QA MENTOR TESTING SERVICES PRIVATE LIMITED ,MUMBAI vs. ITO , MUMBAI

PDF · subscribers
ITA 3207/MUM/2026Status: DisposedITAT Mumbai23 June 2026AY 2022-237 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the AO's determination of turnover and invocation of Section 44AB required detailed verification, as the nature of certain receipts (loans, contra entries, etc.) was not examined. The AO also failed to justify the rejection of books and the estimation of net profit.

What were the facts?

The assessee, engaged in software quality assurance and testing, filed its return of income. The Assessing Officer (AO) initiated scrutiny and invoked Section 44AB, alleging that the assessee's bank receipts exceeded Rs. 10 crores and a tax audit report was not furnished.

What were the issues?

Whether the assessee's bank receipts constituted turnover for the purpose of Section 44AB, and whether the AO properly followed procedures for rejecting books and estimating income.

Which sections of the Income-tax Act were involved?

Section 44AB,Section 145(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: HON’BLEVIKRAM SINGH YADAV & HON’BLE SIDDHARTHA NAUTIYAL

For Respondent: Shri Nakul Agrawal Sr.DR

आदेश / ORDER

PERSIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:

This appeal is filed by the Assessee against the order of Ld. NATIONAL FACELESS APPEAL CENTRE NFAC DELHI vide DIN: ITBA/NFAC/S/250/2025-26/1087283705(1) dated 12-Mar-2026 for the Assessment Year 2022-23.

2.

The Assessee has raised the following grounds of appeal:

ITA 3207/MUM/2026 ITA 3207/MUM/2026 QA MENTOR TESTING SERVICES QA MENTOR TESTING SERVICES PRIVATE LIMITED PRIVATE LIMITED

