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In an income tax raid at construction materials marketplace Infra.Market, the authorities have found evidence of bogus purchases, huge unaccounted cash expenditure and accommodation entries aggregating to over ₹400 crore.
When confronted with these findings, “the directors of the company disclosed additional income of more than ₹224 crore in various assessment years, and consequently offered to pay their due tax liability,” the income tax statement said. The tax department did not mention the company’s name in the press statement, instead they called it “Pune and Thane based unicorn start-up group, primarily engaged in the business of wholesale and retail of construction material.”
Valued at $2.5 billion, Infra.Market is a Thane-based B2B marketplace for construction materials. BusinessLine has reported about the income tax raid at multiple offices of Infra.Market on March 17. The search operation took place on March 9 at 23 company premises across Maharashtra, Karnataka, Andhra Pradesh, Uttar Pradesh and Madhya Pradesh.
Responding to BusinessLine queries on latest tax authorities findings, an Infra.Market spokesperson said, “As per our company policy, we ensure adherence to the applicable tax laws, at all times. We continue to work with the department to solve all their queries related to any transaction. Since the investigation is still ongoing we will wait for the final report to comment further.”In a statement released on March 17, the spokesperson told BusinessLine that the search was related to unpaid taxes and GST by some suppliers who worked with the company.
Foreign funding
Further, the search operation revealed that the company obtained huge foreign funding through the Mauritius route by issuing shares at “exorbitantly high premiums.” In August 2021, Infra.Market had raised $125 million funding from Tiger Global at a valuation of $2.5 billion. This round was raised five months after the company raised $100 million funding from Tiger Global, Accel Partners and others at a $1 billion valuation. Other investors include Nexus Venture Partners, Evolvence India Fund, and Sistema Asia Fund among others. The company is said to have an annual turnover exceeding ₹6,000 crore.
“During the search operation, a complex hawala network of some Mumbai and Thane based shell companies, was also unearthed. These shell companies exist on paper, and were created only for the purpose of providing accommodation entries. Preliminary analysis has revealed that the total quantum of accommodation entries provided by these shell entities exceeds ₹1,500 crore,” the tax authorities added. Till now, the tax authorities have seized unaccounted cash of ₹1 crore and jewellery of the value of ₹22 lakh and are conducting further investigations.
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