CBDT Guidelines for Compulsory ITR Scrutiny in FY 2025-26

Notification F.No.225/37/2025/ITA-II, dated 13-06-2025

The Central Board of Direct Taxes (CBDT) has issued a set of comprehensive guidelines for the compulsory selection of Income Tax Returns (ITRs) for Complete Scrutiny during the Financial Year 2025-26. These guidelines aim to streamline the assessment process by clearly defining the cases that require detailed examination by the Income Tax Department.

1. Objective of the Guidelines

The objective behind issuing these guidelines is to:

• Ensure uniformity and transparency in the selection process;
• Identify high-risk cases requiring in-depth scrutiny;
• Strengthen compliance and enforcement mechanisms under the Income-tax Act, 1961.

2. Categories of Cases Selected for Compulsory Scrutiny

The CBDT has laid down the following categories of cases that must be mandatorily selected for Complete Scrutiny in FY 2025-26:

2.1 Cases Involving Survey under Section 133A

Returns related to cases where a survey action has been conducted under Section 133A of the Income-tax Act are to be compulsorily scrutinised.

2.2 Search and Seizure/Requisition Cases: 01.04.2023 to 31.08.2024

Cases where a search and seizure or requisition action took place on or after 1st April 2023 and before 1st September 2024 are included in the compulsory scrutiny list.

2.3 Search and Seizure/Requisition Cases: 01.09.2024 to 31.03.2025

Cases involving search and seizure or requisition conducted on or after 1st September 2024 and before 1st April 2025 are also selected mandatorily.

2.4 Cases Related to Registration/Approval Under Various Sections

Where the assessee has applied for or obtained registration or approval under any of the provisions of the Act (such as Sections 10(23C), 12AB, 35, etc.), and where concerns are raised, such returns are subject to compulsory scrutiny.

2.5 Recurring Additions in Earlier Assessment Years

Cases involving additions made in earlier assessment years on recurring issues of law or fact, or a combination of both, will be taken up for scrutiny to verify the consistency and correctness of claims.

2.6 Cases Involving Specific Information on Tax Evasion

Returns flagged based on specific, credible information related to tax evasion are mandatorily selected for detailed examination to address potential revenue leakage.

3. Exclusions from Compulsory Scrutiny

CBDT has excluded certain cases from compulsory scrutiny to avoid overburdening the scrutiny mechanism and to focus on truly high-risk areas. These include:

3.1 Cases Responding to Notice Under Section 142(1)

Where a return is furnished in response to a notice under Section 142(1), and such notice was triggered due to:

• NMS (Non-filers Monitoring System) Cycle
• Annual Information Statement (AIS)
• Statement of Financial Transactions (SFT)
• CPC-TDS Information
• Information from the Directorate of I&CI (Investigation and Criminal Intelligence)

such returns will not be taken up for compulsory scrutiny. Instead, these will be processed under the Computer Assisted Scrutiny Selection (CASS) mechanism, which uses risk-based algorithms for selection.

4. Conclusion

The CBDT’s latest guidelines aim to ensure that scrutiny proceedings are targeted, effective, and focused on high-risk and high-impact cases, thereby promoting compliance without causing unnecessary hardship to genuine taxpayers. Taxpayers falling under the above categories should maintain proper documentation and prepare for the possibility of a detailed assessment in FY 2025-26.

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