Ground 1: Audit wrongly held mandatory u/s 44AB Issue: The learned AO has Ground 1: Audit wrongly held mandatory u/s 44AB Issue: The learned AO has Ground 1: Audit wrongly held mandatory u/s 44AB Issue: The learned AO has 1) erred in holding that the appellant case falls within the ambit of Section 44AB that the appellant case falls within the ambit of Section 44AB that the appellant case falls within the ambit of Section 44AB of the Income Tax Act, 1961, without appreciating the amendment brought of the Income Tax Act, 1961, without appreciating the amendment brought of the Income Tax Act, 1961, without appreciating the amendment brought into effect from 01.04.2021 into effect from 01.04.2021 2) Ground 2: Without Prejudice to Point 1 and Facts of the Case in the Ground 2: Without Prejudice to Point 1 and Facts of the Case in the Circumstances and the Circumstances and the Law on the Subject the Learned AO erred in appreciating the provisions of Section 44AB read with CBDT Circular No. appreciating the provisions of Section 44AB read with CBDT Circular No. appreciating the provisions of Section 44AB read with CBDT Circular No. 10/2020 dated 24.12.2020 Clarified applicability of amendments under 10/2020 dated 24.12.2020 Clarified applicability of amendments under 10/2020 dated 24.12.2020 Clarified applicability of amendments under Finance Act, 2020. The learned AO erred while calculating the Turnover as Finance Act, 2020. The learned AO erred while calculating the Turnover Finance Act, 2020. The learned AO erred while calculating the Turnover he treated Contra Entries of Bank Accounts as Trade Receipts . he treated Contra Entries of Bank Accounts as Trade Receipts . 3) Ground 3: Arbitrary rejection of books without invoking Section 145 proviso Ground 3: Arbitrary rejection of books without invoking Section 145 proviso Ground 3: Arbitrary rejection of books without invoking Section 145 proviso 3 Issue : Without Prejudice to Point 1 , 2 and Facts of the Case in the 3 Issue : Without Prejudice to Point 1 , 2 and Facts of the Case in the 3 Issue : Without Prejudice to Point 1 , 2 and Facts of the Case in the Circumstances and the Law on the Circumstances and the Law on the Subject the Learned AO has erred in Subject the Learned AO has erred in Rejecting the Books of Accounts and Estimating the Income without Invoking Rejecting the Books of Accounts and Estimating the Income without Invoking Rejecting the Books of Accounts and Estimating the Income without Invoking the Provisions of Sec 14 proviso 3. the Provisions of Sec 14 proviso 3. 4) Ground 4: Estimation of NP at 12 percent without basis Issue: Without Ground 4: Estimation of NP at 12 percent without basis Issue: Without Ground 4: Estimation of NP at 12 percent without basis Issue: Without Prejudice to Point 1 ,2,3 and Fa Prejudice to Point 1 ,2,3 and Facts of the Case in the Circumstances and the cts of the Case in the Circumstances and the Law on the Subject the Learned AO has erred in estimating the Income at 12 Law on the Subject the Learned AO has erred in estimating the Income at 12 Law on the Subject the Learned AO has erred in estimating the Income at 12 percent NP of Turnover without giving appropriate reasoning for doing the percent NP of Turnover without giving appropriate reasoning for doing the percent NP of Turnover without giving appropriate reasoning for doing the same .The learned AO erred further by Calculation the 12perce same .The learned AO erred further by Calculation the 12percent NP on the nt NP on the Turnover of Rs 9,95,08,254/as shown by the Assessee in the Books. Turnover of Rs 9,95,08,254/as shown by the Assessee in the Books. 5) Ground 5: Double addition / ignoring returned income Issue: Without Ground 5: Double addition / ignoring returned income Issue: Without Ground 5: Double addition / ignoring returned income Issue: Without Prejudice to Point 1 ,2,3 ,4 and Facts of the Case in the Circumstances and Prejudice to Point 1 ,2,3 ,4 and Facts of the Case in the Circumstances and Prejudice to Point 1 ,2,3 ,4 and Facts of the Case in the Circumstances and the Law on the Subject the the Law on the Subject the Learned AO has erred in Computing the Total Learned AO has erred in Computing the Total Income at Rs 1,19,40,990/ ignoring as well without reducing the income Income at Rs 1,19,40,990/ ignoring as well without reducing the income Income at Rs 1,19,40,990/ ignoring as well without reducing the income already offered by the assessee in its Return of Income filed. already offered by the assessee in its Return of Income filed. 6) Ground 6 : Violation of natural justice Issue: Without Prejudice to Point 1 Ground 6 : Violation of natural justice Issue: Without Prejudice to Poi Ground 6 : Violation of natural justice Issue: Without Prejudice to Poi ,2,3 ,4 , 5 and Facts of the Case in the Circumstances and the Law on the ,2,3 ,4 , 5 and Facts of the Case in the Circumstances and the Law on the ,2,3 ,4 , 5 and Facts of the Case in the Circumstances and the Law on the Subject the Learned CIT Appeal has erred in Adjudicating the appeal of the Subject the Learned CIT Appeal has erred in Adjudicating the appeal of the Subject the Learned CIT Appeal has erred in Adjudicating the appeal of the Assessee without adhering to the Mandatory Provisions of Sec 250 proviso 6 Assessee without adhering to the Mandatory Provisions of Sec 250 proviso 6 Assessee without adhering to the Mandatory Provisions of Sec 250 proviso 6 and without considering and without considering the Material available on Records .

2.

The brief facts of the case are that the assessee company is engaged in the The brief facts of the case are that the assessee company is engaged in the The brief facts of the case are that the assessee company is engaged in the business of software quality assurance and testing services. For the year under business of software quality assurance and testing services. For the year under business of software quality assurance and testing services. For the year under consideration, the assessee filed its return of income decl consideration, the assessee filed its return of income declaring income from aring income from business. The case was selected for scrutiny and assessment was completed business. The case was selected for scrutiny and assessment was completed business. The case was selected for scrutiny and assessment was completed under section 143(3) read with section 144B of the Income under section 143(3) read with section 144B of the Income-tax Act, 1961 (“the tax Act, 1961 (“the

