The ITO, posted at Chandigarh, was caught while allegedly accepting a bribe of Rs 50,000 from a businessman, official sources said.
The businessman had approached the CBI alleging the officer was demanding a bribe of Rs 3.50 lakh from him to settle an IT case, they said.
A deal was struck for Rs 50,000 and the CBI laid a trap arresting the officer from the residence of complainant, the sources said.