What Triggers an ITR Scrutiny Notice? Here is what the IT Department Looks while selecting ITR's for Scrutiny:

What Triggers an ITR Scrutiny Notice? Here is what the IT Department Looks while selecting ITR's for scrutiny The Central Board of Direct Taxes (CBDT), on June 13, 2025, issued a circular outlining the mandatory parameters under which certain Income Tax Returns (ITRs) are selected for complete scrutiny in Financial Year 2025–26 (Assessment Year 2025–26). Survey Cases under Section 133A If a taxpayer was subject to a survey under Section 133A (excluding 133A(2A)) on or after April 1, 2023, their ITR will be mandatorily scrutinised—regardless of whether any tax evasion was detected. Search and Seizure under Sections 132/132A Any search or requisition carried out between April 1, 2023, and March 31, 2025, triggers automatic scrutiny. It has to be noted that searches from September 1, 2024, to March 31, 2025, are restricted to scrutiny of the relevant AY only. Exemptions Claimed in ITR‑7 Filing ITR‑7 and claiming exemptions under Sections 12A, 12AB, or 10(23C) without valid registration as of March 31, 2024, will lead to scrutiny. Recurring High-Value Additions If a taxpayer experienced repeated additions in earlier assessment years that were finalised on appeal and involved Rs 50 lakh or more in metropolitan areas or Rs 20 lakh or more elsewhere, then the current return will be scrutinised. Specific Tax‑Evasion Information Any ITR linked with credible intelligence of possible evasion from agencies like CBI, ED, or GST/Regulatory bodies, will also undergo scrutiny.

Timelines for Issuing and Completing Scrutiny Notices

Here are the timelines for Issuing and Completing Scrutiny Notices:

• For Income Tax Returns filed in FY 2024–25, the scrutiny notices under Section 143(2) must be issued by June 30, 2025.
• The National Faceless Assessment Centre is required to complete its assessment by March 31, 2026

Other Risk Factors based on CASS

In addition to the mandatory triggers, the CASS System may trigger Returns that highlight irregularities such as:

• Discrepancies between Form 26AS/AIS and declared income
• Large refund claims
• Sharp drops in gross/net profit
• High deduction claims or mismatches in opening/closing stock
• Foreign income or transactions
• Common transactions with non-filers
• Additionally, mismatches in TDS claims, unreported income, high-value cash or luxury spending relative to declared income can invite scrutiny.

Faceless, Transparent, and Fair Process

Notices are issued with a Document Identification Number (DIN), verifiable on the official portal. The process is faceless, conducted through NaFAC, in which there is no in-person encounter with officers. Taxpayers receive a draft order or show-cause notice prior to the final assessment, with the opportunity to respond or request a video hearing. Taxpayers may also engage the High-Pitched Assessment Committee for disputing high additions.

Tips to Avoid Scrutiny

Below are some tips to avoid scrutiny:

• Exact compliance: Ensure TDS and income declarations align with Form 26AS/AIS.
• Document support: Keep proof for deductions (80C, HRA, etc.), capital gains, and business expenses.
• Consistent reporting: Avoid underreporting income or overstating deductions.
• Mind high-value entries: Be ready to justify TDS claims, high-value purchases, or extraneous transactions.