The Income Tax Department detected "unaccounted" income of Rs 175 crore after it raided two groups of civil contractors in poll-bound Tamil Nadu, the CBDT said on Thursday.
It said "unaccounted" cash of Rs 3 crore was seized after the searches were conducted on Wednesday at 18 premises in Madurai and Ramanathapuram districts.
The action was undertaken, the CBDT said, on the basis of intelligence inputs "about the existence of cash, which is likely to be distributed for election purposes."
Tamil Nadu will have a single-phase polling for its 234-member assembly on April 6.
As a result of the search, unaccounted income of Rs 175 crore has been detected, it said.
"Other findings include the identification of the fact that the assessee is booking bogus expenses under various heads to reduce the profits."
"The declared profits were less than 2 per cent of the turnover, when in actual accounts the profits exceeded 20 per cent," the CBDT said in a statement.
The Central Board of Direct Taxes (CBDT) frames policy for the tax department.
"Similarly, more than 100 sub-contractors were introduced to book expenses to meet illegal payments, and payments for property purchases."
"These sub-contractors introduced, had filed returns of income from the same IP address, and for the first time ever, showing only this receipt as their sole income," it said.