Guidelines for Compulsory Selection of Returns for Complete Scrutiny – FY 2024-25
Introduction
The Central Board of Direct Taxes (CBDT) issues annual guidelines for compulsory scrutiny selection. For FY 2024-25, the guidelines were issued via Circular F. No. 225/72/2024/ITA-II, dated 03-05-2024.
Parameters for Compulsory Scrutiny Selection
- Cases Pertaining to Survey (Section 133A)
o If the survey detects specific information or material indicating tax evasion, the case is selected for compulsory scrutiny.
o Surveys under Section 133A(2A) are not selected for scrutiny.
Procedure:
o AO issues a notice under Section 143(2) with prior approval from Principal CIT/DIT.
o Case transferred to Central Charges under Section 127 within 15 days.
- Cases Pertaining to Search & Seizure
Search conducted before 01-04-2021
o Such cases are automatically selected for compulsory scrutiny.
o AO issues notice under Section 143(2)/142(1) with prior approval and transfers the case to Central Charges within 15 days.
Search conducted on or after 01-04-2021
o AO issues notice under Section 143(2)/142(1) with prior approval and transfers the case to Central Charges within 15 days.
o CBDT clarified that if third-party information is found during a search, such cases are not transferred to Central Charges unless they meet the criteria outlined in CBDT Guidelines F. No. 299/107/2013-IT (Inv. III)/1568, dated 25-04-2014.
- Cases Where Notice is Issued for Filing Return
o If no return is furnished → Case handled by NaFAC for compulsory scrutiny.
o AO uploads supporting documents, and further action is conducted through NaFAC.
- Cases Where Notice is Issued UnderSection 148
o All cases where a notice under Section 148 has been issued are selected for compulsory scrutiny, irrespective of whether a return is filed.
o AO uploads documents and NaFAC handles further proceedings.
o If search/survey was conducted on or after 01-04-2021, the case is transferred to Central Charges within 15 days.
o CBDT clarified that third-party cases found in a search are not transferred unless they meet specific guidelines.
- Cases Related to Registration/Approval (Sections 12A,12AB, 35, 10(23C))
o If exemption/deduction is claimed despite denial or withdrawal of registration/approval, the case is selected for compulsory scrutiny.
o If the withdrawal order is reversed in appeal, the case will not be selected.
- Cases with Additions in Earlier Assessments
o If a recurring issue of law or fact (including transfer pricing) resulted in an addition of:
o ₹25 lakh or more in metro cities (Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai, Pune).
o ₹10 lakh or more in other locations.
o The addition must have been upheld by appellate authorities in favor of the revenue.
- Cases Involving Tax-Evasion Reports
o Cases flagged by Law Enforcement Agencies, Investigation Wing, Intelligence Authorities, or Audit Reports.
- Other Cases
o Return filed in response to Section 142(1) notice due to information from NMS/AIS/SFT/CPC-TDS/IC&I → Not compulsory scrutiny; selected through CASS.
o Cases already selected by International Taxation & Central Circle continue under their jurisdiction.
Time Limits for Selection & Notices
|
Action |
Time Limit |
|
Selection & transfer of cases to NaFAC |
31-05-2024 |
|
Service of Notice under Section 143(2) |
30-06-2024 |