Mario T. Noto, the No. 2 man in the Immigration and Naturalization Service, is under investigation in connection with alien fraud cases, it was learned yesterday.

Although Noto proclaims his innocence -- and even denies he is being investigated -- government sources said he figures in two cases involving efforts to bring aliens into this country illegally.

In an interview, Noto dismissed the widespread talk of the probes as "smear" attempts by subordinates to block him from succeeding INS Commissioner Leonel Castillo.

Castillo, the first Hispanic to head the INS, is expected to announcce this month that he is resigning to run for the city council in Houston.

"People are fighting me within this agency because Mario Noto makes them work," Noto said. "These are scurrilous statements, without substantiation, without documentation. They've spent . . . time doing this that they ought to spend on getting illegal aliens.

"I've got documentation that says I'm not under investigation."

He refused to describe the document.

Government officials familiar with the investigations that involve Noto said yesterday that they were very much alive.

One case is being conducted by the Department of Justice's public integrity section, the other by U. S. attorney's office in Boston.

The Boston-based investigation is an outgrowth of the conviction last spring of Edward Kavazanjian, a longtime friend of Noto, and two conspirators for aiding Iraqis illegally entering the United States through airports in Boston and New York.

Kavazanjian, a former criminal investigator for the INS who left the agency in 1976 to become an immigration counselor was sentenced to one year in prison and fined $10,000. He is appealing the conviction.

The federal grand jury investigation that led to Kavazanjian's indictment turned up records of some 30 long-distance telephone calls from Kavanzanjian to Noto's home in 1977, a time when the events leading to Kavazanjian indictment were under way.

Noto acknowledge many phone conversations with Kavazanjian, but said, "You don't deny the friendship of a man because he's been found guilty." He said the conversations "were purely personal."

Noto said he had no idea of any illegal activities Kavazanzian might have been involved in.

"I talked to Mr. Kavazanjian numbers of times, but so what?" Noto said. "I knew it. I knew it. The worms are finally coming out, saying, "The man that's under consideration is under investigation.' They're trying to impugn my character and my integrity."

The other case being investigated relates to the May 30 indictment by a federal grand jury in Miami of a former State Department official, the Miami law firm of Walters and Costanzo and a retired employe of the firm on charges involving illegal admission of aliens.

David M. Walters, a partner in the law firm, who was not named as defendant, resigned as President Carter's personal representative to the Vatican last year when the Justice Department investigation of his firm became known.