This includes Rs. 2,000 notes worth Rs.10 crore.

The Income Tax Department on Thursday busted a money laundering racket and seized Rs. 120 crore in demonetised notes, new currency and gold.

According to Income Tax officials, three associates — Sekhar Reddy, Srinivasa Reddy and Prem — were involved in these transactions. Around 100 taxmen were deployed for this operation.

“Sekhar and Srinivasa are into the business of sand quarrying and construction. Prem was their agent,” said an Income Tax official from the investigations department.

Sekhar Reddy is also a member of the Tirumala Tirupati Devasthanams Trust Board.

The taxmen have unearthed Rs. 80 crore in the demonetised Rs. 500 and Rs. 1,000 notes. They also found Rs. 10 crore in the new Rs. 2,000 notes.

A senior investigating officer told The Hindu: “Gold bars weighing 100 kg were also seized.”

According to estimates, the gold bars would be worth Rs. 30 crore.

The Income Tax sleuths were surprised how the three men managed to get Rs. 10 crore in new notes when people were struggling to withdraw cash from banks and ATMs.

Asked whether any bank or its officials were hand in glove, the tax official said: “Some banks would have helped them and we are probing that angle too.”

Hotel searched

The raids were conducted at eight locations, including Anna Nagar, Thyagaraya Nagar and Teynampet.

Another source in the department said that in Teynampet, it was a hotel that was searched.

On Vijayaraghava Road at T.Nagar, the officials carried counting machines into the apartment. “The amount is huge, so we used seven counting machines,” said an investigating officer. One of the security guards at T.Nagar said Sekhar and Srinivasa hardly came to the apartment. “They come in their cars once a week or once in 10 days and leave in a few hours,” he said.

Asked whether this search was connected with any political party in Tamil Nadu, the officials refused to comment.

“The raids are still continuing and more details would be made available on Friday,” the official said.