CBDT Compulsory Scrutiny Guidelines FY 2026-27: Who Gets Selected & What You Must Do
If you received a notice under Section 143(2) of the Income-tax Act, 1961 for returns filed in FY 2025-26 (AY 2026-27), this circular is the reason. CBDT has released six specific scenarios under which returns are mandatorily picked up for complete scrutiny. Understanding these parameters protects you from surprises.
What Is Compulsory Scrutiny?
In the regular course, most income tax returns are processed under Section 143(1) without any examination. However, under Section 143(2), the Assessing Officer can issue a notice requiring you to appear and explain your return in detail. When CBDT mandates this for certain categories of cases, it is called Compulsory Scrutiny — as opposed to CASS-based scrutiny.
For FY 2026-27, CBDT has prescribed six scenarios coded CS 01 to CS 06. If your return falls under any of these, scrutiny is not discretionary — it is mandatory.
The Six Compulsory Scrutiny Parameters
Your return is liable for compulsory scrutiny if a survey under Section 133A of the Income-tax Act, 1961 (other than Section 133A(2A)) was conducted at your business or residential premises on or after 1 April 2024.
Cases are selected by the Directorate of IT (Systems) with approval of DGIT(Systems), Delhi. Notice under Section 143(2) is served through the Prescribed Income-tax Authority or the Assessing Officer.
Returns are compulsorily selected where a search under Section 132 or requisition under Section 132A was initiated on or after 1 April 2024.
For searches initiated on or after 1 September 2024, the return selected will be for the Assessment Year covered under Section 158BA(6) of the Income-tax Act, 1961.
(i) Search/Survey before 1 September 2024: Where search was initiated or survey was conducted on or after 1 April 2021, and notice under Section 148 has been issued, the Jurisdictional Assessing Officer (JAO) shall serve the Section 143(2) notice directly.
(ii) Non-search/non-survey Section 148 cases to be completed by 31 March 2027: These are forwarded by the Directorate of IT (Systems) to the National Faceless Assessment Centre (NaFAC), which takes further action.
In both sub-categories, the JAO must upload the underlying documents on the basis of which the Section 148 notice was issued.
This covers trusts, institutions, and research bodies whose registration/approval has been denied or cancelled on or before 31 March 2025 under sections such as 12A, 12AB, 35(1)(ii)/(iia)/(iii), 10(23C)(iv)/(v)/(vi)/(via), and the assessee has still claimed exemption in ITR-7.
- Cases selected by Directorate of IT (Systems) via NaFAC
- Cases where appellate proceedings have reversed the cancellation are excluded
Where an addition in an earlier Assessment Year on a recurring issue of law, fact, or both (including transfer pricing) has become final or has been upheld by Appellate Authorities in favour of Revenue:
| Location | Addition Threshold |
|---|---|
| Eight Metro Charges (Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai, Pune) | Exceeding Rs. 50 Lakh |
| All other charges | Exceeding Rs. 20 Lakh |
Consolidated list to be submitted to Directorate of IT (Systems) by 15 June 2026.
Cases where specific information pointing to tax evasion has been provided by any law-enforcement or regulatory agency — Investigation Wing, ED, Regulatory Authorities, etc. — and the taxpayer has filed a return for that Assessment Year.
Important clarification: Returns filed in response to a Section 142(1) notice issued purely on NMS/AIS/SFT/CPCTDS/Directorate of I&CI data are not covered under compulsory scrutiny unless they independently fall under CS 06.
Key Dates and Deadlines
Critical Timelines You Must Know
Special Rules for International Taxation and Central Charges
Assessing Officers in International Taxation Charges and Central Charges can select cases under all the above parameters with prior administrative approval of Pr.CIT/Pr.DIT/CIT/DIT. However, these cases continue to be handled by International Taxation and Central Circle charges respectively — the NaFAC access/referral mechanism does not apply to these charges.
How This Differs from CASS Scrutiny
CASS (Computer-Aided Scrutiny Selection) selects returns based on risk algorithms — income levels, high-value transactions, mismatches. Compulsory Scrutiny under these guidelines is a separate and more serious track driven by specific events such as a survey, search, intelligence tip, or prior disallowance. The scrutiny is complete and intensive, covering all heads of income for the relevant year.
What Should You Do If You Receive a Section 143(2) Notice?
- Do not ignore it. Non-compliance leads to best judgement assessment under Section 144.
- Identify which parameter applies. The notice may not state the reason. Review CS 01 to CS 06 to understand the Department’s likely concerns.
- Compile documentation proactively. The JAO is required to upload the specific evidence on the portal. Understand what that information might be before your first hearing.
- Engage a tax advocate or CA. Compulsory scrutiny cases require careful preparation of written submissions and supporting documents.
- Do not make voluntary admissions. Statements made during scrutiny proceedings carry evidentiary weight.
Frequently Asked Questions
My ITR for FY 2025-26 has been processed under 143(1). Can it still be selected for scrutiny?
I received a survey in May 2024. Will both my AY 2025-26 and AY 2026-27 returns be scrutinised?
My trust’s registration was cancelled but an appeal is pending. Am I covered under CS 04?
What is the difference between compulsory scrutiny and faceless assessment?
If information was received from SFT or AIS, will my return be automatically selected?
Received a Scrutiny Notice? We Can Help.
Our team of CAs and Tax Advocates handles Section 143(2) scrutiny notices, Section 148 reassessments, and search/survey follow-up cases across India — with full documentation support and representation.
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