An Income Tax officer from East Godavari district in Andhra Pradesh has been booked by the CBI for allegedly demanding a bribe of Rs 65 lakh from an assessee for returning an official favour, a senior officer said today.

The Visakhapatnam unit of CBI yesterday filed a case against Kakinada-based Income Tax Officer (Ward-I) P Venkateswara Rao for demanding Rs 65 lakh as illegal gratification from an agriculturist to bring down his tax liability from Rs 1 crore to Rs 50 lakh and arrested his uncle S Lakshmana Rao for "mediating the deal".

Lakshmana Rao will be produced in the special CBI court at Visakhapatnam tomorrow.

Following the arrest, the agency sleuths today conducted simultaneous "searches" at the official and residential premises of Venkateswara Rao at Kakinada, Visakhapatnam and S Kota and also at the residential premises of Lakshmana Rao in East Godavari district, a CBI release said.

The IT sleuths on June 22 raided Kakinada house of the complainant and seized certain registers, books of accounts and papers. Thereafter, the complainant was summoned to the IT office several times and informed by Venkateswara Rao that he has to pay Income Tax of around Rs 1 crore, the CBI said.

When the complainant requested to reduce the liability, Rao allegedly demanded a bribe of Rs 80 lakh through a mediator and later through his uncle S Lakshman Rao for reducing the tax amount from around Rs 1 crore to Rs 50 lakh, according to the release.

On September 13, Lakshmana Rao took the complainant to his nephew's house where he agreed to reduce the bribe amount from Rs 80 lakh to Rs 65 lakh and told the complainant that his uncle would deal with him.

However, the complainant approached the CBI which led a trap and caught Lakshmana Rao red-handed while accepting the bribe amount of Rs 15 lakh from him.

Meanwhile, the officer said Venkateswara Rao could not be arrested due to his "ill health" and hospitalisation.