That mental illnesses occurred was recognized by the Soviet state, but the Soviet view on it was very different from that which emerged in the West.

A major cause of this is that Soviet psychiatry (like many other disciplines) was developed on a Marxist-Leninist foundation. What this meant in practice is that the assumption was the rationally-created Soviet society was one which a mentally healthy individual would be happy with. Consequently a diagnosis of 'sluggish schizophrenia' emerged and was liberally applied to those unhappy with the Soviet system or seeking to reform it. This was generally accompanied by involuntary inpatient treatment in mental hospitals (popularly termed 'psihushkas', from the word 'psih' [roughly - 'psycho'). In time, these hospitals took on a semi-penal character.

The assumption that mental illness is, in itself, a sign of someone being badly adapted to a well-ordered society meant that having it was a sign of deviance or weakness (even something like depression). The fact that the Soviet state tracked nearly everything (e.g. there was no option to leave an old job off your resume since you were issued an official 'work book') and that psychiatry and psychiatrists were apparatuses of the state (causing Soviet psychiatrists to be kicked out of international psychiatric organizations) led to a significant stigma against seeking mental health treatment or having received a diagnosis of mental illness.

The below offer a decent starting point for further exploration of this.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1154661/pdf/jmedeth00168-0020.pdf http://www.sras.org/snezhnevsky_schizophrenia_soviet_psychiatry https://www.hrw.org/reports/pdfs/u/ussr/ussr.905/ussr905full.pdf