Police said the money was recovered from a garbage dump behind the house of one Kishore Deka.
Deka had been apprehended recently by the police here for stealing over Rs 21 lakh from an ATM at Guwahati's Gorchuk locality a few days back. At the time of arrest, police had recovered Rs 8 lakh from him.
Based on his confession during interrogation, police today raided the house at Sarthebari in Barpeta and recovered the money.
The notes of Rs 500 denomination, tied up in bundles, have been identified as ones stolen from the ATM.