CBDT Issues Guidelines for Compulsory Scrutiny Selection in FY 2025–26: Key Parameters and Procedures

Notification No. F.No.225/37/2025/ITA-II, dated 13th June 2025

The Central Board of Direct Taxes (CBDT) has issued fresh guidelines for the compulsory selection of income tax returns for Complete Scrutiny during Financial Year (FY) 2025–26. This annual exercise, governed by internal parameters, is critical for targeted tax administration and effective compliance monitoring under the Income-tax Act, 1961.

Scope and Applicability

The guidelines mandate that Assessing Officers (AOs) select specific categories of cases for mandatory scrutiny based on identifiable high-risk triggers. The following parameters form the cornerstone of compulsory scrutiny selection for FY 2025–26:

Parameters for Compulsory Selection

1. Cases pertaining to survey operations under Section 133A of the Act.

2. Search & seizure or requisition cases:

   • Where such action occurred on or after 01.04.2023 but before 01.09.2024.

   • Cases where such action took place on or after 01.09.2024 but before 01.04.2025.

3. Cases involving registration/approval under various sections such as:

   • Section 12A / 12AB (charitable/religious trusts),

   • Section 10(23C) (educational institutions, hospitals),

   • Section 80G (donations),

   • and other provisions requiring formal approvals.

4. Recurring additions in earlier assessments:

   • Where identical issues (of fact, law, or both) were repeatedly added in earlier years and have attained finality (e.g., confirmed by ITAT or higher courts).

5. Cases flagged based on specific information:

   • Cases where credible information indicating tax evasion or concealment has been received from:

     • Law enforcement agencies,

     • Intelligence units,

     • Other regulatory authorities,

     • Or inter-departmental sources.

❌ Clarification: Non-Inclusion of NMS/AIS/SFT-Based Notices

Importantly, the CBDT has excluded certain categories of information-driven scrutiny from the mandatory list. It is clarified that returns filed in response to notices under Section 142(1)—based on data from NMS (Non-filers Monitoring System), AIS (Annual Information Statement), SFT (Statement of Financial Transactions), CPC-TDS, or the Directorate of I&CI—will not be selected for compulsory scrutiny under this guideline.

Such cases, however, may still be scrutinized through the Computer Assisted Scrutiny Selection (CASS) route depending on risk parameters.