Demystifying the New Scrutiny Guidelines for ITRs (FY 2024-25)

The Central Board of Direct Taxes (CBDT) has released guidelines for compulsory selection of Income Tax Returns (ITRs) for complete scrutiny for Financial Year (FY) 2024-25. These guidelines provide transparency in the tax department's functioning and bring in a data-driven approach for identifying cases for scrutiny assessment.

In this blog, we will demystify the new scrutiny guidelines for ITRs (FY 2024-25) and provide a comprehensive guide for taxpayers.

Specified Cases for Compulsory Scrutiny

The Income Tax Department will pick up a particular ITR for complete scrutiny based on certain predefined parameters. Here are some of the specified cases:

Cases in which notices under section 142(1) have been issued but no ITR has been filed

• Parameters: The tax department will consider cases where no ITR was filed in response to a notice sent under section 142(1).
• Procedure: The jurisdiction assessing officer (AO) shall upload the underlying documents based on which notice under section 142(1) was issued for access by the National Faceless Assessment Centre (NaFAC).

Cases pertaining to survey under section 133A

• Parameters: The assessments in search and seizure cases are to be made under section 153C, read with section 143(3), and also for ITRs filed for the assessment year relevant to the previous year in which the search was conducted under section 132 or requisition was made under section 132A.
• Procedure: These cases shall be selected for scrutiny with prior administrative approval of the Principal Commissioner of Income tax/Principal Director of Income tax/ Commissioner of Income tax/ Director of Income tax concerned, who shall ensure that such cases are transferred to Central Charges under section 127 within 15 days of serving of notice under section 143(2) by the jurisdictional assessing officer concerned.

Cases pertaining to Search and Seizure

These cases are subdivided into two parts based on the date when this occurred.

Search and seizure/ requisition prior to April 1, 2021

• The assessments in search and seizure cases are to be made under section 153C, read with section 143(3), and also for ITRs filed for the assessment year relevant to the previous year in which the search was conducted under section 132 or requisition was made under section 132A.

Search and seizure/ requisition on or after April 1, 2021

• These cases shall be selected for scrutiny with prior administrative approval of the Principal Commissioner of Income tax/Principal Director of Income tax/ Commissioner of Income tax/ Director of Income tax concerned, who shall ensure that such cases are transferred to Central Charges under section 127 within 15 days of serving of notice under section 143(2)/142(1).

Cases in which notices under section 148 have been issued

• Parameters: Cases where the ITR is either furnished or not furnished in response to notice sent under section 148.
• Procedure: There are two procedures based on the dates.
  • a. Cases where notice under section 148 has been issued due to search and seizure/survey actions conducted on or after April 1, 2024: These cases shall be selected for compulsory scrutiny with prior administrative approval of Principal Commissioner of Income tax/Principal Director of Income tax/ Commissioner of Income tax/Director of Income tax concerned, who shall ensure that such cases are transferred to Central Charges under section 127 within 15 days of serving of notice under section 143(2)/142(1).
  • b. Cases where notice under section 148 has been issued due to search and seizure/survey actions conducted prior to April 1, 2024: These cases shall be selected for scrutiny with prior administrative approval of Principal Commissioner of Income tax/Principal Director of Income tax/ Commissioner of Income tax/ Director of Income tax concerned, who shall ensure that such cases are transferred to Central Charges under section 127 within 15 days of serving of notice under section 143(2)/142(1).

Conclusion

The new scrutiny guidelines for ITRs (FY 2024-25) provide transparency in the tax department's functioning and bring in a data-driven approach for identifying cases for scrutiny assessment. By understanding these guidelines, taxpayers can ensure that they are compliant with the tax laws and avoid any potential scrutiny.

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