The Income Tax Department has detected alleged irregularities to the tune of Rs 735 crore after it conducted searches on civil contractors who work for the Brihanmumbai Municipal Corporation (BMC), the CBDT said on Thursday. The search operation was started at 44 locations in Mumbai and Surat on November 6, on entry providers and beneficiaries who have been engaged in execution of civil contracts mainly in BMC, it said.

The Central Board of Direct Taxes (CBDT) is the policy-making body for the tax department. "There were reports that certain contractors had taken entries in the form of loans among others from entry providers and also inflated expenses in the books of accounts to suppress income. "Incriminating evidence showing large scale tax evasion and money laundering has been found," it said.