Decoding Income Tax Scrutiny Process

Decoding Income Tax Scrutiny Process

The Income Tax department recently released guidelines clarifying the process for selecting tax returns for scrutiny in the financial year 2024-25. This development offers taxpayers valuable insight into why their returns may undergo closer examination.

Every year, the I-T department employs Computer Assisted Scrutiny Selection (CASS), utilizing computer algorithms to flag returns for potential tax evasion based on risk parameters such as high refund claims, discrepancies in income, or unusual transactions.

Additionally, the CBDT has specified criteria for selecting returns for scrutiny. Here’s an overview of the key areas:

Additionally, specific scenarios outlined for compulsory scrutiny include cases involving information sharing by law enforcement agencies, unfiled returns despite notices, and instances of tax exemptions without proper registration.

The scrutiny process will mainly be conducted in a faceless manner, with initial notices issued by jurisdictional Income Tax officers and assessments carried out by the National Faceless Assessment Centre. However, certain cases, such as those involving non-resident assesses or international transactions, will undergo e-proceedings with jurisdiction disclosed in notices.

The guidelines aim to achieve targeted scrutiny, streamline the process, and ensure transparency and fairness for taxpayers. By providing clear parameters for selection, leveraging digital platforms, and emphasizing transparency, the new guidelines aim to enhance the efficiency and integrity of the scrutiny process.

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