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May 23, 2024
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Mandatory Scrutiny of ITR: Income Tax Department Reveals Selection Criteria for FY 2024-25

The Income Tax Department has released a detailed circular outlining the criteria and procedures for selecting income tax returns (ITRs) for scrutiny. These guidelines, issued by the Central Board of Direct Taxes (CBDT) on May 3, 2024, provide taxpayers with clarity on why their ITR might be chosen for a close examination.

Key Criteria for Scrutiny Selection

  1. Section 142(1) Notices:

    • Parameters: Notices issued under section 142(1) where no ITR has been filed.
    • Procedure: The assessing officer (AO) will upload the relevant documents to the National Faceless Assessment Centre (NaFAC).

  2. Survey Cases under Section 133A:

    • Parameters: Assessments resulting from surveys under section 133A indicating tax evasion.
    • Procedure: These cases require prior administrative approval and must be transferred to Central Charges within 15 days of issuing a notice under section 143(2).

  3. Search and Seizure/Requisition Cases:

    • Prior to April 1, 2021:
      • Parameters: Assessments under section 153C related to search and seizure conducted before this date.
      • Procedure: Cases are selected for scrutiny with administrative approval and transferred to Central Charges within 15 days of notice issuance.
      • Additional Notes: If no ITR is filed in response to a notice under section 153C, a notice under section 142(1) will be issued.
    • On or after April 1, 2021:
      • Parameters: Similar procedures apply to search and seizure cases conducted after this date.
      • Procedure: Cases are selected for scrutiny with administrative approval and transferred to Central Charges within 15 days of notice issuance.

  4. Section 148 Notices:

    • Parameters: ITRs filed or not filed in response to section 148 notices.
    • Procedure:
      • For notices due to search and seizure after April 1, 2021, cases are transferred to Central Charges within 15 days.
      • For other cases, scrutiny is completed by NaFAC by March 31, 2025, with notices served through NaFAC.

  5. Specific Information on Tax Evasion:

    • Parameters: Information provided by any law enforcement agency indicating tax evasion for the relevant assessment year.
    • Procedure: The jurisdictional AO compiles and submits these cases for scrutiny with administrative approval.

Emphasizing Transparency and Data-Driven Approach

The CBDT’s guidelines aim to enhance transparency in the scrutiny process. By relying on a data-driven approach, the Income Tax Department minimizes discretionary powers, ensuring a fair and efficient assessment process.

For more insights and updates on tax-related matters, stay tuned to Dinesh Aarjav & Associates

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