Manohar announced Modi's suspension following the IPL final late on Sunday, after days of mounting controversy following raids by tax officials on the offices of the lucrative Twenty20 league and the BCCI.
Manohar said the BCCI was concerned about missing documents in the IPL finances "as the income tax officials have been asking for them".
Modi, who is a vice-president of the BCCI, insisted on Monday that his running of the IPL was completely transparent and denied any corruption.
Indian politicians, meanwhile, have demanded a parliamentary inquiry into claims that IPL clubs had been sold for millions of dollars without accounting for the source of the funds.
Manohar said Modi would be been given 15 days to show why disciplinary action should not be taken against him.
An investigation by the BCCI's chief administrator into the IPL records had already shown a lot of documents missing, Manohar said.
Modi has been a key figure in building the IPL from its launch in 2008 into a multi-billion-dollar commercial juggernaut followed by millions of fans in India and beyond.
Market analysts currently put the tournament's brand value at more than $4bn, well in excess of more long-running sports brands such as English football team Manchester United.
The current crisis stems from a Twitter post by Modi two weeks ago in which he revealed the ownership details of a new franchise set to join the IPL in 2011.
In the posting, he embarrassed a prominent member of the government, Shashi Tharoor, a junior foreign minister, by leaking how his girlfriend had been given a free stake in the new team.
The revelation ultimately forced Tharoor to resign from the government amid opposition accusations that he had been misusing his office for personal benefit.
Since then, the Indian finance ministry has launched a wide-ranging tax inquiry into the IPL, the BCCI and the owners of its teams, including powerful business leaders and stars in the Bollywood film industry.
Many are blaming Modi for bringing the tax investigators to their door.
Indian newspapers and TV news networks have been reporting several allegations over Modi's unpaid tax liabilities, general corruption and kickbacks, and even possible match-fixing.
The latter is seen as a particularly serious offence in India after a 2000 scandal revealed widespread illegal betting and corruption by Indian bookmakers and some leading players.