Scrutiny Assessment in India: Notice, Faceless Process, Response and Timeline

A scrutiny assessment in India is the Income Tax Department's detailed examination of a return that has already been processed. It starts with a notice, runs through the e-Filing portal, and ends with an assessment order that fixes your income and tax. Being selected is not an accusation, but the process is formal and the record you build in it decides every later appeal. This guide uses the 1961 Act, which still governs AY 2026-27 and earlier, and the Income-tax Act, 2025, which governs tax year 2026-27 onwards.

What is a scrutiny assessment in India?

After a return is processed (see the intimation guide), the Assessing Officer can serve a notice under section 143(2) of the 1961 Act, which corresponds to section 270(8) of the 2025 Act. The notice asks you to attend or produce evidence in support of the return. The officer wants to check that income is not understated, loss is not excessive and tax is not underpaid. After hearing evidence and considering the material, the officer makes an assessment in writing and determines the sum payable or refundable.

The CBDT's FAQs confirm that a scrutiny notice for AY 2026-27 or any earlier year is completed under the 1961 Act, even if it arrives after 1 April 2026. Existing PAN, TAN, faceless assessment and the faceless appellate framework continue under the 2025 Act, and the faceless schemes made under the old Act are treated as made under it.

Stages and time limits

Under the 1961 Act, the equivalent limit for completing an assessment is measured from the end of the assessment year (section 153 corresponds to section 286). Check the year-specific limit with your CA, because extensions and exclusions apply for references to a Transfer Pricing Officer, court stays and similar events.

How to respond, step by step

1. Read the notice. Note the section, the year, the officer or unit, the date and time, and the list of documents or questions.
2. Confirm it is genuine on the portal (see scam alerts).
3. Brief your CA the same day and give the CA portal access or authorise the CA as your representative.
4. Build the evidence file. Match each question with numbered documents: books, bank statements, contracts, foreign income proofs, residence evidence.
5. File the response through the portal by the due date. If you need more time, request an adjournment in writing before the deadline, not after.
6. Attend any hearing your CA arranges, usually by video, and note what was asked.
7. Review the draft or final order immediately. A draft order may leave a short window to object to the Dispute Resolution Panel, and a final order starts the 30-day appeal clock.

Documents and information you need

• The return as filed, the computation and the tax audit report if any
• Audited accounts, ledgers, bank statements and invoices for major items
• Proof of residence status: passport pages, travel records, tax residency certificates and visa documents
• Foreign income records and foreign tax proofs, matched to the U.S. or Canadian return
• Transfer pricing study, agreements and Form 3CEB or Form 48 for related-party transactions

After the order

You can pay the demand, ask for rectification of a mistake apparent from the record, or appeal to the Commissioner (Appeals) within 30 days. A demand remains valid until the appeal is disposed of, although the interest and collection rules differ, so ask your CA about a stay. See income tax appeals and penalties and interest. Penalty proceedings may start in the same order; they need a separate show-cause notice and hearing.

Reassessment: when the department reopens a year

Reassessment is a separate path for income that has escaped assessment. Under the 2025 Act, the notice follows a show-cause step and a reasoned order with senior approval, and the Act lists the information that can trigger it, such as risk-management strategy, audit objections, information from foreign governments under treaties, and tribunal or court findings. For years governed by the 1961 Act, the CBDT's FAQ says notices under section 148 can be issued within 3 years 3 months of the end of the assessment year, or within 5 years 3 months where escaped income is Rs 50 lakh or more. Under the 2025 Act the limits are 4 years 3 months and 6 years 3 months, and no such notice can be issued within one year of the end of a tax year. A reassessment order is due within one year from the end of the financial year in which the notice was served.

A worked example

A Calgary-based NRI sells a flat in Pune and files her AY 2026-27 return in November 2026, which falls in FY 2026-27. A scrutiny notice for that return can be served until 30 June 2027, three months after 31 March 2027. If it is served on 15 March 2027, her CA files the reply and documents by the date in the notice. The assessment order is then due by 31 March 2028, one year after the end of the financial year that follows the year of income.

Mistakes to avoid

• Responding late or by email to an informal contact instead of through the portal
• Giving a partial reply and hoping the officer will not ask again
• Contradicting what the U.S. return or the FBAR says about the same asset
• Treating a draft order as final and missing the objection window
• Letting the notice sit because "the return was correct"

How we can help

From Aurora, Illinois, we reconcile the Indian questions with your U.S. and Canadian filings so your answers are consistent, and we prepare U.S.-side documents such as residency evidence and foreign tax credit workings. Your Indian Chartered Accountant represents you before the Indian authorities; we do not. See cross-border tax and individual returns for newcomers and NRIs. Browse the Notices, Penalties and Disputes hub.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.