IT officials said the searches are being carried out on at least three premises of the Chhatarpur MLA in the national capital by teams having 40 income tax and police officials.
The officials said the department had received "actionable inputs" with regard to the MLA's transactions and hence the operation was launched.
The party termed the development as "political vendetta" by the Centre against AAP MLAs.
Senior AAP leader Ashutosh said Singh's residence was gheraoed as if Singh was a terrorist. He also accused the Delhi Police of "misbehaving" with arrested AAP MLA Amanatullah Khan's wife.
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Eleven AAP MLAs have been arrested in different cases since the party came to power in Delhi for a second time in February last year.
Delhi Police had on Sunday arrested Okhla MLA Amanatullah Khan in connection with allegations by a woman that he had tried to mow her down with his car while Mehrauli MLA Naresh Yadav was arrested by Punjab Police in connection with the alleged Malerkotla sacrilege incident.
"There are several cases where the BJP leader were involved in several cases, but they were not even summoned by the police. Whereas in the AAP's case, its MLAs and leaders are immediately arrested.
"NDMC vide-chairman Karan Singh Tanwar was never arrested by the Delhi Police in the MM Khan murder case while R P Singh, a former BJP MLA who was accused of assaulting a DJB engineer, was never summoned," Chadha said.
He claimed, "Of the 78 ministers in the Narendra Modi government Cabinet, 14 face criminal charges. Of the 282 BJP MPs, 98 have criminals charges.