ITA 3207/MUM/2026 ITA 3207/MUM/2026 QA MENTOR TESTING SERVICES QA MENTOR TESTING SERVICES PRIVATE LIMITED PRIVATE LIMITED

Act”). During the course of assessment proceedings, the Assessing Officer Act”). During the course of assessment proceedings, the Assessing Officer Act”). During the course of assessment proceedings, the Assessing Officer observed that the receipts in the bank accounts of the assessee exceeded Rs.10 t the receipts in the bank accounts of the assessee exceeded Rs.10 t the receipts in the bank accounts of the assessee exceeded Rs.10 crores and since the assessee had not furnished the tax audit report prescribed crores and since the assessee had not furnished the tax audit report prescribed crores and since the assessee had not furnished the tax audit report prescribed under section 44AB of the Act, the Assessing Officer proceeded on the basis under section 44AB of the Act, the Assessing Officer proceeded on the basis under section 44AB of the Act, the Assessing Officer proceeded on the basis that the provisions of section 44 that the provisions of section 44AB of the Act were attracted. The Assessing AB of the Act were attracted. The Assessing Officer further held that the books of account prepared by the assessee could not Officer further held that the books of account prepared by the assessee could not Officer further held that the books of account prepared by the assessee could not be relied upon and the Assessing Officer estimated the net profit at 12% of the be relied upon and the Assessing Officer estimated the net profit at 12% of the be relied upon and the Assessing Officer estimated the net profit at 12% of the turnover adopted by him. Accordingly, the income o turnover adopted by him. Accordingly, the income of the assessee was assessed f the assessee was assessed at Rs.1,47,58,280/-.

3.

Aggrieved by the assessment order, the assessee preferred appeal before Aggrieved by the assessment order, the assessee preferred appeal before Aggrieved by the assessment order, the assessee preferred appeal before the CIT(Appeals). Before the CIT(Appeals), the assessee submitted that after the the CIT(Appeals). Before the CIT(Appeals), the assessee submitted that after the the CIT(Appeals). Before the CIT(Appeals), the assessee submitted that after the amendment introduced by the Finance Act, 2020 and amendment introduced by the Finance Act, 2020 and clarification by CBDT clarification by CBDT Circular No.10/2020 dated 24.12.2020, tax audit under section 44AB of the Act Circular No.10/2020 dated 24.12.2020, tax audit under section 44AB of the Act Circular No.10/2020 dated 24.12.2020, tax audit under section 44AB of the Act was required only where the turnover exceeded Rs.10 crores and the cash only where the turnover exceeded Rs.10 crores and the cash only where the turnover exceeded Rs.10 crores and the cash receipts and cash payments exceeded the prescribed threshold of 5%. The receipts and cash payments exceeded the prescribed threshold of 5%. receipts and cash payments exceeded the prescribed threshold of 5%. assessee contended that the actual turnover or gross receipts from business was ntended that the actual turnover or gross receipts from business was ntended that the actual turnover or gross receipts from business was only Rs.9,95,08,254/- and that the Assessing Officer had wrongly considered the and that the Assessing Officer had wrongly considered the and that the Assessing Officer had wrongly considered the aggregate credits appearing in the bank account as turnover. According to the aggregate credits appearing in the bank account as turnover. According to the aggregate credits appearing in the bank account as turnover. According to the assessee, such credits includ assessee, such credits included loan receipts, reversals of entries, refund of ed loan receipts, reversals of entries, refund of deposits and internal transfers, which did not partake the character of business deposits and internal transfers, which did not partake the character of business deposits and internal transfers, which did not partake the character of business receipts. The assessee further submitted that no defects whatsoever had been receipts. The assessee further submitted that no defects whatsoever had been receipts. The assessee further submitted that no defects whatsoever had been pointed out in the books of account and, therefo pointed out in the books of account and, therefore, rejection of books and re, rejection of books and estimation of profit at 12% were wholly arbitrary. However, the CIT(Appeals) estimation of profit at 12% were wholly arbitrary. However, the CIT(Appeals) estimation of profit at 12% were wholly arbitrary. However, the CIT(Appeals) concurred with the conclusions reached by the Assessing Officer and dismissed concurred with the conclusions reached by the Assessing Officer and dismissed concurred with the conclusions reached by the Assessing Officer and dismissed the appeal.

