Sources said that huge amounts of cash had been recovered from the officer's residence and a note counting machine had been taken in to count the money.
The development can spell trouble for former Uttar Pradesh Chief Minister Akhilesh Yadav also since his role in illegal mining is also being questioned.
Abhay Kumar Singh is under the CBI scanner for alleged irregularities in mining when he was District Magistrate of Fatehpur during the Akhilesh regime.
Akhilesh Yadav was the Chief Minister of Uttar Pradesh from 2012 to 2017 and the Mining Minister of the state from 2012 to 2013.
The illegal mining allegedly took place between 2012 and 2016.
Sources in the CBI said that a total of 22 tenders passed by the UP government between 2012 and 2016 were being scrutinised.
Of these, 14 were passed during the time when Akhilesh Yadav held the mining portfolio and the rest when Gayatri Prajapati was Minister for Mining.
Gayatri Prajapati is presently in jail on charges of gang rape of a woman and her minor daughter. In June, the CBI also carried out searches at the residence of Prajapati in Amethi.
The CBI had then conducted searches at 22 locations across the country, including at three premises of Prajapati in Amethi.
Earlier this year in January, the CBI had conducted raids at several locations in Uttar Pradesh and Delhi in connection with the case.
The homes of senior officers, including IAS officer B. Chandrakala in Hamirpur, who served as the district magistrate of Bijnore, Bulandshahr and Meerut, were searched by the CBI.
SP MLC Ramesh Misra and his brother, mining clerk Ram Ashray Prajapati, Ambika Tiwari from Hamirpur, mining clerk Ram Avatar Singh and his relative and Sanjay Dikshit were among the accused in the case.
According to the investigating agency, these officials allegedly allowed illegal mining during the period of 2012-2016.
"The named accused and certain other persons illegally granted and renewed fresh leases and permitted obstructed period. These persons were allowed to extort money from leaseholders and also extract money from drivers carrying minerals," a CBI official said.
After the Allahabad High Court had directed the CBI to conduct inquiries over allegations of illegal sand mining in five districts of Uttar Pradesh including Shamli, Hamirpur, Fatehpur, Siddhartha Nagar and Deoria, an FIR was registered by the agency.
( With inputs from IANS )