CBDT Scrutiny Framework for FY 2026-27: Compulsory Triggers, CASS Selection & Practical Preparation Strategy

The CBDT instruction dated 4 June 2026 (F.No. 225/56/2026/ITA-II) has reshaped how scrutiny cases will be picked for the current filing season. Many practitioners are reading it as a generic “CASS guideline”, which it is not. For professional advisory, distinguishing between compulsory (manual) selection and CASS-based selection is critical.

This instruction deals with only one of those gateways: mandatory selection of cases for complete scrutiny, in exactly six prescribed categories (CS-01 to CS-06). Everything outside these six categories moves through the CASS (Computer-Assisted Scrutiny Selection) mechanism, whose risk filters remain confidential.

Before moving into the detailed categories, three interpretational corrections are essential for advising assessees correctly this season:

• The CBDT instruction is dated 4 June 2026, not 7 June 2026.
• There are six compulsory-selection categories (CS-01 to CS-06), not nine.
• The instruction does not lay down CASS parameters; it only covers manual compulsory selection.

Key distinction:

• **Compulsory selection (CS-01 to CS-06)😗* Structural situations where the Assessing Officer (AO) must select the case for complete scrutiny.
• CASS selection: Algorithm-driven selection based on risk indicators (mismatches, unusual patterns, reporting gaps), derived from AIS, SFT, Form 26AS, and similar datasets.

For returns filed in FY 2025-26 (AY 2026-27), the common procedural anchor is the time bar for scrutiny initiation. The notice under Section 143(2) must be served on or before 30 June 2026 (as per the proviso to Section 143(2) of the Income Tax Act 1961 read with Section 536(2)(c) of the Income Tax Act 2025). Any notice served after this date can be challenged on limitation grounds.

Transition note:
Although the Income Tax Act 2025 came into force from 1 April 2026, returns currently being filed for AY 2026-27 (income of FY 2025-26) are still governed by the Income Tax Act 1961, since they pertain to income earned up to 31 March 2026. Renumbered provisions of the 2025 Act apply from Tax Year 2026-27 onwards.

Each compulsory-selection category below therefore includes a “2025 Transition Consideration” for mapping current sections to their counterparts under the new legislation.

Part A – Six Compulsory Scrutiny Categories (CS-01 to CS-06)

CS-01 – Survey Cases under Section 133A

Who will be compulsorily selected

Any assessee in respect of whom a survey under Section 133A (other than a TDS verification survey under Section 133A(2A)) has been carried out on or after 1 April 2024 will mandatorily fall into scrutiny.

Key features:

• Centralised selection based on information supplied by the Investigation Wing to the Directorate of Income-tax (Systems).
• Notice under Section 143(2) is issued by the prescribed authority/AO.
• Non-Central-Charge cases must be transferred to the Central Charge within 15 days of service of the scrutiny notice.

What documents the assessee should collate in advance

• Copy of the statement recorded during survey under Section 133A along with any subsequent retraction or clarification.
• Inventory of stock, cash and documents prepared at the time of survey.
• Detailed reconciliation of surveyed stock and cash with the books as on survey date.
• Working and supporting evidence showing the treatment of surrendered or admitted income in the return of income.

Issues that need to be cleaned up before filing

• Income admitted or impounded during the survey but not reflected in the returned income.
• Differences in stock or cash that remain unexplained.
• Inconsistent handling of “surrender letters” and disclosure in the ITR.

Treat a survey year as if assessment scrutiny is guaranteed. The return should be prepared on the assumption that each survey finding will be questioned.

Income Tax Act 2025 – Transition consideration

• The basic survey powers continue in substance under the new Act.
• FY 2025-26 scrutiny still proceeds strictly under the 1961 Act.
• From Tax Year 2026-27, survey and assessment provisions shift to the renumbered framework of the Income Tax Act 2025, but the cut-off date of 1 April 2024 mentioned in this CBDT instruction remains a fixed historic date, not a rolling one.

CS-02 – Search and Requisition Cases under Sections 132 / 132A

Who will be compulsorily selected

• Assessees against whom a search under Section 132 or requisition under Section 132A has been initiated on or after 1 April 2024.
• Selection is carried out by the AO with the prior approval of the Pr.CIT/Pr.DIT/CIT/DIT.
• Where search is initiated on or after 1 September 2024, selection will extend to the assessment year(s) covered by the block-assessment framework under Section 158BA(6).
• Non-Central-Charge cases must be transferred to the Central Charge within 15 days from issuance of the Section 143(2) notice.

Documentation that should be ready

• Panchnama and inventory of seized material (cash, jewellery, documents, digital media etc.).
• Statements recorded under Section 132(4).
• Valuation reports for seized jewellery, stock, immovable property and other assets.
• Source trail for every seized or requisitioned asset.
• Where block assessment applies, undisclosed income computation for the block period and relevant disclosures in Form ITR-B.

Critical risk areas

• Seized assets that lack properly documented sources (funding trail, ownership, year of acquisition).
• Inconsistencies between the Section 132(4) statements and figures reported in the return.
• Intra-group or related entities taking divergent positions on common facts or seized material.

In search and requisition cases, the burden of proof is heavily skewed on the assessee. Any unexplained gap is likely to be interpreted against the assessee.

Income Tax Act 2025 – Transition consideration

• Block assessment continues but for searches in future tax years, the time limit for completion increases from 12 months to 18 months, calculated from the date of search.
• For FY 2025-26 income, assessments still follow the 1961 Act time limits and procedures, but future group cases will see more aligned and expanded timelines under the 2025 framework.

CS-03 – Reassessment Cases where a Section 148 Notice Has Been Issued

Who will be compulsorily selected

This category has two distinct limbs:

1. Search/survey-linked reassessments

   • Cases where a search/seizure was initiated on or after 1 April 2021 but before 1 September 2024, or where a survey took place on or after 1 April 2021, and a notice under Section 148 has been issued.
   • The jurisdictional AO issues the Section 143(2) notice and must upload the material that formed the basis for the Section 148 notice.

2. Other reassessment cases (non-search/survey)

   • All other cases where a Section 148 notice has been issued and are required to be completed on or before 31 March 2027.
   • These cases will be routed through the National Faceless Assessment Centre (NaFAC) by the Directorate of Income-tax (Systems).
   • NaFAC issues the Section 143(2) notice, and the Jurisdictional Assessing Officer (JAO) uploads the underlying material considered under Section 148A.

Records that should be compiled