4.

The assessee is in appeal before us against the order passed by the The assessee is in appeal before us against the order pass The assessee is in appeal before us against the order pass CIT(Appeals) dismissing the appeal of the assessee. CIT(Appeals) dismissing the appeal of the assessee.

ITA 3207/MUM/2026 ITA 3207/MUM/2026 QA MENTOR TESTING SERVICES QA MENTOR TESTING SERVICES PRIVATE LIMITED PRIVATE LIMITED

5.

Before us, the learned counsel for the assessee submitted that both the Before us, the learned counsel for the assessee submitted that both the Before us, the learned counsel for the assessee submitted that both the authorities below failed to appreciate the amended provisions of section 44AB authorities below failed to appreciate the amended provisions of section 44AB authorities below failed to appreciate the amended provisions of section 44AB and the clarification issued by CBDT and the clarification issued by CBDT vide Circular No.10/2020 dated vide Circular No.10/2020 dated 24.12.2020. It was submitted that the actual turnover from business was only 24.12.2020. It was submitted that the actual turnover from business was only 24.12.2020. It was submitted that the actual turnover from business was only Rs.9,95,08,254/- and that the Assessing Officer had erroneously equated gross and that the Assessing Officer had erroneously equated gross and that the Assessing Officer had erroneously equated gross bank credits with turnover. The Counsel for the assessee argued that loan bank credits with turnover. The Counsel for the assessee argued that l bank credits with turnover. The Counsel for the assessee argued that l receipts from QA Mentor Inc., reversal entries, refund of deposits and contra receipts from QA Mentor Inc., reversal entries, refund of deposits and contra receipts from QA Mentor Inc., reversal entries, refund of deposits and contra entries were internal movements of funds and not business receipts. The learned entries were internal movements of funds and not business receipts. The learned entries were internal movements of funds and not business receipts. The learned counsel further submitted that the books of account had been regularly counsel further submitted that the books of account had been regularly counsel further submitted that the books of account had been regularly maintained and no defect in the books had been pointed out by the Assessing t in the books had been pointed out by the Assessing t in the books had been pointed out by the Assessing Officer so as to justify rejection under section 145(3) of the Act. It was also Officer so as to justify rejection under section 145(3) of the Act. It was also Officer so as to justify rejection under section 145(3) of the Act. It was also contended that the estimation of net profit at 12% was arbitrary and contrary to contended that the estimation of net profit at 12% was arbitrary and contrary to contended that the estimation of net profit at 12% was arbitrary and contrary to the past history of the assessee, wherein the past history of the assessee, wherein the net profit ratio had consistently the net profit ratio had consistently remained between 2% and 4%. remained between 2% and 4%.

6.

In response, the learned Departmental Representative submitted that the In response, the learned Departmental Representative submitted that the In response, the learned Departmental Representative submitted that the receipts exceeded the threshold limit of Rs.10 crores and therefore the receipts exceeded the threshold limit of Rs.10 crores and therefore the receipts exceeded the threshold limit of Rs.10 crores and therefore the conclusion drawn by the Assessing Officer conclusion drawn by the Assessing Officer and the CIT(Appeals) are correct. and the CIT(Appeals) are correct.

7.

We have heard the rival submissions and perused the material available We have heard the rival submissions and perused the material available We have heard the rival submissions and perused the material available on record. The controversy involved in the present appeal is whether the on record. The controversy involved in the present appeal is whether the on record. The controversy involved in the present appeal is whether the assessee was liable to get its accounts audited under section 44AB of the Act assessee was liable to get its accounts audited under section 44AB of the assessee was liable to get its accounts audited under section 44AB of the and, consequently, whether the rejection of books and estimation of net profit at and, consequently, whether the rejection of books and estimation of net profit at and, consequently, whether the rejection of books and estimation of net profit at 12% by the Assessing Officer are sustainable in law. 12% by the Assessing Officer are sustainable in law.

