The Central Board of Direct Taxes (CBDT) has issued a directive to Income Tax Department officials across India, emphasizing the need for "due application of mind" while issuing scrutiny notices. The directive underlines that all queries raised during the assessment of a taxpayer's return must be relevant, specific and justified.
The policy communication, accessed by PTI, has been sent by CBDT Chairman Ravi Agrawal to all Principal Chief Commissioners of Income Tax (PCCITs). It instructs senior officers to exercise "effective supervision" over their assessing officers, particularly the Faceless Assessing Officers (FAOs), to ensure that taxpayers are not subjected to unnecessary or irrelevant questions during scrutiny proceedings.
Specificity and Relevance Are Key
According to the CBDT directive, all queries issued by assessment units should reflect a clear application of mind and must be firmly grounded in the specific facts and circumstances of the case. The heads of assessment units-namely Additional or Joint Commissioners of Income Tax-will be held directly accountable for the quality of notices and final assessment orders.
The directive seeks to curb the long-standing issue of generic and excessive questioning during scrutiny assessments, which often leads to undue harassment and prolonged disputes for taxpayers. The CBDT reiterated that queries raised should align strictly with the scrutiny selection criteria issued recently for FY 2025-26.
Monthly Reviews and Accountability
To ensure adherence to these instructions, the CBDT has asked PCCITs to periodically interact with their subordinate officers, reinforce the guidelines, and conduct monthly reviews to assess compliance. Furthermore, regional heads are required to submit monthly updates to the board, detailing the quality and nature of scrutiny notices and assessment orders issued in their jurisdiction.
This directive follows the CBDT's issuance of the annual guidelines for compulsory selection of returns for complete scrutiny on June 13, 2025. The move is seen as part of the government's broader initiative to foster a fair, transparent, and taxpayer-friendly assessment system, especially under the faceless regime introduced to eliminate discretion and ensure uniformity.
Expert View
Tax professionals have welcomed the move, saying it reflects the department's evolving approach towards minimizing litigation and ensuring just, evidence-based assessments. "The emphasis on relevancy and accountability will certainly reduce taxpayer grievances and build confidence in the faceless assessment system," said a senior tax consultant.
As scrutiny season approaches, the CBDT's communication underscores its commitment to balancing revenue interests with taxpayer rights-marking another step toward a more responsible and responsive tax administration.
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