The Central Board of Direct Taxes (CBDT) has notified fresh guidelines for compulsory scrutiny of Income Tax Returns (ITRs) during the financial year 2026-27, identifying six categories of cases that may be selected for detailed examination by the Income Tax Department.
The guidelines, issued through a notification dated June 4, 2026, aim to ensure closer scrutiny of high-risk cases involving surveys, search and seizure actions, tax-evasion information, recurring tax disputes, and certain trusts or institutions claiming tax benefits despite cancellation or denial of registrations.
Which taxpayers can face mandatory scrutiny?
According to the CBDT guidelines, the following categories of cases can be selected for compulsory scrutiny:
1. Taxpayers covered under survey operations
Returns of taxpayers on whom a survey under Section 133A of the Income-tax Act was conducted on or after April 1, 2024, will be selected for scrutiny. However, surveys conducted under Section 133A(2A) have been excluded from this category.
2. Search and seizure cases
Cases involving searches under Section 132 or requisitions under Section 132A carried out between April 1, 2024 and March 31, 2026 will also come under compulsory scrutiny.
3. Certain reassessment cases
The guidelines cover cases where notices under Section 148 have been issued for reassessment. Depending on the nature of the case, scrutiny proceedings may be handled through the National Faceless Assessment Centre (NaFAC) or the concerned jurisdictional authorities.
4. Trusts and institutions claiming tax benefits despite cancellation of registration
CBDT has directed scrutiny of cases where trusts, educational institutions, research bodies or charitable entities continued to claim tax exemptions or deductions in ITR-7 despite their registrations or approvals being denied, cancelled or withdrawn before March 31, 2025.
However, cases where appellate authorities have restored such registrations will not be covered.
5. Cases involving large additions in earlier years
Taxpayers may also face scrutiny if substantial additions were made to their income in earlier assessment years on recurring issues and those additions have attained finality or have been upheld by appellate authorities.
The threshold for such cases is:
Rs 50 lakh in Delhi, Mumbai, Bengaluru, Chennai, Hyderabad, Kolkata, Pune and Ahmedabad
Rs 20 lakh in other jurisdictions
Tax experts note that this threshold was increased last year and continues for FY 2026-27.
6. Tax-evasion information received from agencies
Cases based on specific information indicating possible tax evasion received from law-enforcement agencies, intelligence agencies, regulatory authorities or the Income Tax Department’s investigation wings can also be selected for compulsory scrutiny.
Will AIS or SFT mismatches automatically trigger scrutiny?
Not necessarily.
The CBDT has clarified that cases where returns are filed in response to notices issued on the basis of information available through the Annual Information Statement (AIS), Statement of Financial Transactions (SFT), Non-Filer Monitoring System (NMS) or CPC-TDS data will not automatically be selected for compulsory scrutiny.
Such cases will continue to be processed through the Computer Assisted Scrutiny Selection (CASS) mechanism unless they fall under one of the specified compulsory scrutiny categories.
Why can additions in earlier years matter?
Tax experts point out that income additions made during previous assessments can have implications for future scrutiny.
If an assessing officer increases a taxpayer’s taxable income during assessment proceedings and the issue becomes final or is upheld in favour of the tax department, similar issues appearing in future returns may attract compulsory scrutiny under the CBDT guidelines.
Important deadline for tax officers
The CBDT has reminded field officers that notices under Section 143(2) for returns filed during FY 2025-26 and selected for compulsory scrutiny must be served on or before June 30, 2026.
What should taxpayers do?
While the guidelines target specific categories of cases, taxpayers falling within these parameters should ensure that their tax records, supporting documents and exemption claims are properly maintained. Having complete documentation can help avoid unnecessary disputes during assessment proceedings.
Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. Tax laws and regimes are subject to frequent changes by the government. Readers should verify details with official Income Tax Department notifications or consult a Chartered Accountant before making any financial decisions.
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