Income Tax Dept Picks 1.6 Lakh Returns for Scrutiny, Three Times Higher Than Usual
Over 1.6 lakh tax returns are under scrutiny this year as the Income Tax Department tightens checks on cash deposits, GST mismatches, and M&A discrepancies.
The Income Tax Department has selected around 1.65 lakh income taxreturns (ITRs) for scrutiny for the assessment year 2025. This is happening just before June 30, which is the last date to issue notices for ITRs filed for the financial year 2024–25. This is a huge jump in the number of cases selected for scrutiny, as it is three to four times higher than previous years, where...
The Income Tax Department has selected around 1.65 lakh income taxreturns (ITRs) for scrutiny for the assessment year 2025. This is happening just before June 30, which is the last date to issue notices for ITRs filed for the financial year 2024–25.
This is a huge jump in the number of cases selected for scrutiny, as it is three to four times higher than previous years, where around 50,000 to 60,000 cases were selected each year.
According to The NDTV report, over one lakh notices have already been sent to individuals and companies under Section 143(2) of the Income Tax Act, 1961. These notices begin a detailed checking process where the Income Tax Department verifies the details filed in the tax returns.
What is being checked?
The department is focusing on the following red flags this year:
- Unusual cash deposits in bank accounts.
- Large bank credits that have not been explained.
- Capital introduced in businesses without clear disclosed sources.
- Mismatches between turnover shown in tax returns and GST data.
- Discrepancies related to mergers and acquisitions (M&A).
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The department uses CASS (Computer Assisted Scrutiny Selection), a data-driven system that helps select cases for scrutiny based on risk parameters and inconsistencies in reported income, expenses, or transactions.
Apart from these cases, the department has also flagged high-risk non-filers under its Risk Management Strategy (RMS), taking the total number of flagged cases to around 2.5 to 3 lakh across the country.
Why is there a sudden increase?
The sharp increase in scrutiny cases for AY 2025 is due to:
- Use of advanced data analytics by the department.
- Tighter compliance and monitoring filters.
- Better integration of financial databases to detect discrepancies.
The Income Tax Department has become more proactive in catching tax evasion and incorrect reporting, ensuring that taxpayers follow compliance strictly.
What should taxpayers do?
If you have received a notice under Section 143(2), you need to respond promptly and provide all the required documents to avoid penalties or further actions. It is advisable to recheck your filings and consult your CA or tax consultant if needed.
This large-scale scrutiny drive is seen as a huge step by the government to enhance transparency and compliance in the taxation system, utilizing technology to efficiently track financial irregularities.
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