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The Income Tax Department on Thursday said that it carried out search and seizure operations on March 3 on two groups of civil contractors in southern Tamil Nadu.

These searches and surveys were conducted in 18 premises mainly in Madurai and Ramnad districts.

The department said that searches were mounted on the group based on intelligence inputs about the existence of cash, which is likely to be distributed for election purposes.

The action resulted in the finding of unaccounted cash of Rs 3 crore which was seized, the department said.

Other findings if the I-T operation 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. Similarly, more than 100 sub-contractors were introduced to book expenses to meet illegal payments, and on-money payments for property purchases," a Finance Ministry release on the issue said.

These subcontractors 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, the release added.

As a result of the search, unaccounted income of Rs 175 crore had been detected and unaccounted cash of Rs 3 crore has been seized. Further investigations are in progress.