Guideline for ITR Compulsory Selection for Complete Scrutiny

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Guidelines for Compulsory Selection of Returns for Complete Scrutiny – FY 2025-26

The Central Board of Direct Taxes (CBDT) has released its Central Action Plan (CAP) for FY 2025–26, setting the tone for India’s income tax administration. With a strong focus on litigation management, early refunds, quality scrutiny, and enhanced taxpayer services, this year’s plan aims to foster a transparent, digital-first, and compliance-friendly ecosystem.
Central Board of Direct Taxes issued circular to the Department of Revenue, Ministry of Finance, Government of India. Date: 13th June 2025 and this circular is relevant for All Pr. CCITs / CCITs / Pr. DGITs / DGITs and purpose of this circular is to define criteria and procedures for compulsory selection of scrutiny cases.

What Is the CBDT Central Action Plan?

CBDT Central Action Plan FY 2025–26 : The CBDT Central Action Plan is an annual blueprint to Set performance benchmarks for income tax officers, Streamline assessment and appeal procedures, Boost taxpayer-centric services, Ensure timely and efficient legal compliance, For FY 2025–26, the Central Action Plan continues last year’s themes while intensifying focus on High-quality scrutiny, Faster refund issuance, Faceless appeal finalization
The CBDT Central Action Plan FY 2025–26 is a continuation of India’s evolving, digital-centric tax regime. With a sharper focus on transparency, faceless assessments, and faster service delivery, the Plan reflects the government’s commitment to a modern, taxpayer-friendly administration.
Central Action Plan is supported by Income-tax Act, 1961, Section 119 – Empowers CBDT to issue directives, Union Budget 2024–25 – Focused on faceless schemes and digital reforms & Notifications and circulars available on the CBDT Official Website
The CBDT Central Action Plan Targets in By the Numbers, i.e., 100% disposal of appeals pending >3 years, income tax Refunds within 30 days of ITR processing, Scrutiny case resolution: Targeted for completion by Q3 FY 2025–26 (except special audits) and Surveys: To be data-driven only, with prior administrative approval
Our experts are saying about it With strict timelines in place under this year’s Central Action Plan, early filing of ITRs and timely response to notices is crucial to avoid scrutiny-related penalties and refund delays

Compulsory Scrutiny Parameters for Selection of Returns for Complete Scrutiny – FY 2025-26

Code	Scenario	Criteria	Procedure
CS01	Survey u/s 133A (excluding 133A(2A)) post 01.04.2023	Based on information from CIT (Inv)(OSD), selected by DIT(Systems).	Transfer to Central Charges u/s 127 within 15 days of notice u/s 143(2).
CS02	Search/requisition u/s 132/132A between 01.04.2023 and 31.08.2024	With approval from Pr.CIT/CIT.	Transfer to Central Charges u/s 127 within 15 days.
CS03	Search/requisition u/s 132/132A between 01.09.2024 and 31.03.2025	With approval from Pr.CIT/CIT.	Same as above.
CS04	Registration/approval u/s 12A, 35(1)(ii)/(iia)/(iii), 10(23C), etc. withdrawn/cancelled but exemption claimed in ITR-7	Based on returns filed in FY 2024-25.	Notice u/s 143(2) through NaFAC.
CS05	Recurring additions (final or upheld) in past A.Ys exceeding ₹50L (Metro) / ₹20L (Non-metro)	Prepared by JAO; approved by Pr.CIT/CIT; consolidated by Pr.CCIT.	Notice u/s 143(2) via NaFAC.
CS06	Specific tax evasion info from law enforcement agencies	Info must be for relevant A.Y. and return filed by assessee.	Notice via NaFAC; documents uploaded by JAO.

Important CBDT Clarifications related to response to Section 142(1) notice

Income tax returns filed in response to Section 142(1) notice due to info from NMS, AIS, SFT, CPC-TDS, etc., will not be selected for compulsory scrutiny. These may be selected under CASS (Computer Aided Scrutiny Selection). Key Focus Areas for Compulsory Scrutiny Parameters for Selection of ITR for Complete Scrutiny for FY 2025–26

Priority Area	Action Points
1. Litigation Management	Prioritize disposal of appeals pending before CIT(A) and ITAT, especially those pending for more than 3 years.
2. Timely Refunds	Process valid refunds within 30 days of ITR processing.
3. Disposal of Scrutiny Cases	Fast-track assessment closures, especially high-potential scrutiny cases, ensuring quality documentation.
4. Prosecution Management	Regular review and quarterly reporting of pending prosecution cases under the Income-tax Act.
5. Faceless Appeal Finalization	Ensure timely completion of appeals under National Faceless Appeal Centre (NFAC).
6. Taxpayer Services	Strengthen e-Nivaran grievance redressal, promote e-filing, and expand digital support infrastructure.
7. High-Demand Recovery	Intensify recovery actions for top 100 high-demand cases in every region.
8. Survey and Enforcement	Conduct surveys only in high-risk sectors, triggered by data intelligence and approved protocols—no random surveys.

Income tax returns, related notices & income tax case handling CBDT instructions:

For AO/NFAC Action: Notice u/s 148 issued – whether return filed or not – to be handled via NaFAC if not a search case. If Search/Survey conducted (01.04.2021 to 31.08.2024) and return filed – issue notice u/s 143(2), transfer to Central Charges. Third-party data (non-core group) from search cases does not require transfer to Central Charges unless as per Board guidelines dated 25.04.2014.
International Taxation & Central Circle Cases : Cases shall be selected as per these parameters with prior approval and will continue to be handled within their respective charges. NaFAC coordination not applicable for these cases.
CBDT Instruction for Authorities : All Pr.CITs, Pr.DGITs, CITs, etc., must ensure Timely identification and approval of cases, Submission of lists to Pr.CCIT and further to DIT(Systems) by 23.06.2025 Uploading of documents by JAOs for NaFAC action
The deadline for Service of Notice u/s 143(2) is For ITRs filed in FY 2024-25: Deadline is 30.06.2025
How It Impacts Different Taxpayers
- Salaried individuals expect faster income tax refund processing and better grievance resolution.
- Consultants & CAs Need to ensure accurate submissions and track scrutiny timelines.
- Businesses must tighten controls over TDS compliance and real-time audits and respond swiftly to enforcement actions.

Frequently Asked Questions (FAQs)

Q1. Does this affect AY 2024–25 returns?

Ans : Yes. Refunds and scrutiny for AY 2024–25 will follow CAP timelines and quality guidelines.

Q2. Will scrutiny cases increase?

Ans : Not necessarily in number, but the depth and quality of scrutiny will improve.

Q3. Can refund status be checked faster now?

Ans : Yes. Use the TIN-NSDL Refund Portal for real-time updates.