Guidelines for Compulsory Scrutiny of ITRs for FY 2025-26: What Taxpayers Should Know

Date of Issue: 13th June 2025

Issued by: Central Board of Direct Taxes (CBDT)

The Central Board of Direct Taxes (CBDT) has issued new guidelines for the compulsory selection of Income Tax Returns (ITRs) for complete scrutiny during FY 2025-26. This scrutiny is a part of the department’s effort to ensure better compliance and transparency in return filings, especially in high-risk or sensitive cases.

Below is a simplified overview of the key parameters and procedures outlined in the circular:

 1. Cases Where Survey Under Section 133A Conducted

• • Applicable To: Cases where a survey (except u/s 133A(2A)) was conducted on or after 01.04.2023.

• • Selection & Process: These will be compulsorily scrutinized by the Income Tax (Systems) Directorate. After issuance of notice u/s 143(2), if the case is outside Central Charges, it must be transferred u/s 127 within 15 days.

2. Search & Seizure or Requisition Cases

A. Search/Requisition between 01.04.2023 and 31.08.2024

• • Will be scrutinized compulsorily after administrative approval.

• • Transfer to Central Charges must be done within 15 days.

B. Search/Requisition between 01.09.2024 and 31.03.2025

• • Same procedures apply for scrutiny and transfer.

 3. Registration/Approval Withdrawal Cases (e.g., Sec 12A, 12AB, 35, 10(23C))

• • Covered: Cases where the exemption registration was withdrawn/cancelled before 31.03.2024 but taxpayer still claimed exemption in ITR-7 for FY 2024-25.

• • Excluded: If registration was later restored in appeal, the case will not be selected.

4. Recurring Additions in Previous Assessments

• • Metro Cities: If addition was above ₹50 lakh.

• • Other Regions: If addition was above ₹20 lakh.

• • Condition: Must be on a recurring issue of law/fact and:
    

     

    • • Either no appeal was filed,
    • • Or appellate authority upheld the addition in Revenue’s favour.

 5. Specific Information Indicating Tax Evasion

• • If any law enforcement or regulatory agency has provided credible information for a particular taxpayer, their case will be taken up for compulsory scrutiny.

 Important Clarification

Returns filed in response to notices under Section 142(1) due to system-generated information (like AIS, SFT, NMS, CPC-TDS) will not be selected under compulsory scrutiny. These will go through the CASS system.

Service of Notice

• • For most cases, Notice u/s 143(2) will be issued by NaFAC.

• • In search/seizure/survey cases, if return is not furnished, the case shall be transferred to Central Charges.

 International Taxation & Central Circle Cases

• • These will follow the same scrutiny parameters but will continue to be handled by their respective AOs.

• • NaFAC procedures do not apply to them.

 Deadline to Note

As per the proviso to Section 143(2), the last date for issuing scrutiny notice for returns filed in FY 2024-25 is 30th June 2025.

 Final Note

All tax professionals and taxpayers are advised to keep these guidelines in mind, especially if their case falls under any of the categories mentioned above. Timely compliance and proactive response to any scrutiny notices is essential.

Read the Guideline at: https://yourcommercialattorney.in/wp-content/uploads/2025/06/Compulsory-scrutiny-guidelines_FY-2025_26_13.06.2025.pdf