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CBDT Income Tax Scrutiny Guidelines for FY 2025-26
The Central Board of Direct Taxes (CBDT) has issued new guidelines under which ITRs will undergo compulsory scrutiny. Specific cases involving search, survey, or requisition, cancellation, etc., may all lead to mandatory scrutiny under section 143(2) of the Income Tax Act.
In this article, we will learn about the reasons for attracting compulsory scrutiny under the Income Tax Act.
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What is Compulsory Scrutiny?
Compulsory scrutiny refers to the income tax returns that are automatically selected for scrutiny or detailed examination under section 143(2), based on specific circumstances or legal reasons. Compulsory scrutiny cases are selected on the basis of predefined cases, instead of Computer Assisted Scrutiny Selection (CASS).
Once Selected -
- The taxpayer receives a notification under section 143(2)
- They must submit documents, records, and clarifications online.
- The scrutiny cases are handled using the Faceless Assessment Scheme. This reduces the need for human interaction.
- On the basis of the evidence and representations, the Income Tax Department passes the final assessment orders.
Cases in Which Compulsory Scrutiny is Undertaken in FY 2025-26
The cases that can be selected for compulsory scrutiny for FY 2025-26 are given in the table below -
| Compulsory Scrutiny Cases | Notice Issued and Other Points |
|---|---|
| Survey conducted under section 133A on or after 01-04-2023 | Notice for scrutiny assessment u/s 143(2) will be sent |
| Search cases u/s 132 and requisition u/s 132A (from 01-04-2023 to 31-08-2024) | Notice u/s 143(2) or 142(1) |
| Search cases u/s 132 and requisition u/s 132A conducted from 01-09-2024 - should pertain only to assessment year 2025-26 for conducting compulsory scrutiny. | |
|
Notice for scrutiny assessment u/s 143(2) will be sent |
| An addition in taxable income of the assessee was made regarding the same repeating issues that were previously dealt with in assessment proceedings. | Notice for scrutiny assessment u/s 143(2) will be sent |
|
Notice for scrutiny assessment u/s 143(2) will be sent |
Legal Provisions Behind Scrutiny
Key provisions that make scrutiny mandatory under the Income Tax Act are -
- Section 143(2) - Notice Issued for a Scrutiny Assessment
- Section 132 - Search and Seizure
- Section 132A - Requisition of books/documents
- Section 133A - Survey operations
- Section 12A, 12AB, 10(23C) - Exemptions for Charitable/Religious institutions
- Section 92CA - Transfer pricing and international transactions scrutiny
Types of Compulsory Scrutiny - FY 2025-26
Given below are the six cases that can be compulsorily selected for scrutiny during FY 2025-26, on the basis of the guidelines released by the CBDT -
1. Survey-Based Cases (Section 133A)
If the taxpayer underwent a survey on or after April 1, 2023, the return for the corresponding financial year will be mandatorily scrutinised.
Even if there are no obvious irregularities in the return, the department is obligated to examine it in full.
2. Search and Requisition Cases (Sections 132 & 132A)
Wherever a search (u/s 132) or a requisition (u/s 132A) has taken place between April 1, 2023, and March 31, 2025, the ITRs of such individuals will automatically be selected for scrutiny.
3. ITR-7 Filers Claiming Exemptions Without Valid Registration
Returns filed in Form ITR-7, where taxpayers claim exemptions under Sections 12A, 12AB, or 10(23C) will be scrutinised if:
- The registration was not granted, or
- It was cancelled or withdrawn by March 31, 2024
The return still makes the claim, unless the appellate body reverses the cancellation. This provision affects the NGOs, charitable trusts, and institutions that claim tax-exempt income.
4. Recurring Additions in Previous Years (Confirmed by Appeal)
If a taxpayer has faced repeated additions in the past assessments because of a consistent legal or factual issue, and -
- The addition was upheld on appeal, and
- The amount is ₹50 lakh or more in metro cities, or
- ₹20 lakh or more elsewhere, then the current return will be scrutinised if the same issue arises again.
- This includes Transfer Pricing (TP) matters and other recurring disputes.
5. Tax Evasion Alerts by Intelligence Agencies
The returns have to be scrutinized compulsorily, if there are credible reports of tax evasion from -
- Regulatory bodies
- Law enforcement agencies
- Intelligence departments
This scrutiny does not depend on the risk profile, and the selection is based on external intelligence.
This includes tips about undisclosed foreign income, bogus donations, benami transactions, or GST mismatches.
