Income Tax Scrutiny Notice under Section 143(2): What It Means and How to Respond

A notice under section 143(2) means your income tax return has been selected for scrutiny. It is not an accusation. It means the department wants to verify specific items in the return. Scrutiny is now largely faceless: notices, replies and video hearings run through the e-filing portal. A clear, well-documented response is usually the difference between an assessment accepted as filed and a large addition to income.

Which law applies in 2026?

The Income-tax Act, 2025 came into force on 1 April 2026, but proceedings for earlier assessment years continue under the Income-tax Act, 1961. So most scrutiny notices issued during 2026 still cite section 143(2) and questionnaires under section 142(1). The equivalent scrutiny provisions in the new Act apply to later tax years.

Time limits

• Scrutiny notice: must be served within 3 months from the end of the financial year in which the return was filed. A notice served later is invalid.
• Assessment order: generally due within 12 months from the end of the relevant assessment year, with extensions in specified cases.

Why returns get selected

• High-value transactions in the AIS/TIS not reflected in the return (property, cash deposits, securities)
• Large refund claims or sharp changes in income
• Deductions and exemptions that look out of line
• Information from other agencies, surveys or third-party reports
• Random computer-aided selection (CASS)

Responding step by step

1. Log in and read everything under Pending Actions > e-Proceedings, including the questionnaire, which lists the specific issues.
2. Check validity: date of service, DIN, and the issues under limited or complete scrutiny.
3. Reconcile AIS, TIS and Form 26AS with your books and bank statements, item by item.
4. Prepare a structured submission: an index, point-wise answers, and annexures that are clearly labelled and paginated.
5. Ask for time early if you need it. Adjournment requests are made on the portal.
6. Respond to the show cause notice / draft order if one follows. This is your last chance to change the outcome at assessment stage. Use the video hearing option where facts need explaining.

Mistakes that lead to additions

• Missing the response date, which leads to a best judgment assessment under section 144
• Uploading bulk documents without explanation or reconciliation
• Answering only some questions
• Not replying to the show cause notice before the final order

After the order

If additions are made, you can appeal to the CIT(A) or JCIT(A) within 30 days of the demand notice, apply for a stay of demand, and file for rectification of apparent mistakes. Penalty proceedings under section 270A usually start alongside, and they deserve a separate, careful reply.

Read more: Income tax notice reply services · Reassessment notices under section 148A / 281

This article is general information and is not legal advice.