Since the ITR filing season for AY 26–27 has started and taxpayers are awaiting Form 16 to file their tax returns, Google Trends has shown a spike in searches for mandatory ITR scrutiny criteria in the last 5 days.

While most returns are processed automatically, the Income Tax Department has identified certain categories of taxpayers whose returns may be picked for mandatory or complete scrutiny. The Central Board of Direct Taxes (CBDT) has recently issued guidelines specifying the cases that will be compulsorily selected for detailed examination during FY 2026-27. 

    Trusts, institutions, research bodies, and other entities claiming tax exemptions may face mandatory scrutiny if their registration, approval, or recognition has been rejected, cancelled, or withdrawn.
    Prompt and accurate responses often help complete assessments smoothly.

What is mandatory scrutiny?

Scrutiny assessment is a detailed verification process in which the Income Tax Department examines a taxpayer’s return, income disclosures, deductions, exemptions, and supporting documents.

Under mandatory scrutiny, a return is selected automatically based on predefined criteria laid down by the CBDT, irrespective of the taxpayer’s risk score or refund claim.

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Categories that can trigger mandatory scrutiny

1. Survey cases

If a taxpayer has been covered under a tax survey conducted under Section 133A (excluding certain limited-purpose surveys), the return may be selected for mandatory scrutiny.

Tax authorities generally use survey findings to verify whether all income has been correctly reported.

2. Search and seizure cases

Returns linked to search-and-seizure operations conducted by the Income Tax Department can face compulsory scrutiny.

These cases typically involve a detailed examination of income, assets, investments, and transactions uncovered during the search process.

3. Reassessment and income-escaping assessment cases

If a notice has been issued under reassessment provisions because the department believes income may have escaped taxation, the return can be selected for complete scrutiny.

4. Cases involving specific tax-evasion information

Returns may be scrutinised if the department receives credible information from investigation wings, regulatory agencies, law-enforcement bodies, or intelligence units indicating possible tax evasion.

Examples may include undisclosed foreign assets, suspicious transactions, accommodation entries, or unreported income.

5. Tax-exemption cases facing registration or approval issues

Trusts, institutions, research bodies, and other entities claiming tax exemptions may face mandatory scrutiny if their registration, approval, or recognition has been rejected, cancelled, or withdrawn.

6. Recurring issues involving substantial tax additions

If a taxpayer has faced significant additions in previous assessment years on recurring legal or factual issues and such additions have either attained finality or been upheld by an appellate authority, the return may again be selected for scrutiny. This includes transfer-pricing disputes and recurring tax positions.

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How can taxpayers reduce scrutiny risks?

While no taxpayer can guarantee that a return will not be scrutinised, the following practices can help avoid unnecessary queries:

  • Report all sources of income accurately.
  • Match income figures with Form 26AS, AIS, and TIS.
  • Disclose foreign assets and overseas income wherever required.
  • Retain documentation for deductions and exemptions claimed.
  • Verify capital gains, dividend income, and business receipts carefully.
  • Avoid inflated or unsupported deduction claims.

What should you do if you receive a scrutiny notice?

If your return is selected for scrutiny:

  1. Do not ignore the notice.
  2. Respond within the prescribed timeline.
  3. Upload supporting documents through the income tax portal.
  4. Seek professional assistance if the matter involves complex transactions, capital gains, foreign assets, or business income.

Prompt and accurate responses often help complete assessments smoothly.

The bottom line

The CBDT’s latest guidelines show that the Income Tax Department continues to focus on search cases, survey findings, reassessment matters, tax-evasion intelligence, exemption-related disputes, and recurring high-value additions while selecting returns for mandatory scrutiny.

For honest taxpayers, the best defence remains simple: file an accurate return, disclose all income, and maintain proper records to substantiate every claim.