💼 Whether you’re a salaried individual, business owner, or investor — the taxman’s radar is sharper than ever. But what’s changed, and how do you stay on the right side of the law? Let’s dive in.
1. Why have income tax authorities become more vigilant?
Short answer? Data + AI = Laser focus.
The Income Tax Department has upgraded from random checks to real-time surveillance. With Artificial Intelligence (AI), analytics, and access to your AIS, TIS, bank data, property deals, mutual funds, crypto trades, and even foreign transactions — your financial footprint is fully mapped.
👉 Example: You book a luxury overseas trip, but your ITR shows modest income? That’s a red flag. 🚩
🔑 Key Insight: Every financial move you make could be traceable, especially under India’s new tech-driven compliance regime.
2. What kind of income tax notices should you actually worry about?
Here are the top 5 notices you must know:
• Section 142(1): “Why haven’t you filed your return?” or “We need more info.”
• Section 143(1): Intimation — refund or demand, based on system checks.
• Section 143(2): Scrutiny alert! Your case has been picked for deeper review.
• Section 148A/148: They think you’ve missed declaring income. This can go 10 years back!
• Section 131: A summon — you need to attend or provide documents.
👉 Mini Case: Claimed HRA ₹6L without landlord PAN? A Section 143(2) might just land in your inbox.
3. What triggers these notices or scrutiny?
🛑 Watch out if you’re doing any of the following:
• Big spends, small income (mismatch alert!)
• TDS or income mismatch in AIS/26AS
• Excessive deductions (fake rent receipts? Think again)
• Undisclosed foreign assets or gifts
• High-value transactions: cash deposits > ₹10L, luxury car purchases, crypto trades
• Repeated high additions in past assessments (₹50L+ in metros)
👉 Example: Your Form 16 shows ₹12L income, but you deposited ₹30L in stocks. ITD will notice.
4. What can happen if you misreport income?
💣 Penalties: 50% for under-reporting, 200% for misreporting.
💣 Interest: On unpaid taxes.
💣 Prosecution: Willful evasion? Jail time is on the table.
👉 Example: A professional hiding ₹20L consultancy income was hit with ₹10L in penalties plus interest.
🛡️ Pro Tip: Disclose everything. It’s not worth the risk.
5. What are the latest scrutiny trends for FY 2025-26 and ahead?
📌 Mandatory scrutiny for:
• Surveys post-April 2023 (Sec 133A)
• Search/seizure cases up to April 2025
• NGOs with revoked registration
• Cases flagged by CBI, ED, SEBI
• Repeat high-value additions not contested in appeals
💡 New Trend Alert: Top advance taxpayers and high deduction claimants are now on the radar.
👉 AIS is now like your digital diary. No secrets, just entries.
6. Why must you disclose foreign assets or income?
Simple: Global income, global scrutiny.
If you’re a resident and own foreign stocks, real estate, crypto, or bank accounts, disclose them in your ITR. Failing to do so can result in harsh penalties under the Black Money Act.
👉 Example: An NRI with a UK pension didn’t disclose it. ₹5L penalty + interest followed.
7. How can you stay compliant and safe from notices?
✅ File accurate returns
✅ Match your AIS, TIS, Form 26AS with your records
✅ Maintain proper invoices, loan agreements, bank proof
✅ Avoid cash overuse — digital is traceable
✅ Respond quickly to any IT notices
✅ Consult a tax expert — don’t guess
👉 Missed reporting income in FY 2022-23 or FY 2023-24? File an updated return (ITR-U) and avoid future complications.
8. How is technology changing income tax enforcement?
The age of “file and forget” is over. Now it’s:
• 🔍 Real-time cross-verification
• 🤖 AI-based fraud detection
• 🧮 Automated data matching
• 🧾 Faceless assessments
👉 Fun Fact: Your rent, mutual funds, and even GPay spends — all might show up in your AIS.
🧠 Final Thoughts
“If you’re spending like a king but reporting like a pauper, expect a knock from the taxman.”
📈 Tax vigilance is here to stay. Be smart, stay compliant, and always file right the first time.
📌 FAQs on Income Tax Scrutiny
Q1. How does the Income Tax Department decide which returns to scrutinize?
Cases are selected based on AI-driven risk analysis, mismatch reports, and high-value transactions.
Q2. Can I ignore a tax notice if I think it’s a mistake?
No. Always respond within the given deadline. Ignoring notices can lead to penalties and even prosecution.
Q3. What if I forgot to report some income in my return?
You can file an ITR-U (Updated Return) within the allowed time frame and avoid future penalties.
Q4. Are digital payments like UPI and GPay under ITD monitoring?
Yes. High-value transactions via UPI, wallets, or credit cards are flagged in AIS/TIS.
📣 Call to Action (CTA)
🖊️ For personalised tax help, scrutiny handling, or notice response guidance, reach out today:
📞 CA Bhavesh Panpaliya – 8888755557