This year, the Income Tax Department has further strengthened the scrutiny process for taxpayers filing Income Tax Returns (ITR). The Central Board of Direct Taxes (CBDT) has decided to strictly implement the scrutiny system under Section 143(2) of the Income Tax Act. The purpose of this process is to verify the information provided in the returns filed by taxpayers and to check for any discrepancies or inconsistencies.
The Income Tax Department has fixed June 30, 2026 as the last date for issuing scrutiny notices for returns related to the financial year 2025-26. If a taxpayer does not receive notice by this date, his return will not be selected for scrutiny in this financial year.
What is section 143(2)?
Section 143(2) of the Income Tax Act empowers the Assessing Officer to conduct a detailed investigation of the return of a taxpayer. If the officer feels that the income has been understated, loss has been overstated or tax has been underpaid in the return, he can send a notice to the taxpayer.
After receiving the notice, the taxpayer has to submit necessary documents and evidence in support of his claims. This may include income details, investment documents, tax exemptions and other financial records.
In which cases may the risk of investigation increase?
According to experts, cases involving discrepancies in AIS, Form 26AS and ITR, large financial transactions, unusual tax exemption claims or risk profiles may be selected for scrutiny. However, being selected for investigation does not constitute evidence of any tax evasion or irregularities.
Don’t panic when you get notice
Tax experts say that if scrutiny notice is received then there is no need to panic. The taxpayer should respond timely and seek help from a chartered accountant or tax advisor if needed. By providing correct documents and clear information, the investigation process can be completed easily. The aim of the department is not to harass taxpayers, but to improve tax compliance.
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