The dismissal means that he will not get any benefits like pension and will not be entitled to use Army rank or any privilege attached with military service.
Prakash is the senior-most officer to have been awarded this punishment by the Army.
The Army Chief confirmed the sentence awarded to the former Military Secretary by a General Court Martial (GCM) in December last year.
The decision was taken by Gen V.K. Singh on May 21, ten days before his retirement from service, sources told.
Commenting on the development, Prakash said, "I am considering various options available under the service rules and legal remedies to protest against the decision taken by the Army Chief." In recent interviews, the Army Chief has also blamed the former Military Secretary for raking up the age issue by filing RTIs.
Prakash was held guilty of misusing his position under Section 45 (conduct unbecoming of his position as an officer) and Section 52 (intent to defraud) of the Army Act by the General Court Martial at 51 sub-area of the Army station at Narengi in Guwahati.
The court martial was conducted after Prakash was indicted by an Army court of inquiry in 2010 for his role in the illegal transfer of 71 acres of land adjacent to the Sukna military station near Siliguri in West Bengal to a private realtor for constructing an educational institution in 2008.
He is the third Lt Gen rank officer to have been punished in a corruption-related case. Lt Gen S K Sahni was cashiered from service for his role in the ration scam and Lt Gen P K Rath was given a punishment in the Sukna case earlier.
While Prakash and Sahni were punished after their retirement, Rath was serving when he was indicted. The officer has now retired.
The Sukna land scam dates back to 2008 when the alleged move to transfer the land in Siliguri to a private educational trust came out in the open, leading to the Army initiating disciplinary proceedings against senior Army officials, including Prakash and Rath.