8.

At the outset, it would be useful to refer to the relevant provisions of At the outset, it would be useful to refer to the relevant provisions of At the outset, it would be useful to refer to the relevant provisions of section 44AB as applicable for Assessmen section 44AB as applicable for Assessment Year 2022-23. The relevant portion 23. The relevant portion of section 44AB reads as under: of section 44AB reads as under:-

ITA 3207/MUM/2026 ITA 3207/MUM/2026 QA MENTOR TESTING SERVICES QA MENTOR TESTING SERVICES PRIVATE LIMITED PRIVATE LIMITED

“44AB. Every person carrying on business shall, if his total sales, turnover or gross “44AB. Every person carrying on business shall, if his total sales, turnover or gross “44AB. Every person carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business receipts, as the case may be, in business exceed one crore rupees in any previous year, get his accounts of such previous year audited by an accountant before the ounts of such previous year audited by an accountant before the ounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form specified date and furnish by that date the report of such audit in the prescribed form specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant: duly signed and verified by such accountant: … Provided further that in the case of a person whose Provided further that in the case of a person whose— (a) aggregate of all amounts received including amount received for sales, turnover or aggregate of all amounts received including amount received for sales, turnover or aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed five per cent of the gross receipts during the previous year, in cash, does not exceed five per cent of the gross receipts during the previous year, in cash, does not exceed five per cent of the said amount; and

(b) aggregate of all payments made including amount incurred for expenditure, in (b) aggregate of all payments made including amount incurred for (b) aggregate of all payments made including amount incurred for cash, does not exceed five per cent of such payment,this section shall apply if the total cash, does not exceed five per cent of such payment,this section shall apply if the total cash, does not exceed five per cent of such payment,this section shall apply if the total sales, turnover or gross receipts, as the case may be, in business exceed ten crore sales, turnover or gross receipts, as the case may be, in business exceed ten crore sales, turnover or gross receipts, as the case may be, in business exceed ten crore rupees during such previous year.” rupees during such previous year.”

9.

Thus, the main provision of Thus, the main provision of section 44AB of the Act stipulates that every section 44AB of the Act stipulates that every person carrying on business is required to get his accounts audited where the person carrying on business is required to get his accounts audited where the person carrying on business is required to get his accounts audited where the total sales, turnover or gross receipts exceed Rs.1 crore. However, the second total sales, turnover or gross receipts exceed Rs.1 crore. However, the second total sales, turnover or gross receipts exceed Rs.1 crore. However, the second proviso inserted by the Finance Act, 2020 carves ou proviso inserted by the Finance Act, 2020 carves out an exception and provides t an exception and provides that where cash receipts and cash payments do not exceed 5% of the aggregate that where cash receipts and cash payments do not exceed 5% of the aggregate that where cash receipts and cash payments do not exceed 5% of the aggregate receipts and payments, the threshold for compulsory audit stands enhanced to receipts and payments, the threshold for compulsory audit stands enhanced to receipts and payments, the threshold for compulsory audit stands enhanced to Rs.10 crores. Therefore, for Assessment Year 2022 Rs.10 crores. Therefore, for Assessment Year 2022-23, in cases where 23, in cases where transactions are predominantly carried out through banking channels, the actions are predominantly carried out through banking channels, the actions are predominantly carried out through banking channels, the requirement of tax audit arises only when the turnover or gross receipts exceed requirement of tax audit arises only when the turnover or gross receipts exceed requirement of tax audit arises only when the turnover or gross receipts exceed Rs.10 crores.

10.

