Three persons, including two security personnel, were killed late Friday afternoon when two militants stormed the heavily guarded local headquarters of the income tax (IT) department in Srinagar [Images] in the high security Civil Lines area.

The attackers stormed the office complex hurling grenades and firing indiscriminately at the security picket posted outside the office killing one Central Reserve Police Force jawan. Another policeman died later.

Around 70 employees and visitors were inside the building at the time of the attack.

Officiating Senior Superintendent of Police (Srinagar) Syed Ahmad Syed immediately rushed to the spot with reinforcements and surrounded the building.

In the encounter that followed, the building caught fire but the local police, fire brigade personnel and security forces managed to evacuate all the trapped people by putting a ladder near a rear window.

"I had just returned after offering Friday prayers and was sitting in my office when there was a loud sound followed by gunfire," said a shocked Riyaz Bhat. "We panicked and tried to hide under the tables and chairs. We then took shelter in a room on the second floor.

"The first thing I did on entering the room was to throw outside the gas cylinder, used for the heating stove. There was chaos because of the screams and shrieks of women employees. It was a heart-rending scene. I also wept and lost all hope as the fire was spreading fast.

"We laid flat on the floor as smoke filled the room. We saw embers coming down from the top floor even as bullets were flying from all sides," said Bhat.

Then fire tenders used water canons, which almost deluged the top floor, to douse the flames.

"Fortunately, all civilians, including the staff of the income tax department, were rescued unharmed," said Kashmir Zone police chief Javed Ahmad Mukhdoomi.

At the same time, security forces continued to engage the militants in a gunbattle, allowing paramilitary soldiers stationed inside the building to jump outside safely.

The operation has been called off at night but a tight cordon is in place and the area has been illuminated to prevent any militant from fleeing under the cover of darkness.

"Troops shot dead one militant and his body is lying inside the complex. We have reports that another militant is still holed up inside the building," Mukhdoomi said.