Updated

New Delhi, Dec 1: In the biggest seizure of cash in new currency post demonetisation, the Income Tax department today confiscated over Rs 4 crore during searches in a dozen premises in Bengaluru and other locations.

Officials said the searches were launched on the premises of two engineers, working with the state government, and some "connected persons". A team of over 50 I-T sleuths and police personnel launched operations early morning and searched premises in Bengaluru, Chennai and Erode (Tamil Nadu).

"During the course of searches Rs 4.7 crore cash in new denominations of Rs 2000 and 0.3 crore in old/smaller denominations totalling Rs 5 crore and 7 kg bullion worth approximately Rs 2 crore were found in a flat owned by a civil contractor.

"The new notes and bullion are learnt to have been obtained by exchange of demonetised notes by payment of commission of an engineer and a contractor," the Central Board of Direct Taxes (CBDT), the policy-making body of the tax department, said in a statement here.

The sleuths also seized some notes of Rs 100, demonetised notes of Rs 500 and a few gold biscuits during the operation, it said, adding the department had to call in note counting machines and additional staff to ascertain the value of the cash.

What has surprised the tax authorities is the sheer amount of new currency stashed by these individuals at a time when new notes are not available to the common public which is queueing up to withdraw even small amounts from their accounts.

"This is the highest seizure of the new currency in the country post the currency ban on November 8. Some entry operators and bankers in Karnataka and Tamil Nadu are under the scanner. Such volume of new currency cannot be obtained without connivance of bank officials," a senior I-T department official said.

The department has also found a number of identity cards of various individuals from the searched premises which could have been used to illegally change the old currency with new ones.

Taxman has also seized documents of property purchase from the premises, even as they found a battery of luxury cars parked in these locations. "The investigation is still in progress and the search action is still continuing in ten premises," the CBDT statement added.

Only yesterday, the Enforcement Directorate (ED) had seized Rs 10 lakh cash in new notes of Rs 2000 from the premises of a Kolkata-based doctor. The agency conducted nationwide search operations yesterday at 40 locations and seized about Rs 1 crore in new notes.

Both the I-T department and the ED, along with other enforcement agencies and police, are undertaking these operations after reports of instances of illegal exchange of old currency and stashing of new currency notes to perpetrate hawala and money laundering like activities.

Close aides of CM, minister?

Though the names of the people who were raided were not officially announced, it is learnt that the I-T officials raided the residence of officer Chikkarayappa, who is said to be close to the chief minister and the residence of Jayachandra, said to be close to PWD miniser H C Mahadevappa. Recovery of over six crore rupees in cash, of which Rs 4.7 crore was in the form of newly issued currency notes, surprised the officials.

The residence of Chikkarayappa, who heads Cauvery Neeravari Nigam Ltd, at Banaswadi, and that of Jayachandra, who is close to minister, Mahadevappa, at Sanjay Nagar here, were simultaneously raided. Jayachandra is the project officer of Karnataka State Road Development Corporation. Sources say that the attention of IT officers turned towards Jayachandra, after his son, Trijesh, recently bought Lamborghini car by paying its entire cost of eight crore rupees in cash. In addition to the said car, a Porche car valued at Rs 12 crore rupees, which also stands in the name of Trijesh, was seized by the IT officials.

Residences of contractors, Ibrahim Shariff, Ramalingam, Chakravarthy, and Nazeer Kannan, who too are said to be close to Jayachandra, were raided and large quantity of unaccounted cash and documents were recovered, it is learnt. The officials, who are still verifying the documents, are yet to announce the total value of such assets found during these raids.

Lokayukta officials said that the residence of S C Jayachandra was raided in 2008 and a case pertaining to possession of assets disproportionate to known sources of income was registered. But, in spite of repeated follow up letters, successive governments failed to give clearance to prosecute him, they pointed out. The officials said that money power, connections of contractors and closeness of ministers came to the rescue of people found to be having huge unaccounted assets. Chikkarayappa and Jayachandra had worked together in the past and have a close bond since long, it is said.

Efforts made by media persons to contact Chikarayappa and Jayachandra failed as both their cellphones were found to have been switched off.

With PTI Inputs