The Central Industrial Security Force, which handles security at the nation's airports, said that the cash was beyond the permissible limit set by the Election Commission. Gao, however, maintained that it was his personal money and was not related to the elections.
Gao was first stopped by CISF personnel at the airport in Imphal, Manipur's capital, as he was about to get on a flight to Guwahati. He was, however, allowed to board his flight with the cash, under intimation to their counterparts and the IT Department at the destination airport.
"We have intercepted Gao as he was carrying cash beyond permissible limits of the Election Commission. Therefore, we have informed the Air Intelligence Wing of the Income Tax Department which further took action on the cash," he said.
Income Tax Department sources said the cash was declared by Gao as funds under the Pradhan Mantri Garib Kalyan Yojna (PMGKY), the final black money disclosure window provided by the government post-demonetisation.
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When contacted, Gao said it was his personal money and the party has nothing to do with it.
The PMGKY ensures complete confidentiality of the declarant and will close on March 31.
Gao was a Lok Sabha MP from Arunachal East constituency from 2004 to 2009. He was appointed BJP state unit President in April 2016.