Procedure of compulsory selection of returns for Complete Scrutiny during the Financial Year 2025–26

The Cen­tral Board of Direct Tax­es (CBDT) has laid down com­pre­hen­sive para­me­ters and pro­ce­dures for com­pul­so­ry selec­tion of income tax returns for com­plete scruti­ny dur­ing the Finan­cial Year (FY) 2025–26. These guide­lines, root­ed in admin­is­tra­tive pru­dence and risk-based enforce­ment, aim to ensure tax com­pli­ance in cas­es involv­ing sur­veys, search­es, high-stake lit­i­ga­tion mat­ters, and oth­er spe­cif­ic intel­li­gence-based triggers.

1. Purpose and Applicability

The instruc­tions pre­scribe manda­to­ry cri­te­ria under which income tax returns (ITRs) shall be select­ed for com­plete scruti­ny under sec­tion 143(2) of the Income-tax Act, 1961. The selec­tion will be car­ried out cen­tral­ly by the Direc­torate of Income-tax (Sys­tems) and will be applic­a­ble for ITRs filed dur­ing FY 2024–25 rel­e­vant to Assess­ment Year (AY) 2025–26.

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2. Parameters for Compulsory Scrutiny Selection

Code	Para­me­ter	Trig­ger­ing Event	Responsibility/Procedure
CS 01	Sur­vey u/s 133A	Sur­vey con­duct­ed (exclud­ing u/s 133A(2A)) on or after 01.04.2023	Select­ed by Sys­tems with DGIT(Systems)’ approval. Notice u/s 143(2) to be issued by Juris­dic­tion­al AO. Non-Cen­tral cas­es to be trans­ferred to Cen­tral charges with­in 15 days.
CS 02	Search & Seizure (01.04.2023–31.08.2024)	Search u/s 132 or Req­ui­si­tion u/s 132A	Requires pri­or approval of Pr.CIT. Notice u/s 143(2)/142(1) to be issued; trans­fer to Cen­tral Charges with­in 15 days.
CS 03	Search & Seizure (01.09.2024–31.03.2025)	Same as above, but dif­fer­ent time window	Same pro­ce­dure as CS 02.
CS 04	Exemp­tion Claims Despite Can­celled Registration	Registration/approval (u/s 12A, 10(23C), etc.) not grant­ed or can­celled by 31.03.2024, but exemp­tion claimed in ITR‑7	Select­ed by Sys­tems with DGIT(Systems)’ approval. Notice via NaFAC. Excludes cas­es where appel­late author­i­ty has reversed the cancellation.
CS 05	Recur­ring Addi­tions Sus­tained in Appeal or Not Contested	Addi­tion > ₹50L (metro) / ₹20L (non-metro) sus­tained or unchallenged	JAOs to com­pile and send lists to Pr.CIT, then to Pr.CCIT and DGIT(Systems) by 23.06.2025. Notice via NaFAC.
CS 06	Spe­cif­ic Tax Eva­sion Intelligence	Info from Investigation/Regulatory agen­cies indi­cat­ing eva­sion for the rel­e­vant AY	Sim­i­lar process as CS 05. Requires prompt upload­ing of sup­port­ing doc­u­ments by JAO.

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3. Clarification on 142(1)-Based Notices

Returns filed in response to notice u/s 142(1) based on data from:

• NMS Cycle
• AIS
• SFT
• CPC-TDS
• Direc­torate of I&CI

shall not be select­ed for com­pul­so­ry scruti­ny under these guide­lines. These will be con­sid­ered under CASS (Com­put­er Assist­ed Scruti­ny Selec­tion).

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4. Additional Procedural Instructions

4.1 Notices by NaFAC

In the fol­low­ing cas­es, NaFAC will serve notices u/s 143(2)/142(1) and com­plete scruti­ny assess­ment by 31.03.2026:

• Reopened cas­es u/s 148 (where returns are filed or not filed)
• Non-return cas­es issued notices u/s 142(1)

4.2 Search & Survey-based 148 Cases

• Where notices u/s 148 are issued based on actions between 01.04.2021 and 31.08.2024:
  • Return filed: JAO to issue notice u/s 143(2) and trans­fer to Cen­tral charges.
  • Return not filed: Trans­fer to Cen­tral charges for fur­ther action.

4.3 Third-Party Transactions Found During Search

Cas­es involv­ing third par­ties not inte­gral­ly con­nect­ed to the main search group are not manda­to­ri­ly required to be trans­ferred to Cen­tral charges unless cov­ered by pri­or Board instruc­tions (F.No. 299/107/2013-IT(Inv.III)/1568 dat­ed 25.04.2014).

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5. Special Provisions for International Taxation and Central Charges

• Cas­es under these charges must still fol­low the above para­me­ters but con­tin­ue to be han­dled by their respec­tive AOs.
• No com­mu­ni­ca­tion to NaFAC is required for scruti­ny in these cases.

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6. Time Limit for Issuance of Notice u/s 143(2)

Per the pro­vi­so to sec­tion 143(2), the last date for serv­ing scruti­ny notice for ITRs filed in FY 2024–25 is 30.06.2025.

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7. Conclusion and Compliance

The CBDT has direct­ed that these instruc­tions be dis­sem­i­nat­ed to all field for­ma­tions and offi­cers for time­ly and uni­form com­pli­ance. The empha­sis is on:

• Time­ly iden­ti­fi­ca­tion and approval of eli­gi­ble cases.
• Prop­er ser­vice of notices.
• Adher­ence to statu­to­ry dead­lines and pro­ce­dur­al integrity.

Pre­pared by: A Char­tered Accoun­tant in prac­tice, inter­pret­ing CBDT’s scruti­ny selec­tion frame­work for AY 2025–26.