The Central Board of Direct Taxes (CBDT) has issued detailed guidelines for the compulsory selection of income tax returns for complete scrutiny for the Financial Year 2025-26.
The communication, addressed to all Principal Chief Commissioners and Directors General of Income-tax, outlines the scenarios, parameters, and procedures under which cases will be mandatorily scrutinized.
As per the proviso to section 143(2) of the Income Tax Act, the time limit for service of notice under section 143(2) of the Act for the ITRs filed in the Financial Year (FY) 2024-25 which are selected for Compulsory Scrutiny is 30.06.2025.
Survey Cases (Code CS01):
Returns of assessees who underwent surveys under Section 133A (except 133A(2A)) of the Income-tax Act on or after April 1, 2023, will be selected. Approval from DGIT (Systems) and information from the Investigation Division, CBDT, will form the basis for selection.
Search & Seizure/Requisition Cases (Codes CS02 & CS03):
- CS02: Covers cases with searches initiated under Section 132 or requisitions under 132A between April 1, 2023, and August 31, 2024.
- CS03: Covers such actions initiated between September 1, 2024, and March 31, 2025.
Prior administrative approval is required, and cases must be transferred to Central Charges if they lie outside.
Registration/Approval Withdrawal (Code CS04):
Entities whose registrations under sections such as 12A, 12AB, 35(1)(ii)/(iii), or 10(23C) were cancelled or not granted before March 31, 2024, and who claimed exemptions in ITR-7, will be compulsorily scrutinized.
Recurring Additions (Code CS05):
Cases involving recurring additions exceeding ₹50 lakh in major metro jurisdictions or ₹20 lakh in others will be scrutinized if such additions are final or upheld by appellate authorities.
Specific Information Indicating Tax Evasion (Code CS06):
Cases flagged by enforcement or intelligence agencies where returns have been filed will be picked for scrutiny.
Procedural Highlights:
- Notices under Section 143(2) must be served in all such selected cases.
- Transfer to Central Charges under Section 127 is mandated within 15 days where applicable.
- Communication with NaFAC is required for processing and uploading supporting documentation in certain cases.
- Cases involving international taxation and those under Central Circles will continue to be handled by their respective AOs and are excluded from NaFAC routing.
The CBDT has clarified that cases where returns were filed in response to notices under Section 142(1) based solely on information from AIS, SFT, or CPC-TDS databases will not be selected under compulsory scrutiny but through the regular CASS cycle.
Notification Details
Notification No. F.No.225/37/2025/ITA-II
Date: 13/06/2025
