are investigating the case of mask companies and action is being taken if required.

The government had told in June that it has identified 2.25 lakh companies and 7,191 LLPs, which did not file an ITR for the financial year 2015-16 and 2016-17. The government then said that the registration of these companies can be canceled in the current financial year itself.