CBDT Confirms 30 June 2026 Deadline for Issuing Scrutiny Notices Under Section 143(2) of Income Tax Act

The Central Board of Direct Taxes (CBDT) has reaffirmed that 30 June 2026 is the statutory deadline for issuing scrutiny notices under Section 143(2) of the Income Tax Act in respect of Income Tax Returns (ITRs) filed for Financial Year 2025-26.

As part of its scrutiny selection process, the department has also prescribed an internal deadline of 15 June 2026 for certain identified categories of cases, including those involving significant recurring additions that have previously been sustained in favour of the tax authorities and cases supported by specific tax evasion information received from credible enforcement or regulatory agencies.

Key Areas of Scrutiny Selection

The scrutiny framework continues to prioritize returns that present identifiable compliance risks. Cases may be selected based on factors such as:

• Substantial income additions in earlier assessment years that have been upheld in favour of the tax department.
• Specific information indicating possible tax evasion received from reliable government or regulatory sources.
• Significant discrepancies between declared income and reported financial transactions.
• High-value deposits or transactions that are not adequately reflected in the taxpayer’s return.

Clarification on High Bank Balances

The tax administration has clarified that maintaining a high bank balance does not, by itself, result in the issuance of a scrutiny notice. The primary concern remains the existence of inconsistencies between financial transactions and income disclosed in the return.

While cash deposits exceeding ₹10 lakh may be captured through reporting mechanisms and subjected to review, such transactions do not automatically lead to penalties or scrutiny proceedings. The department generally examines whether the source of funds is properly disclosed and supported by records.

Compliance Review Recommended

Tax professionals have advised taxpayers to conduct a comprehensive review of their filed returns by reconciling information available in:

• Form 26AS
• Annual Information Statement (AIS)
• Taxpayer Information Summary (TIS)
• Bank account statements
• Books of account and supporting records

Any omission, mismatch, or reporting error identified at this stage should be evaluated promptly. Where applicable, taxpayers may consider filing an updated return in accordance with statutory provisions. However, additional tax liability and applicable charges, including the prescribed additional tax component, may arise depending on the circumstances.

Importance of Documentation

Proper maintenance of financial records remains critical during assessment proceedings. In many scrutiny cases, the issue relates not only to the reported transaction but also to the taxpayer’s ability to substantiate the information through supporting evidence and documentation.

Position After 30 June 2026

Following the expiry of the statutory timeline on 30 June 2026, ITRs filed for FY 2025-26 generally cannot be selected for scrutiny under Section 143(2) unless they have already been identified and processed within the prescribed framework.

Taxpayers who receive scrutiny notices should carefully review the nature of the selection and respond within the stipulated timelines. Timely submission of information and supporting documents can facilitate faster resolution of proceedings, whereas non-compliance may result in further assessment actions and potential tax demands.