"Income tax audit" is used for two different things in India. One is the tax audit under section 44AB, where your own chartered accountant audits your books and files a report with your return. The other is a scrutiny assessment, where the income tax department examines your return and asks you questions. One is something you arrange. The other is something that is done to you.
Last reviewed: 17 October 2026. Facts checked. The income tax department site (incometaxindia.gov.in) and the e-filing help pages returned access errors or page-not-found when we tried to open them, so we did not verify anything on them. We used web searches that returned secondary tax commentary and tribunal (ITAT) orders. For the Income-tax Act 2025 transition we read search summaries, not the Act or a CBDT circular. We have left out thresholds and dates on purpose; take them from the linked guides and confirm on the portal.
The two meanings, side by side
| Tax audit (section 44AB) | Scrutiny assessment | |
|---|---|---|
| Who starts it | The law, based on your turnover or receipts and how you are taxed | The department, which selects a return for examination |
| Who does the work | A chartered accountant you appoint | The assessing officer |
| What it is for | The CA reports on your books and tax compliance | The officer checks that your return is correct |
| Output | Audit report (Form 3CA or 3CB) with Form 3CD | An assessment order, after notices and replies |
| When | Before you file the return | After you file, if selected |
| Your role | Provide records, answer the auditor | Reply to notices, give evidence, attend |
Meaning 1: tax audit under section 44AB
Section 44AB sets out who must get their accounts audited, depending on business turnover, professional receipts and certain presumptive-tax situations. The audit is by a chartered accountant. The CA's report goes in Form 3CA or 3CB, with particulars in Form 3CD. Search summaries say the penalty for not getting the audit done is under section 271B, calculated on turnover and capped.
Do not rely on a quick number from the internet for whether you need one. Thresholds depend on the type of income, cash share and tax scheme. Use the section 44AB applicability checker, then read our section 44AB guide and the plain-language meaning, process and penalty. If your accounts are already audited under another law, see the third proviso to section 44AB. The Form 3CD template shows the layout of the report.
Meaning 2: scrutiny assessment
A scrutiny assessment begins when the department selects your return and issues a notice under section 143(2). Search summaries of tribunal orders say selection can be done through a computer-assisted system, and that cases are described as limited scrutiny, complete scrutiny or compulsory manual scrutiny. We could not verify the department's selection criteria. Commentary mentions mismatches with third-party information and claimed deductions as possible risk factors, but that is not an official list.
After the notice you will usually receive questionnaires and requests for documents. You reply through the e-filing account. The officer may accept the return or make additions, and the result is an assessment order. If you disagree, there are appeal routes, which we do not cover here.
Notices that look similar, such as a notice about a mismatch, are not always scrutiny. Our guide to replying to an income tax notice explains one common type.
How the two connect
A completed tax audit does not stop a return being selected. But a clean, well-documented 3CD helps. Many questions in scrutiny can be answered from the same books and reconciliations the auditor reviewed. On the other side, a scrutiny officer can ask about points the tax auditor reported, so a qualified or incomplete report invites questions.
What changed with the Income-tax Act 2025
Search summaries say the Income-tax Act 2025 came into force on 1 April 2026 and replaced the 1961 Act. They also say income of FY 2025-26 (assessment year 2026-27) continues under the 1961 Act, and tax year 2026-27 is the first under the new Act, with proceedings started under the old law continuing there. We did not read the Act or CBDT's guidance, so check the savings provisions before citing section numbers. Our transition playbook for auditors covers the practical side, and 1961 vs 2025 compares the two.
A simple checklist
For a tax audit
- Confirm whether it applies, using turnover, receipts and tax scheme.
- Appoint the CA and agree the timeline.
- Reconcile the books to TDS, GST and bank records.
- Review the 3CD clauses for cash payments, TDS defaults and related-party items.
For a scrutiny notice
- Note the date, section and the deadline to respond.
- Read the notice and see what it covers.
- Collect evidence for each point, not the whole file.
- Reply through the portal and keep a copy.
Frequently Asked Questions
What is an income tax audit?
It can mean a tax audit under section 44AB, done by a chartered accountant, or a scrutiny assessment by the income tax department. Check which one you are dealing with.
Is a tax audit the same as scrutiny?
No. A tax audit is a CA's report filed with your return. Scrutiny is the department's examination after you file.
Who needs a tax audit under section 44AB?
It depends on turnover, receipts and the tax scheme. Use the applicability checker and confirm with your CA.
What is a section 143(2) notice?
It is the notice the department uses to start scrutiny of a return. Reply to it by the stated date.
Does the Income-tax Act 2025 change tax audit for FY 2025-26?
Search summaries say FY 2025-26 matters stay under the 1961 Act. Confirm against the official text.
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