CBDT Circular No.10 of 2020 dated 24.12.2020 clarifying the provisions CBDT Circular No.10 of 2020 dated 24.12.2020 clarifying the provisions CBDT Circular No.10 of 2020 dated 24.12.2020 clarifying the provisions of the Finance Act, 2020 states that the object behind the amendment was to , 2020 states that the object behind the amendment was to , 2020 states that the object behind the amendment was to reduce compliance burden on small and medium businesses and to encourage reduce compliance burden on small and medium businesses and to encourage reduce compliance burden on small and medium businesses and to encourage digital transactions. The Circular clarifies that where aggregate cash receipts and digital transactions. The Circular clarifies that where aggregate cash receipts and digital transactions. The Circular clarifies that where aggregate cash receipts and aggregate cash payments do not exceed 5% aggregate cash payments do not exceed 5% of total receipts and payments of total receipts and payments respectively, the threshold limit for tax audit under section 44AB gets enhanced respectively, the threshold limit for tax audit under section 44AB gets enhanced respectively, the threshold limit for tax audit under section 44AB gets enhanced to Rs.10 crores. Thus, both the Statutory provision and the Circular make it clear to Rs.10 crores. Thus, both the Statutory provision and the Circular make it clear to Rs.10 crores. Thus, both the Statutory provision and the Circular make it clear

ITA 3207/MUM/2026 ITA 3207/MUM/2026 QA MENTOR TESTING SERVICES QA MENTOR TESTING SERVICES PRIVATE LIMITED PRIVATE LIMITED

that the decisive factor is the amount of "sales, turnover or that the decisive factor is the amount of "sales, turnover or gross receipts" and gross receipts" and not the aggregate amount of credits reflect not the aggregate amount of credits reflecting in the bank account.

11.

Before us, the learned counsel for the assessee has specifically contended Before us, the learned counsel for the assessee has specifically contended Before us, the learned counsel for the assessee has specifically contended that the actual turnover or gross receipts from business aggregated to that the actual turnover or gross receipts from business aggregated to that the actual turnover or gross receipts from business aggregated to Rs.9,95,08,254/- and, therefore, section 44AB of the Act was not attracted. It and, therefore, section 44AB of the Act was not attracted. It and, therefore, section 44AB of the Act was not attracted. It has further been argued that the Assessing Officer proceeded on an erroneous has further been argued that the Assessing Officer proceeded on an erroneous has further been argued that the Assessing Officer proceeded on an erroneous premise by treating all credits appearing in the bank account as turnover. premise by treating all credits appearing in the bank account as turnover. premise by treating all credits appearing in the bank account as turnover. According to the assessee, such credits i According to the assessee, such credits included loan receipts, reversal entries, ncluded loan receipts, reversal entries, refund of deposits and contra entries which were internal movement of funds refund of deposits and contra entries which were internal movement of funds refund of deposits and contra entries which were internal movement of funds and not receipts arising from business operations. and not receipts arising from business operations.

12.

Prima facie, we find substance in the submissions advanced on behalf of Prima facie, we find substance in the submissions advanced on behalf of Prima facie, we find substance in the submissions advanced on behalf of the assessee. The expression employed by section 44AB is "sales, turnover or e. The expression employed by section 44AB is "sales, turnover or e. The expression employed by section 44AB is "sales, turnover or gross receipts". Therefore, before invoking section 44AB of the Act, it is gross receipts". Therefore, before invoking section 44AB of the Act, it is gross receipts". Therefore, before invoking section 44AB of the Act, it is necessary for the Assessing Officer to ascertain whether the receipts in question necessary for the Assessing Officer to ascertain whether the receipts in question necessary for the Assessing Officer to ascertain whether the receipts in question actually are business receipts or actually are business receipts or not whether they are in the nature of loans, not whether they are in the nature of loans, reversals, refunds or internal transfers. reversals, refunds or internal transfers.

13.

