Under the latest guidelines issued by the Central Board of Direct Taxes (CBDT), certain returns filed during FY26 will automatically move into complete scrutiny if they fall under specific risk categories. The framework lays down who may be selected, how cases will move through the system, and which authorities will handle them.
For ordinary taxpayers, the document is also a reminder that filing an ITR does not always end the compliance process.
What does compulsory scrutiny mean?
A scrutiny assessment is a detailed examination of a taxpayer’s return by the Income Tax Department to verify whether income, deductions, exemptions and tax payments have been correctly reported.
Most returns are processed automatically. But cases selected for complete scrutiny involve deeper review and taxpayers may be asked to submit documents, explanations and supporting records.
The CBDT has prescribed six broad categories for compulsory selection.
1. Taxpayers surveyed under Section 133A
Survey proceedings generally involve verification of books, business records or transactions. The guidelines clarify that surveys under Section 133A(2A) are excluded from this category.
The Directorate of Income Tax (Systems) will select such cases based on information provided by the investigation wing, and notices under Section 143(2) will be issued through the prescribed tax authority.
2. Search and requisition cases
Returns linked to search operations under Section 132 or requisition proceedings under Section 132A are also marked for compulsory scrutiny.
The CBDT has separately covered searches initiated from April 1, 2024 onwards and cases falling under revised assessment provisions for later periods.
Such cases may also be transferred to specialised central charges after notice issuance for coordinated assessment.
3. Reassessment cases where tax notices have already been issued
Another category includes non-search cases where reassessment notices under Section 148 have been issued.
This effectively means the department has already identified possible under-reporting or escaped income and reopened the assessment process.
The guidelines provide that such cases will move through the faceless assessment system, with relevant documents uploaded for processing.
4. Trusts and institutions claiming tax benefits despite registration issues
Trusts and institutions may come under scrutiny where registration or approval under provisions such as Sections 12A, 12AB, Section 10(23C) and related clauses was denied, cancelled or withdrawn, but tax exemptions or deductions were still claimed in ITR-7.
However, the CBDT has clarified that cases where cancellation orders were later overturned on appeal will not be selected under this category.
5. Taxpayers with large additions in earlier years
The department will also focus on taxpayers whose earlier assessments resulted in substantial tax additions on recurring issues.
The threshold has been fixed at:
Above Rs 50 lakh in eight metro jurisdictions: Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune.
Above Rs 20 lakh in other jurisdictions
The earlier addition must either have become final or been upheld by appellate authorities in favour of the Revenue. Transfer pricing disputes are also covered.
6. Cases flagged through tax evasion information
Returns may also be selected where specific information suggesting tax evasion is received from law enforcement agencies, investigation wings, intelligence agencies or regulatory authorities.
However, the CBDT has carved out an important exception.
What should taxpayers do?
For salaried individuals and retail taxpayers, the guidelines do not create any new tax burden. But they reinforce the need to maintain documentation and ensure consistency between ITR disclosures and financial records.
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