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

A Section 143(2) notice is commonly called a scrutiny notice. It means the Income Tax Department proposes to examine the return more closely. A scrutiny notice should be handled with records, timelines and a clear response strategy.

It should not be ignored, but it should also not be treated as proof of wrongdoing.

Professional help is available under Tax Notices, Scrutiny, Assessments & Appeals.

What Section 143(2) scrutiny means

Section 143(2) enables the department to require the taxpayer to attend or produce evidence in support of the return. In current practice, many communications and submissions are handled through the e-Filing portal and e-Proceedings.

The purpose is to examine selected issues or the return as a whole, depending on the proceeding.

143(1), 142(1) and 143(2): key differences

Many scrutiny proceedings also include later notices or questionnaires asking for information under other provisions. Track every communication separately.

Why returns may be selected

Selection may arise from risk parameters, mismatch information, high-value transactions, capital gains, business turnover, deductions, losses, refund claims, related-party transactions or other data points. The exact reason may be visible from the notice or subsequent questionnaire.

Do not assume selection is random or targeted without reading the actual notice.

Documents and evidence

Common records include:

• ITR, computation and audit report, where applicable;
• AIS, TIS and Form 26AS;
• bank statements;
• books of account and ledgers;
• invoices and GST returns;
• capital-gains statements and property documents;
• deduction proofs;
• loan, gift or source-of-funds evidence;
• earlier notices and replies.

Response strategy

1. Verify the notice and deadline.
2. Identify the exact issues.
3. Reconcile ITR with AIS, books, bank records and GST data.
4. Prepare issue-wise explanations.
5. Attach relevant evidence, not excessive documents.
6. Submit through the specified mode.
7. Preserve acknowledgement and watch for follow-up notices.

Example

A salaried taxpayer reports capital gains from mutual funds but the AIS shows additional securities transactions. The response should reconcile broker statements, AIS entries and ITR schedules. If a transaction is duplicated or incorrectly reported, the reply should explain the mismatch with evidence.

After the assessment order

If the assessment results in an addition or demand, the taxpayer should review whether:

• there is an apparent mistake suitable for rectification;
• the issue is disputed on facts/law and may require appeal;
• demand response or stay-related steps are needed;
• penalty proceedings have been separately initiated.

Use the Income Tax Calculator only for broad planning context; scrutiny outcomes depend on assessed income and order details.

Official references

• Income Tax e-Proceedings FAQ
• Income Tax e-Proceedings User Manual
• Authenticate Notice/Order issued by ITD

This guide is general information reviewed in July 2026. Scrutiny strategy depends on the actual notice, records and assessment year.