Here is a comprehensive summary of the CBDT guidelines for the compulsory selection of income tax returns for complete scrutiny during the Financial Year (FY) 2026-27.

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Overview and Key Timelines

• Authority: Issued by the Central Board of Direct Taxes (CBDT), Ministry of Finance, Government of India under F.No.225/56/2026/ITA-II. Dated 4th June 2026

• Statutory Basis: Guidelines are framed in pursuance of Section 536(2)(c) of the Income-tax Act, 2025, for returns filed during FY 2025-26.

• Stipulated Deadline: The statutory time limit for serving notices under section 143(2) of the Income-tax Act, 1961 to assessees is June 30, 2026.

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Scrutiny Selection Parameters (Systems Scenario Codes)

The CBDT has established 6 specific parameters for compulsory scrutiny selection:

1. Survey Cases (CS 01)

• Criteria: Cases where a survey under section 133A (excluding section 133A(2A)) was conducted on or after April 1, 2024.

• Procedure: Automatically selected by the Income-tax (Systems) Directorate with DGIT (Systems) approval, based on list inputs from the Investigation Wing.

• Jurisdiction: If currently outside Central Charges, it must be transferred there within 15 days of serving the 143(2) notice.

2. Search & Requisition Cases (CS 02)

• Criteria: Cases involving a search initiated under section 132 or a requisition made under section 132A on or after April 1, 2024.

• Procedure: Selected manually by the concerned Assessing Officer (AO) following prior administrative approval from the Pr. CIT/CIT. Returns filed for searches on/after September 1, 2024, fall under special block assessment provisions of section 158BA(6).

3. Reassessment Notices under Section 148 (CS 03)

• Search/Survey Related (i): Cases where search & seizure was initiated between April 1, 2021, and August 31, 2024, or a survey conducted on/after April 1, 2021. Notices are served by the Jurisdictional Assessing Officer (JAO).

• Other Cases (ii): All other section 148 notice cases scheduled to be completed by March 31, 2027. These are handled via the National Faceless Assessment Centre (NaFAC).

• Requirement: JAOs must upload all underlying document trails that justified the issuance of the section 148 notice.

4. Non-Approval/Cancellation of Tax Exemptions (CS 04)

• Criteria: Trusts, institutions, or funds (registered under sections 12A, 12AB, 10(23C), etc.) whose registration or statutory tax-exempt status was denied, cancelled, or withdrawn on or before March 31, 2025, but who still claimed tax exemptions or deductions in their ITR-7 filings.

• Exception: Cases where the cancellation or withdrawal order has been set aside or reversed in legal appellate proceedings will not be selected.

5. Recurring Issues Involving Significant Additions (CS 05)

• Criteria: Cases involving recurring legal or factual tax additions (including transfer pricing issues) made in earlier assessment years that have either become final or were upheld by Appellate Authorities.

• Monetary Thresholds:

  • Exceeding ₹50 Lakh in 8 Metro Charges (Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai, and Pune).

  • Exceeding ₹20 Lakh in all non-metro charges.

• Timeline: The consolidated list approved by the Pr. CIT must be forwarded by the Pr. CCIT to the Systems Directorate latest by June 15, 2026.

6. Specific Tax Evasion Information (CS 06)

• Criteria: Cases where explicit, verifiable tax evasion information for the relevant assessment year has been officially provided by external law enforcement or regulatory agencies (e.g., Investigation Wing, Intelligence, etc.), provided the assessee has filed a return.

• Clarification: Returns filed merely in response to routine notices under section 142(1) driven by NMS Cycle, AIS, SFT, or CPC-TDS data stream flags will not trigger compulsory scrutiny unless they qualify directly under this specific parameter.

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Special Provisions: International Taxation & Central Charges

• Cases falling under International Taxation or Central Circle charges will follow the identical parameter criteria but must obtain prior administrative approval from their respective Pr. CIT/CIT/DIT.

• These cases will continue to be handled directly by their respective dedicated circle charges; standard NaFAC electronic communication channels and access routing protocols do not apply to them.