Scrutiny Timeline
For the ITRs filed during the financial year FY 24-25 (AY 25-26), the department is required to issue notices under section 143(2) by June 30, 2025. If the department fails to issue the notice within this timeline, the scrutiny will be rendered legally invalid.
| Case Type | Criteria | Notice Type |
|---|---|---|
| Survey-Based Cases | If a survey under Section 133A is conducted on or after April 1, 2023 | Notice u/s 143(2) |
| Search & Requisition Cases | Searches u/s 132 or requisitions u/s 132A conducted between April 1, 2023 and August 31, 2024 | Notice u/s 143(2) or 142(1) |
| Search/Requisition Post-Sep 2024 | If search is conducted on or after September 1, 2024, scrutiny is relevant only to AY 2025-26 | Notice u/s 143(2) |
| ITR-7 and Exemption Claims | Where exemption registration under Section 12A/12AB/10(23C)/80G is not granted, cancelled, or withdrawn by March 31, 2024, but still claimed in ITR-7 for AY 2024-25 | Notice u/s 143(2) |
| Recurring Additions | If similar additions in prior years (confirmed or upheld on appeal) are repeated and exceed ₹50 lakh in metros or ₹20 lakh elsewhere | Notice u/s 143(2) |
| Tax Evasion Alerts | Specific intelligence shared by law enforcement or regulatory bodies pointing to tax evasion | Notice u/s 143(2) |
What the New Scrutiny Guidelines Mean for ITR Filing in FY 2025–26?
CBDT’s new guidelines signal a shift from routine ITR filing to stricter, document-based compliance.
For Individual Taxpayers:
- Cross-check all details with Form 26AS, AIS (Annual Information Statement), and TIS (Taxpayer Information Summary) before filing.
- Report only those figures that you can support with proper documents—avoid assumptions.
- Keep records for all income and deductions, even if your total income is below ₹10 lakh.
- Be prepared for audits, especially if you’ve received past notices or triggered intelligence alerts.
For Businesses and Corporates:
- Maintain complete documentation for all significant transactions—filing now demands greater record-keeping.
- Coordinate among the Accounts, Finance, and Compliance teams to prevent data mismatches.
- Resolve recurring issues flagged in previous assessments, particularly those confirmed during appeals.
- Consult tax advisors in advance to prepare for any potential scrutiny.
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Actions to be Taken by Taxpayers
Given below are the actions that taxpayers must take in order to avoid scrutiny notice under section 143(2) -
- Review the prior assessments conducted to identify recurring errors.
- Ensure all the exemptions you claim are valid and registered.
- You must have valid proof and evidence for high-value deductions and transactions.
- Monitor your email or SMS for a section 143(2) notice.
- Respond immediately to the queries on the portal.
- Consult a tax expert for matters related to litigation.
The CBDT is rapidly shifting towards an intelligence-backed and data-driven compliance enforcement. It is not targeting specific high-risk cases for scrutiny, like those with recurring tax disputes. Therefore, it has become even more important to ensure accurate claims, timely compliance, and transparent reporting.
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Frequently Asked Questions
Q- What is compulsory scrutiny in the Income Tax?
Compulsory scrutiny is a specific selection of ITRs for scrutiny based on specific legal criteria like survey, recurring tax disputes, search, or intelligence alerts.
Q- Are these guidelines applicable to all ITRs?
No. The guidelines are applicable only to ITRs filed during FY 24-25, which are categorized in the high-risk category as per CBDT.
Q- What types of returns are compulsorily selected for scrutiny?
As per the CBDT, compulsory scrutiny is possible in the following 6 cases -
- Cases having a survey under Section 133A on or after April 1, 2023
- Search and requisition cases under Sections 132 or 132A (April 1, 2023 – March 31, 2025)
- ITR-7 filers claiming exemptions without valid registrations under 12A, 12AB, or 10(23C)
- Recurring additions confirmed in prior years where the amount exceeds ₹50 lakh (metros) / ₹20 lakh (others)
- Cases flagged for tax evasion by intelligence or regulatory bodies
- Any scrutiny for ITRs filed in FY 2024–25 must be initiated by June 30, 2025
Q- Will I get a physical notice or an email for scrutiny?
Scrutiny notices are sent digitally through the official income tax portal. They can also be notified via email and SMS. Therefore, it is important to ensure your contact details are updated on the portal.
Q- What is the Income Tax Deadline for issuing a scrutiny notice?
The notice under section 143(2) must be issued on or before 30th June 2025, for the returns filed 24-25.
Q- What if I miss responding to the scrutiny notice?
Failing to respond to the scrutiny notice can result in -
- Ex-parte assessments (without your input)
- Penalties and interest
- Possible reopening of past years’ assessment.
Q- How do I know that I fall under recurring additions scrutiny?
You fall under this category if:
- The same issue has been recurring in multiple years.
- The additions were upheld on appeal
- The total addition is over ₹50 lakh in metros or ₹20 lakh elsewhere
Q- I filed ITR-7, but my exemption registration is pending?
If your registration under Section 12A, 12AB, or 10(23C) was cancelled, withdrawn, or not granted by 31st March 2024, and you still claimed exemption in your ITR, your return will face compulsory scrutiny—unless there’s a favourable appellate order.
