Recently, the Central Board of Direct Taxes (CBDT) issued guidelines for compulsory selection of income tax returns (ITRs) for complete scrutiny and in this regard specified two deadlines, one for internal use and the other for sending tax notices.
The two deadlines are:
- June 15, 2026: (internal deadline) Tax officers have to forward certain selected ITRs which satisfy specific guidelines to the Directorate of Income Tax (Systems) so that further action can be taken.
- June 30, 2026: This is the deadline for issuance of tax notice under Section 143(2) for ITRs filed in FY 2025-26.
This circular by CBDT is not in public domain and this correspondent has seen a copy of it via sources.
What do these two deadlines mean for taxpayers?
Chartered Accountant Suresh Surana says that based on the CBDT guidelines, the two dates serve different purposes. June 30, 2026 is the statutory deadline for issuance/service of notice under Section 143(2) for ITR filed in FY 2025-26, whereas June 15, 2026 is an internal administrative deadline applicable to certain categories of compulsory scrutiny cases.
Legal time limit for scrutiny notice (June 30, 2026): Under Section 143(2), the Income Tax Department must issue/service a scrutiny notice within the prescribed timeline.
The CBDT circular specifically reiterates that for ITRs filed in FY 2025-26, the deadline for serving a Section 143(2) notice is June 30, 2026. If no notice is issued by this date, ordinarily the ITR cannot be picked for scrutiny under Section 143(2) of the Income-tax Act, 1961.
Internal cut-off for tax officers in selected cases (June 15, 2026): The June 15 timeline is an internal administrative deadline for field officers under CS05 and CS06 categories. These categories relate to:
- Cases involving addition in an earlier assessment year(s) on a recurring issue of law or fact and/or law and fact, such as recurring additions that have attained finality or have been upheld in favour of the Revenue (tax department) (CS05) and
- Cases related to specific information regarding tax evasion, where inputs are received from investigation wings, law enforcement agencies, regulatory authorities, or other credible information sources pointing to possible tax evasion (CS06).
The CBDT has directed jurisdictional officers to compile and forward such cases to the Directorate of Income-tax (Systems) latest by June 15, 2026, so that scrutiny selection can take place and notices issued within the statutory deadline of 30 June 30, 2026.
As per the circular, CS 05 is cases involving large additions in earlier assessment years to be scrutinised: Cases involving income additions in earlier assessment years on recurring issues of law or fact including income additions that exceeds Rs 50 lakh in Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune, or Rs 20 lakh in other charges; and such addition has become final or has been upheld by appellate authorities in favour of Revenue.
CS 06 is cases related to specific information regarding tax evasion: Cases where specific information indicating tax evasion for the relevant assessment year is provided by law-enforcement agencies, Investigation Wing, Intelligence agencies, Regulatory authorities, etc., and the return for the relevant assessment year has been furnished. ITRs filed in response to notice u/s 142(1) linked only to AIS/SFT/CPC-TDS information will not be selected unless they fall under CS 06.
Tax scrutniy notice can be sent by June 30, 2026 to certain taxpayers
Rahul Jain, Partner at Khaitan & Co, said to ET Wealth Online: “The provisions of Section 143(2) (which are now replaced by Section 270(8) and Section 270(9) of the Income-tax Act, 2025) require the tax officer to serve the scrutiny notice on the taxpayer until the expiry of 3 months from the end of the financial year in which the tax return has been filed.”
Jain says that for ITR filed in the financial year 2025-26, the outer timeline for the tax officer to initiate the scrutiny proceedings and serve the notice is 30 June 2026. If a taxpayer’s case falls within any of the parameters set out in the CBDT Circular, such a taxpayer may expect a scrutiny notice to be received anytime until June 30, 2026.
What can taxpayers do if there is some error on their part and they are likely to get a scrutiny notice?
Surana says that taxpayers who identify an error, omission or mismatch in their return should not assume that receipt of a scrutiny notice is inevitable.
Moreover, the income tax law also provides mechanisms to voluntarily correct genuine mistakes, and proactive compliance is generally viewed more favourably than waiting for departmental action.
According to Surana, where the ITR has already been filed, taxpayers should first review the ITR with their books of account (if applicable), Form 26AS, AIS/TIS, bank statements, capital gains statements and other supporting records to identify the nature and extent of the discrepancy.
Surana says: “If the error pertains to omission of income, incorrect claim of deduction, reporting mismatch or any other bona fide mistake, the taxpayer can consider filing a return ITR or updated ITR (ITR-U) subject to applicable conditions and additional tax implications.”
Surana says that taxpayers need to make sure that they have enough documentation to back up the claims made in their returns.
Surana says: “Many scrutiny cases arise not merely because of a tax adjustment but because the taxpayer is unable to furnish supporting evidence when called upon by the Department.”
Therefore, maintaining proper records, reconciliations and explanations can significantly strengthen the taxpayer’s position if a notice is eventually issued.
What can taxpayers do if there is any error in thier ITR but scrutiny notice has not yet been sent for FY 2025-2026?
Since the timeline to revise the ITR filed for FY 2025-2026 is over, so the opportunity to correct the errors has lapsed.
However, Jain says that if the taxpayers believe certain errors may have occurred at the time of filing the ITR on a bonafide basis, appropriate explanation backed up by documentary evidence may be furnished during the scrutiny proceeds and pay the incremental taxes (if any) along with applicable interest, to avoid any penal consequences.
Jain says: “The tax provisions also provide an alternative mechanism to file an updated tax return prior to receipt of the scrutiny notice, to correct the errors but with payment of an additional amount equivalent to 25% of the incremental taxes and interest liability.”
What can taxpayers do if they already have got a scrutiny notice for FY 2025-2026?
The course of action would depend on the facts of the case and the reason for scrutiny. There can be two events: a) Tax notice is sent erroneously b) Tax notice is correct
Taxpayer believes everything is correct and tax notice is erroneous
Where the taxpayer believes that the return is correct and all disclosures have been made, the scrutiny notice should not be viewed as a cause for concern.
According to Surana, selection of ITR for scrutiny does not imply any wrongdoing; it merely indicates that the Income-tax Department seeks clarification or verification of specific transactions or claims.
Surana says: “In such cases, the taxpayer should carefully review the notice, identify the issues under examination, and submit complete and accurate supporting documentation within the prescribed timelines.”
Tax notice is correct and taxpayer has made an error
When the taxpayer subsequently realizes that there is an error, omission or incorrect claim in the return, Surana says it is advisable to assess the extent of the exposure and duly respond during the scrutiny proceedings.
In either scenario, taxpayers should carefully evaluate the notice, maintain proper documentation, and ensure timely compliance with all information requests issued by the tax authorities.”
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