Scrutiny Notice: CBDT Issues Fresh Guidelines for FY 2025–26

The Income Tax Department continues to strengthen its compliance framework, and one of the key tools in its arsenal is the scrutiny notice. Recently, the Central Board of Direct Taxes (CBDT) released the updated guidelines for compulsory scrutiny cases for the Financial Year 2025–26. These guidelines outline the types of cases that will mandatorily be selected for detailed assessment under the Income Tax Act.

If you’re wondering whether your income tax return might attract scrutiny this year, this guide will walk you through the most relevant updates and help you stay prepared.

What Is a Scrutiny Notice?

A scrutiny notice is an official communication issued by the Income Tax Department under Section 143(2) of the Income Tax Act. It signals that your filed income tax return is under review, and you are required to provide supporting documents or clarification on certain aspects.

Scrutiny can be routine, risk-based, or compulsory, depending on parameters like undeclared income, high-value transactions, or other flagged data points.

CBDT’s Guidelines for Compulsory Scrutiny in FY 2025–26

The CBDT’s circular for compulsory scrutiny cases lays out specific scenarios where scrutiny will not be left to chance or random selection but must be undertaken mandatorily by assessing officers.

Below are the key categories of compulsory scrutiny cases for the financial year 2025–26:

1. Cases Involving Search & Seizure

All assessments arising from:

• Search under Section 132

• Requisition under Section 132A

• Survey under Section 133A

These are mandatorily picked up for scrutiny to examine undisclosed income, assets, or transactions.

2. Cases Where Notices Have Been Issued Under Section 148

If a notice has been issued under Section 148 (Income escaping assessment), the corresponding return is automatically subject to scrutiny. This ensures that all relevant details that prompted reassessment are verified.

3. Cases Relating to Information from Law Enforcement or Regulatory Bodies

If the Department receives credible information from:

• Law enforcement agencies

• SEBI, RBI, MCA, or ED
  …regarding undisclosed income or suspicious activity, those cases will be subject to compulsory scrutiny.

4. Cases of High-Risk International Transactions

Returns filed by entities involved in:

• Transfer pricing

• International group structures
  …will be scrutinized if flagged for inconsistencies or mismatches.

Process Flow for Scrutiny Assessment

1. Notice under Section 143(2) is issued within 3 months of ITR filing deadline.

2. Online response is submitted through the Income Tax portal.

3. Assessing Officer may request supporting documents.

4. In some cases, a hearing may be scheduled, either online or in person.

5. Final Assessment Order is passed based on evidence and compliance.

What Taxpayers Should Keep in Mind

To avoid falling under scrutiny unnecessarily:

• Report all income, including capital gains and foreign income.

• Reconcile ITR data with Form 26AS, AIS, and TIS.

• Avoid discrepancies in high-value transactions like property sales, share trading, or crypto.

• Ensure that TDS and advance tax details are accurate.

• Keep proper documentation and invoices for all deductions claimed.

What To Do If You Receive a Scrutiny Notice

If you’ve received a scrutiny notice:

• Don’t panic.

• Read the notice carefully and check the assessment year and reasons.

• Prepare relevant documents and explanations.

• Respond within the given timeline on the official income tax portal.

• Consider seeking help from a qualified tax consultant or CA, especially for complex cases.

Need Help Responding to a Scrutiny Notice?

At Tradeviser, we assist individuals and businesses in handling income tax scrutiny notices, from drafting professional replies to representing you before tax authorities. We ensure 100% compliance while protecting your interests.

Get in touch today for a smooth and stress-free tax assessment process.