An income tax scrutiny assessment is a detailed examination of your return under section 143(3), in which an officer checks whether income, deductions and tax are correct, and it always starts with a notice under section 143(2). For a return of AY 2026-27, that notice must reach you within three months of the close of the financial year in which you filed.
Most returns are only processed by computer under 143(1). A small share are picked for scrutiny, by a computer-aided system or under set criteria. The process is now faceless and online. This guide covers the 1961 Act rules that apply to AY 2026-27 and earlier; see the notices hub for other queries.
Quick facts
Section
143(3) assessment, started by a 143(2) noticeNotice deadline
3 months from the end of the FY in which the return was filedOrder deadline
12 months from the end of the assessment yearProcess
Faceless, under section 144B, through e-ProceedingsIf you do not respond
Best judgment assessment under section 144Appeal
CIT(A) within 30 days, Form 35New law
Tax year 2026-27 returns follow the assessment chapter of the 2025 Act
Types of assessment in income tax
| Type | Section | What happens |
|---|---|---|
| Summary processing | 143(1) | Computer checks arithmetic and data; intimation issued |
| Scrutiny assessment | 143(3) | Officer examines the return in detail after a 143(2) notice |
| Best judgment assessment | 144 | Officer decides income on available material when you do not file or do not cooperate |
| Reassessment | 147 with 148 | An old year is reopened because income escaped tax |
| Faceless procedure | 144B | How scrutiny and best judgment cases are run online |
An intimation under 143(1) is not scrutiny. It is processing. The 143(1) guide explains it.
Why a return is picked for income tax scrutiny
- Computer-aided selection. A risk system compares your return with AIS data, past returns and patterns, and flags outliers.
- Mandatory ITR scrutiny criteria. The CBDT issues guidelines listing cases that must be taken up, such as cases connected with a search or survey, or where specific information has come from another agency.
- Large or unusual claims: big refunds, sharp drops in income, high cash deposits or large exempt income.
- Mismatch between turnover reported for GST and the income tax return.
Limited scrutiny looks only at the issues named in the notice. Complete scrutiny can look at anything in the return.
Income tax scrutiny time limit
| Step | Time limit | Example for a return filed in FY 2025-26 |
|---|---|---|
| 143(2) notice | 3 months from the end of the FY in which the return was filed | By 30 June of FY 2026-27 |
| 143(3) order | 12 months after the assessment year ends | For AY 2025-26, by 31 March of FY 2026-27 |
| Order on an updated return | 12 months from the end of the FY in which it was filed | Based on the filing date |
A 143(2) notice served after its deadline makes the assessment open to challenge. Courts have quashed assessments made on invalid notices, so check the date of service.
How the faceless income tax scrutiny assessment runs
- The income tax department scrutiny notice under 143(2) arrives by email and appears under Pending Actions, then e-Proceedings, on the e-filing portal.
- Questionnaires under 142(1) follow, asking for ledgers, bank statements, bills or explanations.
- You upload replies and documents online by each due date, or ask for more time before it passes.
- If the officer proposes additions, you get a show cause notice with a draft order and a chance to reply.
- You may ask for a personal hearing by video conference when a variation is proposed.
- The final assessment order is passed with a demand notice under 156, or with no change.
A scrutiny case from notice to order
Facts. Kavita, a freelance designer, filed her return for AY 2025-26 showing income of ₹14,00,000 under the new regime. In June she receives a limited scrutiny notice on cash deposits of ₹9,00,000.
Her reply. She shows that ₹6,00,000 came from client payments already in her income and ₹3,00,000 from a gift by her mother, with a gift deed and her mother's bank statement.
Outcome A. Both explanations are accepted. The order makes no change.
Outcome B. Suppose the ₹3,00,000 could not be explained. It would be added under section 69A and taxed at 60% under 115BBE: ₹1,80,000, plus 25% surcharge of ₹45,000 and 4% cess of ₹9,000, a total of ₹2,34,000, with interest and a possible penalty on top.
Best judgement assessment in income tax: section 144
Section 144 lets the officer fix your income on the material available when you do not file a return, do not comply with a 142(1) or 143(2) notice, or do not follow a direction to get accounts audited. You get a show cause notice first. The figure is usually high, and penalties for non-compliance can follow, so responding late is still better than not responding.
After any assessment order you may pay the demand, apply for rectification of an obvious error, or appeal. The appeals guide covers the CIT(A) and ITAT route.
Scrutiny under the 2025 Act and the assessment year idea
What is assessment year in income tax? Under the 1961 Act it is the year after the previous year in which income was earned, so FY 2025-26 income is assessed in AY 2026-27. The 2025 Act drops this pair and uses tax year 2026-27 for income earned from 1 April 2026. Scrutiny of those returns follows the assessment chapter of the new Act, while every case up to AY 2026-27 stays with the old sections.
Mistakes during scrutiny
| Slip | Safer move |
|---|---|
| Missing a questionnaire due date | Ask for an adjournment online before the date |
| Uploading unreadable scans | Upload clear, labelled PDFs within the size limit |
| Answering more than the limited scrutiny asks | Stick to the issues named in the notice |
| Ignoring the draft order | Reply to the show cause notice; it is your last chance before the order |
This walk-through of scrutiny is general information. Each case depends on its own records, so review your notice on the e-filing portal and consult a chartered accountant on the reply.
Sources we checked
- Income-tax Act, 1961, sections 143, 144 and 144B
- Income-tax Act, 1961, section 153
- Income Tax Department: time limits for notices and assessment
Frequently asked questions
What is scrutiny assessment in income tax under 143(3)?
It is a detailed check of your return by an officer after a 143(2) notice. The officer can ask for documents and may change your income and tax in the final order.
What is the income tax scrutiny notice time limit?
A 143(2) notice must be served no later than three months after the close of the financial year in which the return went in. The assessment must then be finished within 12 months of the close of the assessment year.
When can section 144 of Income Tax Act be used?
It allows a best judgment assessment when you do not file a return or do not respond to notices. The officer decides your income on the information available.
Can I meet the officer in a faceless assessment?
There is no physical meeting, but you can request a personal hearing by video conference when an addition is proposed.
What can I do after an income tax assessment order?
You can pay the demand, seek rectification of a clear error, or appeal to the CIT(A) within 30 days in Form 35.