The Income Tax Department has selected approximately 1.65 lakh cases for scrutiny for Assessment Year (AY) 2025.
This selection is part of a major compliance push ahead of the June 30 deadline, which is the last date to issue notices for ITRs filed in FY 2024–25.
Income Tax Dept Flags 1.65 Lakh Cases for Scrutiny in AY 2025
The number of selected cases is significantly higher—three to four times—than in earlier years.
According to official sources, more than one lakh notices have already been sent to individuals and companies under Section 143(2) of the Income Tax Act, 1961.
These notices begin the process of detailed assessment and verification of filed income tax returns.
The main criteria for case selection include unusual cash deposits, unexplained large bank credits, capital introduction without identified sources, mismatched turnover compared to GST filings, and discrepancies related to mergers and acquisitions.
The CASS (Computer Assisted Scrutiny Selection) system, which is data-driven and risk-based, is used by the department to identify returns for scrutiny.
CASS flags cases based on set risk parameters and inconsistencies in reported income, spending, or financial transactions.
High-Risk Non-Filers Flagged Under Risk Management Strategy Framework
In addition to CASS, high-risk non-filers have also been flagged under the Risk Management Strategy (RMS) framework.
Including these high-risk non-filer cases, the total number of flagged returns across India is now estimated to be between 2.5 lakh and 3 lakh.
In the financial years 2022, 2023, and 2024, the average number of scrutiny cases was around 50,000 to 60,000 annually.
The dramatic increase in scrutiny cases for AY 2025 is attributed to stronger data analytics, stricter compliance measures, and improved integration of various financial databases.
Massive Tax Fraud Uncovered: ₹1070 Crore Lost
In a sweeping crackdown, India’s Income Tax Department has reportedly exposed over 90000 salaried taxpayers for making false deduction claims. This large-scale fraud has cost the tax exchequer more than ₹1070 crore, prompting a stringent overhaul in the tax filing process to prevent further misuse.
To counter fraudulent claims, the Income Tax Department has made significant changes to the Income Tax Return (ITR) utilities—specifically ITR-1 and ITR-4. These forms now require detailed proof for deductions under various sections, making it harder for taxpayers to submit vague or unsupported entries.
