Income Tax Department issues ITR scrutiny guidelines:
These ITR filers may face compulsory scrutiny in FY 26-27
Jun 8, 2026
Synopsis
The CBDT has released new guidelines for compulsory income tax return scrutiny in FY 2026-27, impacting returns filed in FY 2025-26. Specific risk parameters will mandate detailed examination by the I-T Department. A June 30, 2026 deadline is set for issuing scrutiny notices under Section 143(2).
The Central Board of Direct Taxes (CBDT) has issued fresh guidelines for the compulsory selection of income tax returns for complete scrutiny during the financial year 2026-27. The guidelines will apply to returns filed during FY 2025-26 and lay down the parameters and procedures for selecting cases for detailed examination by the Income Tax (I-T) Department.
According to a circular issued by the CBDT, certain categories of taxpayers will be mandatorily picked up for complete scrutiny based on specific risk parameters identified by the I-T Department.
Mihir Tanna, associate director, S.K Patodia LLP says, "Income-tax assessment involves verifying and reviewing the information the taxpayer furnishes in the Income-tax return. Assessments are done broadly under two categories: (1) Compulsory selection for complete scrutiny, and (2) Risk Parameter-based scrutiny. Every year, the income tax department issues guidelines for compulsory selection for complete scrutiny. Compared to 2025 there are no changes in 2026 guidelines that will substantially impact taxpayers."
Here are the parameters for compulsory selection of ITRs for complete scrutiny during Financial Year 2026-27:
| Code | Parameters | Procedures |
| CS 01: ITRs of taxpayers surveyed under Section 133A to face mandatory scrutiny | Cases pertaining to survey under Section 133A of the Income-tax Act, 1961. Cases where survey u/s 133A (other than u/s 133A(2A)) has been conducted on or after 01.04.2024. | Cases shall be selected for compulsory scrutiny by the Directorate of Income-tax (Systems) with approval of DGIT(Systems), Delhi, based on information provided by Commissioner (OSD)(Investigation), CBDT. Notice u/s 143(2) shall be served through the prescribed income-tax authority or Assessing Officer. Pr. CCsIT/Pr. DGsIT/DGsIT(Inv.)/CCsIT(Central) shall provide consolidated lists of such cases. |
| CS 02: Search and requisition cases selected for compulsory scrutiny | Cases pertaining to search initiated or requisition made. Cases where search u/s 132 or requisition u/s 132A has been initiated/made on or after 01.04.2024. For searches/requisitions on or after 01.09.2024, returns covered by Section 158BA(6) are included. | Cases shall be selected for compulsory scrutiny by the Assessing Officer concerned with prior administrative approval of Pr. CIT/Pr. DIT/CIT/DIT concerned. If the case lies outside Central Charges, it should be transferred within 15 days of service of notice u/s 143(2). |
| CS 03(i): Cases where notice under Section 148 was issued after search or survey action | Cases where notice u/s 148 has been issued following search & seizure action initiated on or after 01.04.2021 but before 01.09.2024, or survey action conducted on or after 01.04.2021. | Jurisdictional Assessing Officer (JAO) shall serve notice u/s 143(2) where return has been furnished. If cases fall outside Central Charges, they shall be transferred to Central Charges as per Board guidelines. JAO shall upload supporting documents on the basis of which notice u/s 148 was issued. |
| CS 03(ii): Non-search reassessment cases with Section 148 notice to undergo scrutiny | Cases other than search & seizure/survey cases where notice u/s 148 has been issued and assessment is to be completed on or before 31.03.2027. | Directorate of Income-tax (Systems) shall forward cases to NaFAC for further action. Notice u/s 143(2) shall be served through NaFAC where return has been furnished. JAO shall upload underlying documents supporting issue of notice u/s 148. |
| CS 04: Trusts and institutions denied or losing tax-exempt status under scanner | Cases related to registration/approval under Sections 12A, 12AB, 35(1)(ii)/(iia)/(iii), 10(23C)(iv)/(v)/(vi)/(via), etc., where registration/approval was not granted or was cancelled/withdrawn on or before 31.03.2025 and the assessee claimed exemption/deduction in ITR-7. Cases where withdrawal/cancellation orders have been reversed or set aside in appeal are excluded. | Cases shall be selected for compulsory scrutiny by Directorate of Income-tax (Systems) with approval of DGIT(Systems), Delhi, based on returns filed in FY 2025-26. Notice u/s 143(2) shall be served through NaFAC or prescribed authority. JAOs shall upload relevant documents containing specific information regarding the parameter. |
| CS 05: Cases involving large additions in earlier assessment years to be scrutinised | Cases involving additions in earlier assessment years on recurring issues of law or fact. Addition exceeds ₹50 lakh in Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune, or ₹20 lakh in other charges; and such addition has become final or has been upheld by appellate authorities in favour of Revenue. | JAOs shall prepare a list of such cases and obtain administrative approval of Pr. CIT/Pr. DIT/CIT/DIT concerned. Consolidated list shall be submitted to Pr. CCIT concerned, who shall forward it to Directorate of Income-tax (Systems) by 15.06.2026. Notice u/s 143(2) shall be served through NaFAC. |
| CS 06: Cases related to specific information regarding tax evasion | Cases where specific information indicating tax evasion for the relevant assessment year is provided by law-enforcement agencies, Investigation Wing, Intelligence agencies, Regulatory authorities, etc., and the return for the relevant assessment year has been furnished. Returns filed in response to notice u/s 142(1) linked only to AIS/SFT/CPC-TDS information will not be selected unless they fall under CS 06. | Same procedure as CS 05. JAOs prepare the list, obtain approval, and send a consolidated list to Directorate of Income-tax (Systems) by 15.06.2026. Notice u/s 143(2) shall be served through NaFAC. Relevant supporting information/documents must be uploaded immediately. |
Income addition can trigger future scrutiny
Tanna explains, "During assessment proceedings, if the assessing income tax officer does not accept the taxable income shown by the taxpayer in the ITR, the officer increases the taxable income in the assessment order. An increase in income (assessed income) during earlier proceedings becomes the basis for the subsequent year's selection for compulsory scrutiny."
Adding further, "If the increase in taxable income exceeds ?25 lakhs (in the specified 8 metro charges) and the taxpayer does not challenge the matter, the ITR for the subsequent year will be selected for scrutiny if the income tax system identifies the same issue that led to the income increase in the earlier year. On 13th June 2025, guidelines were revised after 3 years, increasing the aforementioned amount from 25 lakhs to 50 lakhs (in the specified 8 metro charges). For other charge also limit is increased from 10 lakh to 20 lakh. Same limit will continue in 2026."
Time Limit
For income tax returns filed in FY 2025-26, the deadline for the Income Tax Department to issue a scrutiny notice under Section 143(2) is June 30, 2026.
International transactions
For international taxation and central charges, cases selected under these parameters will continue to be handled by those charges and not by National Faceless Assessment Centre (NaFAC).
[The Economic Times]
