Guidelines for compulsory selection of returns for complete scrutiny during FY 2026-27

Introduction

The cases for limited and complete scrutiny are selected in a centralised manner through Computer-Aided Scrutiny Selection (CASS). It is a system-based method for the selection of cases through data analytics and 360-degree data profiling of taxpayers, in a non-discretionary manner. Further, every year the CBDT issues the guidelines and the parameters for the compulsory selection of returns for the Complete Scrutiny.

1. About

CBDT has issued guidelines

1.1. Cases pertaining to the survey

Cases pertaining to the survey under Section 133A of the ITA 1961 conducted on or after 01.04.2024 shall be selected for complete scrutiny. However, cases pertaining to surveys under Section 133A(2A) of the ITA 1961 shall not be selected for complete scrutiny.

The jurisdictional Assessing Officer shall issue a notice under Section 143(2) of the ITA 1961 for compulsory scrutiny with the prior approval of Principal CIT/Principal DIT/CIT/DIT, who ensure that such cases are transferred to Central Charges under Section 127 of the ITA 1961 within 15 days of issue of such notice.

1.2. Cases pertaining to Search initiated or Requisition made

Assessment in cases arising from search & seizure actions/requisitions under Section 132 or Section 132A of the ITA 1961 conducted on or after 01.04.2024, shall be selected for compulsory scrutiny. Further, for searches initiated or requisitions made on or after 01.09.2024, the return shall be selected for the assessment year which is covered under Section 158BA(6) of the ITA 1961.

The jurisdictional Assessing Officer shall issue a notice under Section 143(2) of the ITA 1961 for compulsory scrutiny with the prior approval of Principal CIT/Principal DIT/CIT/DIT, who also ensure that such cases are transferred to Central Charges under Section 127 of the ITA 1961 within 15 days of issue of such notice.

1.3. Cases where notice is issued under Section 148

Cases in which notice under Section 148 of the ITA 1961 has been issued shall be compulsorily selected for complete scrutiny. The cases shall be selected for complete scrutiny irrespective of the fact whether the return is furnished by the assessee or not in response to the Section 148 notice.

The assessing officer shall upload the documents on the basis of which notice under section 148 was issued for access by NaFAC, and all further action (including issuance of section 143(2) of the ITA 1961 shall be done through NaFAC. The Scrutiny shall be completed by NaFAC on or before 31.03.2027.

It is to be noted that where a notice under section 148 of the ITA 1961 has been issued pursuant to a search & seizure action has been initiated on or after 01-04-2021 but before 01.09.2024 or survey action conducted on or after 01-04-2021, such cases shall be selected for compulsory scrutiny with the prior approval of Principal CIT/Principal DIT/CIT/DIT and transferred to Central Charges under Section 127 of the ITA 1961 only if such cases are covered by the Board's guidelines under F.No. 299/107/2013-IT (Inv. III)/1568, dated 25-04-2014.

1.4. Cases related to registration/approval

Cases where registration/approval under Section 12A, Section 12AB, Section 35(1)(ii)/(iia)/(iii), Section 10(23C)(iv)/(v)/(vi)/(via), etc. of the ITA 1961 has not been granted or cancelled or withdrawn on or before 31.03.2025 and the assessee has been found to be claiming tax exemption/deduction in the return filed in ITR-7, such cases shall be compulsorily selected for scrutiny on the basis of return filed in FY 2025-26.

However, where such orders of withdrawal of registration or approval have been reversed or set aside in appellate proceedings, those cases will not be selected under this clause.

In such cases, a notice under Section 143(2) of the ITA 1961 for compulsory selection shall be issued through NaFAC. Assessment proceedings in such cases will be conducted by NaFAC.

1.5. Cases involving addition in an earlier assessment year(s) on a recurring issue of law of fact and/or law and fact

Where the addition in an earlier assessment year(s) on a recurring issue of law or fact and/or law and fact (including transfer pricing issue) exceeds Rs. 50 lakh in 8 metro charges (Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai, and Pune) or exceeding Rs. 20 lakh in other charges and such addition has become final or has been upheld by the Appellate Authorities in favour of revenue even if a further appeal of the assessee is pending against such order.

In such cases, a notice under Section 143(2) of the ITA 1961 for compulsory selection shall be issued through NaFAC. Assessment proceedings in such cases will be conducted by NaFAC.

1.6. Cases related to specific information regarding tax evasion

Cases in respect of which specific information pointing out tax evasion for the relevant assessment year is provided by any law enforcement agency (Investigation Wing/Intelligence/Regulatory Authority/Agency, etc.) and return for the relevant assessment year is furnished by the assessee.

In such cases, a notice under Section 143(2) of the ITA 1961 for compulsory selection shall be issued through NaFAC. Assessment proceedings in such cases will be conducted by NaFAC.

2. Others

2.1. Scrutiny in case of a return filed in response to notice under section 142(1)

Where a return has been furnished in response to notice under Section 142(1) of the ITA 1961 and such notice was issued due to the information contained in NMS Cycle/AIS/Statement of Financial Transactions (SFT)/CPC-TDS information/information received from the Directorate of I&CI, such return will not be taken up for compulsory scrutiny, unless such cases fall under the Para 1.6. Selection of such cases for scrutiny will be done through the Computer-Aided Scrutiny Selection (CASS) cycle.

2.2. Cases already selected by International taxation and Central Circle charges

The cases, which are selected for compulsory scrutiny by the International Taxation and Central Circle charges following the above parameters and procedures, shall continue to be handled by these charges. It is also clarified that communication to NaFAC for access and/or further action after the selection of Compulsory Scrutiny will not apply to the International taxation and Central charges.

2.3. Time limit for selection of cases

Cases for compulsory scrutiny on the basis of the above parameters shall be selected by the following time limit:

References

Circular F. NO. 225/56/2026/ITA-II, dated 04-06-2026

This article is general information and not tax advice. Provisions change. Confirm your position with a qualified professional before acting.