44-year-old Palsania, who was termed as one of the bright officers of the agency, passed away at a private hospital in South Delhi due to a terminal illness.
Hailing from Rajasthan, Palsania was a 1996 batch IPS officer of Odisha cadre and was working with the CBI since 2006.
An engineering graduate, Palsania, who was posted as Deputy Inspector General with the CBI, was a recipient of this year's Police Medal for meritorious service announced on the Republic Day.
CBI Director AP Singh, who is at present in Rome for Interpol Conference, expressed shock over the sad demise of Palsania.
"We are all crushed and shocked. He was one of the best officers of the CBI," Singh said.
Palsania filed chargesheet in the 2G case booking the then telecom minister A Raja and DMK leader Kanimozhi, besides a number of top honchos of telecom companies.
Palsania had walked out of a meeting with a senior government law officer who wanted to discuss the strategy on 2G case with him along with the lawyer of the former telecom minister A Raja, who was in jail.
He had recently visited Malaysia and other countries to pursue the quick processing of the Letters Rogatory in connection with the case.
Palsania also initiated a probe in the Commonwealth Games scam and was also in the two-member team that went to London to probe Suresh Kalmadi's role in the Queen's Baton Relay controversy.