This includes unaccounted cash expenditure and accommodation entrances, totaling over Rs. 400 crores; disclosure of additional income of more than Rs. 224 crore by the group and alleged accommodating inflows through shell companies of Rs. 1,500 crore.
The department had raided the Pune and Thane-based unicorn startup group on March 9 at 23 premises, including those in Maharashtra, Karnataka, Andhra Pradesh, Uttar Pradesh and Madhya Pradesh. The group has a pan-Indian presence with an annual turnover. exceeding Rs. 6,000 crores.
While the statement did not identify the startup evaluator, sources said the unicorn group was under investigation on Infra Market.
In response to ET’s questions, an Infra Market spokesperson said, “We continue to cooperate with authorities and provide all necessary information to the department to resolve any questions they have regarding their research. We continue to work with the department to resolve all of their business-related issues. We will await the release of the final investigation report to comment further. As the case is pending, we do not wish to comment further.
The ongoing investigation comes at a time when compliance and governance issues have surfaced at some well-funded startups that are growing at breakneck speed. In the said case, the department seized a large number of prosecution evidence in the form of paper documents and digital data.
“…This evidence revealed that the group booked bogus purchases, made huge unrecorded cash outlays and secured accommodation entries, totaling over Rs. 400 crores,” the press release reads.
The ministry also recorded the statements of some of the group’s board of directors who were targeted during the search operations, they allegedly accepted under oats an additional unaccounted transaction of Rs 224 crores and agreed to pay taxes on the same. “Faced with evidence, the directors of the group…. disclosed additional income of more than Rs. 224 crore over various valuation years, and consequently offered to pay their tax debt due”.
The department is probing the group for its foreign funding via the Mauritian route, which was raised by issuing shares at an exorbitant premium.
The raids come at a time when Infra.Market has reportedly staged a funding round from new and existing investors, seeking to raise nearly $450 million at a valuation of over $4 billion. Infra.Market entered the unicorn club in January 2021 when it raised $100 million in a round led by Tiger Global. It again raised $125 million from Tiger Global, catapulting its valuation to $2.5 billion.
The survey also found accommodating entries using shell companies and an intricate network of hawala “These shell companies (based in Mumbai and Thane) exist on paper and were created solely for the purpose of providing accommodation entries. Preliminary analysis has revealed that the total amount of accommodation entries provided by these fictitious entities exceeds Rs. 1,500 crore,” the press release adds.
During the search operations, unaccounted cash of Rs. 1 crore and jewelry worth Rs. 22 lakh were seized.