New Delhi, October 16: The Income Tax department has seized Rs 94 crore in cash as well as gold and diamond jewellery worth Rs 8 crore and 30 luxury watches following raids on government contractors and real estate developers in Karnataka and some other states, the CBDT said on Monday. The searches were launched on October 12 and 55 premises were covered by the department in Bengaluru and some cities in neighbouring Telangana and Andhra Pradesh as well as in Delhi.

"The search has resulted in seizure of unaccounted cash of approximately Rs 94 crore and gold and diamond jewellery of over Rs 8 crore, aggregating to more than Rs 102 crore," the Central Board of Direct Taxes said in a statement. "Further, a cache of about 30 luxury wristwatches of foreign make were unearthed from the premises of a private salaried employee, not engaged in the business of wristwatches," it said without identifying the accused entities. IT Raid in Karnataka: Over Rs 50 Crore Cash Recovered in Income Tax Raids on Contractor and Others, Says Official.

A war of words on the matter has broken out between Karnataka's ruling Congress and the opposition BJP following the recovery of the "unaccounted" cash. BJP state president Nalin Kumar Kateel said the money was linked to the Congress. Chief Minister Siddaramaiah has denied the allegation as baseless.

The CBDT frames policies for the Income Tax department. It alleged that a large amount of "incriminating" evidence in the form of loose sheets, hard copy of documents and digital data was also seized after the raids on the entities and their associates.

The modus-operandi of "tax evasion" detected indicates that these contractors were involved in reducing their income by inflation of expenses by booking bogus purchases, non-genuine claim of expenses with sub-contractors and claiming ineligible expenses, it said.

The "irregularities" detected in utilisation of contract receipts has resulted in generation of "huge unaccounted cash" and creation of "undisclosed" assets, according to the CBDT. IT Seizes Rs 42 Cr in Raid at Former Contractor's Residence in Bengaluru.

"Evidence indicating inflation of expenses in the form of discrepancies in goods receipt note (GRN) validation have been unearthed during the search and evidence of huge discrepancies in documentation related to purchases booked and actual physical transport of goods have also been unearthed, with regard to bogus transactions with sub-contractors, some of whom were also covered during the search," the statement said.

These contractors, it claimed, were also involved in booking expenses for non-business purposes. It said evidence related to "liaison expenses" was seized and large-scale unaccounted cash transactions, not found recorded in the account books, have also been found during the search from the premises of the assessees, sub-contractors, and associates, including certain cash handlers.