Rs 2,000 and 500 notes constitute 97 per cent of the Rs 4.13 crore that the Income Tax Department has seized in poll-bound Karnataka till now, authorities said on Saturday.
The revelation comes in the backdrop of a cash crunch being witnessed across various regions in the country as a number of ATMs had gone dry.
The Central Board of Direct Taxes (CBDT), that makes policy for the ITD, had recently asked its probe wings in the country to check these instances.
The results of this exercise in Karnataka are now known.
"Though the election process is just beginning, the investigation wing of the department in Bengaluru has already seized cash of Rs 4.13 crore and gold jewellery of 4.52 kilogrammes valued at Rs 1.32 crore.”
"The interesting fact in these seizures is that the majority of the cash is in the denominations of Rs 2,000 and Rs 500. Out of the total cash seized, an amount of Rs 4.03 crore is in these higher denominations," the department said in a statement.
The seizures have been made since the Election Commission announced on March 27 the schedule for the Assembly election in Karnataka.
It said that these revelations have come at a time "when people are finding it difficult to withdraw the money from the banks/ATMs" and that this development is sure to raise eyebrows. "Among the cash seizures, Bengaluru city tops the list with the figure of Rs 2.47 crore, followed by Bellary at Rs 55 lakh," it added.
It said that while there are reports of cash shortage in some parts of the country, cash "seems to be flowing" in the poll-bound state.
It said that as part of the enhanced alertness in the wake of the single-phase polling scheduled on the May 12, the investigation wing of the department in Karnataka and Goa has "stepped up its surveillance and monitoring activities."
"A high level of alertness is being maintained in airports and railway stations," it said.
"A person carrying Rs 16.5 lakh was intercepted at one of the airports. The source of the cash could not be explained by him. Follow-up action was taken in Mumbai and cash of Rs 37 lakh was found and seized from the Mumbai premises," it said.
A total seizure of "unaccounted" cash amounting to Rs 53.50 lakh was made in the case, it said.
In another instance, it said, a contractor in one of the districts of the state was searched and it was found that "he had made payments to another person who, in turn, had withdrawn cash from the amount transferred."
"The cash withdrawn of Rs 55 lakh was seized and the contractor also admitted to concealment of Rs 16 crore," it said.
The department said it also recovered "household articles worth Rs 9.51 crore intended for distribution (during polls) that was found in a warehouse near Mysore."
"After careful investigation, it has been established that this was meant for distribution (as illegal inducements). The district election officer concerned has been alerted to ensure that these items are not actually distributed during the election process," the tax department said.
In another case in Karnataka, it said, cash of almost Rs 50 lakh was seized from a private person.
The department has set up a 24 x 7 control room in the state capital to receive election-related complaints from the general public and other agencies of Karnataka, and strike teams have been formed in all the districts to act upon any information received.
"The department is into intelligence gathering at various places of public transport and its air intelligence units are keeping close watch in all the airports in the state of Karnataka and also in the neighbouring state of Goa," it said.
The probe wing of the department, it said, has also "gathered details of all contract payments made in the last quarter of the completed financial year and is making a comparison with previous years for identifying the abnormal cases."
This data is being co-related with all bank transactions and available cash withdrawal intelligence, it added.
The counting of the votes for the 224-member Assembly is scheduled on May 15.
The EC has appointed a number of election expenditure observers in Karnataka, apart from other Central observers, to keep a check on black money and illegal inducements used to bribe voters.