CBDT Issues Guidelines for Compulsory Scrutiny of Income Tax Returns for FY 2025-26 [Read Notification]

The Central Board of Direct Taxes (CBDT), under the Ministry of Finance, issued Notification No. F.No.225/37/2025/ITA-II dated 13th June 2025, detailing the guidelines for compulsory selection of income tax returns (ITRs) for complete scrutiny during the financial year 2025–26.

What Is Complete Scrutiny?

Complete scrutiny refers to an in-depth examination of a taxpayer’s income tax return, focusing on all aspects, including income, deductions, exemptions, and any suspicious or mismatched information. It is more comprehensive than limited scrutiny.

Key Parameters for Compulsory Scrutiny (FY 2025–26)

Here are the primary scenarios under which ITRs will be compulsorily selected for full scrutiny:

1. Survey Cases – Code CS01

If a survey under section 133A (except 133A(2A)) has been conducted on or after 01.04.2023, the assessee’s case will be compulsorily scrutinized.

• Action: The Directorate of Income Tax (Systems) will select these cases.
• Next Step: Notice under Section 143(2) will be served.
• Transfer: If the case lies outside Central Charges, it must be transferred to Central Charges within 15 days.

2. Search & Seizure / Requisition Cases – CS02 & CS03

If there was a search (u/s 132) or requisition (u/s 132A) between:

• 01.04.2023 to 31.08.2024 (CS02)
• 01.09.2024 to 31.03.2025 (CS03)

The case will be selected with prior administrative approval and may be transferred to Central Charges within 15 days.

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3. Trusts & Institutions – CS04

If:

• Registration under 12A/12AB, 35(1)(ii)/(iia)/(iii), or 10(23C) was withdrawn/cancelled on or before 31.03.2024, and
• The assessee still claims tax exemption in ITR-7 for FY 2024–25,

Then the return will be picked for scrutiny.

4. Recurring Additions – CS05

If an addition in earlier years was:

• For a recurring issue of law or fact, and
• Exceeded Rs. 50 lakh in metros or Rs. 20 lakh in non-metros, and
• Was not appealed, or was upheld by an appellate authority

It will be scrutinized again.

5. Tax Evasion Information – CS06

If a law enforcement agency has provided specific information about tax evasion, and the return has been filed, it will be selected for scrutiny.

Clarifications Provided

• Returns filed in response to notices under Section 142(1) based on data from AIS, SFT, or NMS will not be compulsorily scrutinized under this guideline. These will be handled under CASS (Computer-Assisted Scrutiny Selection).

Time Limit

• Deadline to issue notice under Section 143(2): 30th June 2025 for ITRs filed in FY 2024–25 that fall under these categories.

Special Notes for International Taxation & Central Circle Charges

• They will continue to handle cases under their jurisdiction.
• They are not required to route scrutiny cases through NaFAC (National Faceless Assessment Centre).