The Central Board of Direct Taxes (CBDT) has issued guidelines for compulsory selection of income tax returns for complete scrutiny during Financial Year 2026-27.
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The guidelines govern returns filed under the Income-tax Act, 1961, but cite the provisions of the new Income-tax Act, 2025 as the legal authority for issuing them. As in previous years, the framework aims to standardise case selection criteria for consistent tax scrutiny.
Who May Face Tax Scrutiny?
1. Under CBDT’s norms, cases where a survey under Section 133A of the Income-tax Act, 1961, was conducted on or after April 1, 2024, will be selected for complete scrutiny. These will not include the surveys under Section 133A(2A)). Section 133A of the Income-tax Act, 1961 empowers income tax authorities to conduct surveys at business or professional premises to verify tax compliance.
2. CBDT’s guidelines for FY 2026-27 also cover cases involving search under Section 132 or requisition under Section 132A of the Income-tax Act, 1961, initiated on or after April 1, 2024. As per the tax department, these provisions enable tax authorities to collect evidence of undisclosed income or wealth and to seize related assets for securing tax or penalty demands.
“Section 132B governs the application and release of assets seized. Section 132A empowers requisition of books, documents or assets from other authorities..,” it explained.
3. Cases under section 148 and 143(2): Where a notice under Section 148 has been issued, cases fall into this parameter if they involve search action initiated on or after April 1, 2021 but before Sept. 1, 2024, or survey action conducted on or after April 1, 2021. In such cases, the Jurisdictional Assessing Officer serves notice under Section 143(2). Section 148 deals with cases where the authorities reassess a taxpayer’s income if there is credible evidence that taxable income has escaped assessment (or was under-reported).
4. CBDT’s parameters for FY27 also cover entities claiming exemption under registration or approval provisions such as Sections 12A, 12AB, and others of the the Income-tax Act, 1961.
“Cases will be selected where such registration or approval has not been granted, or has been cancelled/withdrawn by the Competent Authority on or before March 31, 2025, based on returns filed by these entities in FY26,” the notice read. These provisions mainly deal with entities claiming exemption or deductions while filing ITR 7.
5. The guidelines also mandate compulsory scrutiny for cases with recurring additions from earlier years. This amount stands at over Rs 50 lakh in eight metro cities or Rs 20 lakh elsewhere, where the addition has become final or was upheld by Appellate Authorities favouring Revenue.
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6. Under CBDT’s FY 2026-27 guidelines, cases will face compulsory scrutiny where specific tax-evasion information for the relevant assessment year has been provided by any law-enforcement agency and the assessee has furnished a return for that year.
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