The Central Board of Direct Taxes (CBDT) has issued fresh guidelines prescribing the categories of income tax returns that will be compulsorily selected for complete scrutiny during Financial Year 2026-27.
The guidelines have been issued under Section 536(2)(c) of the Income-tax Act, 2025 and apply to returns filed during FY 2025-26.
The instructions identify six specific scenarios under which returns may be mandatorily scrutinized by the Income Tax Department. The move aims to ensure focused examination of high-risk cases involving surveys, searches, reassessment proceedings, tax exemption claims, recurring additions, and information relating to tax evasion.
Categories for Compulsory Scrutiny
| System Scenario Code | Parameters | Procedure |
| CS 01 | Cases pertaining to survey under Section 133A of the Income-tax Act, 1961 where a survey under Section 133A (other than Section 133A(2A)) has been conducted on or after 01.04.2024. | Cases shall be selected for compulsory scrutiny by Directorate of Income-tax (Systems) with approval of DGIT (Systems), Delhi, based on survey information received from CBDT Investigation Wing. Notice under Section 143(2) shall be issued through the prescribed income-tax authority or the concerned Assessing Officer. |
| CS 02 | Cases pertaining to Search initiated or Requisition made where a search under Section 132 or requisition under Section 132A was initiated on or after 01.04.2024. For searches/requisitions initiated on or after 01.09.2024, the return selected shall be the assessment year covered under Section 158BA(6). | Selection for compulsory scrutiny shall be made by the Assessing Officer with prior administrative approval of the jurisdictional authority. Cases outside Central Charges must be transferred within 15 days from service of notice under Section 143(2). |
| CS 03 | Cases where notice under Section 148 has been issued.This includes: (i) cases involving search and seizure action initiated on or after 01.04.2021 but before 01.09.2024 or survey conducted on or after 01.04.2021; and (ii) other reassessment cases where proceedings are to be completed on or before 31.03.2027. | Jurisdictional Assessing Officer shall issue notice under Section 143(2). For non-search/survey reassessment cases, Directorate of Income-tax (Systems) shall forward cases to NaFAC for further action. Supporting documents forming the basis of Section 148 proceedings must be uploaded. |
| CS 04 | Cases related to registration/approval under various provisions such as Sections 12A, 12AB, 35(1)(ii), 35(1)(iia), 35(1)(iii), 10(23C)(iv)/(v)/(vi)/(via), etc., where registration or approval has not been granted, or has been cancelled/withdrawn by the competent authority on or before 31.03.2025, and the assessee continues claiming exemption/deduction in the return. | Cases shall be selected by Directorate of Income-tax (Systems) with approval of DGIT (Systems) based on returns filed in FY 2025-26. Notices under Section 143(2) shall be served through NaFAC or the prescribed authority. |
| CS 05 | Cases involving additions in earlier assessment years on recurring issues of law or fact, including transfer pricing issues. The addition should exceed ₹50 lakh in eight metro charges (Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune) or ₹20 lakh in other charges and should have attained finality or been upheld by appellate authorities. | Jurisdictional Assessing Officers shall prepare and submit lists of such cases for approval by the jurisdictional Principal Commissioner/Commissioner. Consolidated lists are to be forwarded to Directorate of Income-tax (Systems). |
| CS 06 | Cases related to specific information regarding tax evasion, where credible information is received from law enforcement agencies, investigation wings, intelligence agencies, or regulatory authorities and the return for the relevant assessment year has been filed. | Jurisdictional Assessing Officers shall prepare approved lists and forward them to Directorate of Income-tax (Systems) by 15.06.2026. Notices under Section 143(2) shall be issued through NaFAC. |
Greater Focus on Search, Survey and Reassessment Cases
A significant portion of the scrutiny framework focuses on taxpayers connected with search, seizure, survey, and reassessment proceedings. Returns linked to searches conducted after April 2024 and survey actions carried out under Section 133A will automatically fall within the scrutiny net. Similarly, reassessment cases where notices under Section 148 have already been issued will continue to receive heightened scrutiny from the Department.
Exemption-Claiming Entities Also Under Scanner
The CBDT has also targeted charitable institutions, educational entities, research organizations and other taxpayers claiming exemptions under provisions such as Sections 12A, 12AB, 35 and 10(23C). Returns may be selected for scrutiny where registration or approval has been denied, withdrawn or cancelled, but exemption claims continue to be made in the return. However, the guidelines clarify that cases where cancellation orders have been reversed by appellate authorities will not be selected under this parameter.
Recurring Additions and Tax Evasion Information
Another notable category covers cases where substantial additions have been made in earlier years on recurring legal or factual issues. The Department intends to closely monitor taxpayers who continue adopting positions that have already resulted in significant tax additions. In addition, specific information suggesting tax evasion received from investigative or regulatory agencies will trigger compulsory scrutiny selection.
Time Limit for Issuance of Scrutiny Notices
The CBDT has reiterated that notices under Section 143(2) relating to returns filed for FY 2025-26 must be served on or before 30 June 2026, in accordance with the timelines prescribed under the Income-tax Act, 1961 and the Income-tax Act, 2025.