In the present case, we find that the very basis for invoking section 44AB In the present case, we find that the very basis for invoking section 44AB In the present case, we find that the very basis for invoking section 44AB of the Act viz. the determination of turnover exceeding Rs.10 crores, requires of the Act viz. the determination of turnover exceeding Rs.10 crores, requires of the Act viz. the determination of turnover exceeding Rs.10 crores, requires detailed verification. The plea of the Counsel for the assessee that certain verification. The plea of the Counsel for the assessee that certain verification. The plea of the Counsel for the assessee that certain receipts are loans, refunds, reversals and contra entries has not been examined receipts are loans, refunds, reversals and contra entries has not been examined receipts are loans, refunds, reversals and contra entries has not been examined by the Tax authorities below. Further, before invoking section 145(3) of the Act, by the Tax authorities below. Further, before invoking section 145(3) of the Act, by the Tax authorities below. Further, before invoking section 145(3) of the Act, the Assessing Officer is r the Assessing Officer is required to point out defects in the books and before equired to point out defects in the books and before estimating net profit at 12%, the Assessing Officer is required to justify the estimating net profit at 12%, the Assessing Officer is required to justify the estimating net profit at 12%, the Assessing Officer is required to justify the estimate. No such exercise has been undertaken by the Assessing Officer in the estimate. No such exercise has been undertaken by the Assessing Officer in the estimate. No such exercise has been undertaken by the Assessing Officer in the instant case.

ITA 3207/MUM/2026 ITA 3207/MUM/2026 QA MENTOR TESTING SERVICES QA MENTOR TESTING SERVICES PRIVATE LIMITED PRIVATE LIMITED

14.

Considering the entirety Considering the entirety of facts and circumstances of the case, we are of of facts and circumstances of the case, we are of the considered view that the matter requires fresh examination at the level of the the considered view that the matter requires fresh examination at the level of the the considered view that the matter requires fresh examination at the level of the Assessing Officer. Accordingly, we restore the matter to the file of the Assessing Officer. Accordingly, we restore the matter to the file of the Assessing Officer. Accordingly, we restore the matter to the file of the Assessing Officer for de novo adjudication. The As Assessing Officer for de novo adjudication. The Assessing Officer shall verify sessing Officer shall verify the actual turnover or gross receipts of the assessee and examine whether any the actual turnover or gross receipts of the assessee and examine whether any the actual turnover or gross receipts of the assessee and examine whether any part of the credits appearing in the bank accounts are loans, contra entries, part of the credits appearing in the bank accounts are loans, contra entries, part of the credits appearing in the bank accounts are loans, contra entries, reversals, refunds or internal transfers which do not constitute turnover within reversals, refunds or internal transfers which do not constitute turnov reversals, refunds or internal transfers which do not constitute turnov the meaning of section 44AB of the Act. The Assessing Officer shall thereafter the meaning of section 44AB of the Act. The Assessing Officer shall thereafter the meaning of section 44AB of the Act. The Assessing Officer shall thereafter examine the applicability of section 44AB in the light of the statutory provisions examine the applicability of section 44AB in the light of the statutory provisions examine the applicability of section 44AB in the light of the statutory provisions and CBDT Circular No.10/2020 dated 24.12.2020. The Assessing Officer shall and CBDT Circular No.10/2020 dated 24.12.2020. The Assessing Officer shall and CBDT Circular No.10/2020 dated 24.12.2020. The Assessing Officer shall further examine whether the conditions stipulated under section 145(3) of the xamine whether the conditions stipulated under section 145(3) of the xamine whether the conditions stipulated under section 145(3) of the Act are fulfilled. Needless to state, adequate opportunity of hearing shall be Act are fulfilled. Needless to state, adequate opportunity of hearing shall be Act are fulfilled. Needless to state, adequate opportunity of hearing shall be afforded to the assessee. Since we are restoring the matter for fresh adjudication, afforded to the assessee. Since we are restoring the matter for fresh adjudication, afforded to the assessee. Since we are restoring the matter for fresh adjudication, we refrain from expressing any opinion on the merits of the issues involved and ng any opinion on the merits of the issues involved and ng any opinion on the merits of the issues involved and all contentions are left open. all contentions are left open. Accordingly, the appeal of the assessee is allowed Accordingly, the appeal of the assessee is allowed for statistical purposes.

15.

In the result, appeal In the result, appeal filed by the Assessee is allowed for statistical the Assessee is allowed for statistical purposes.

Order pronounced in the open court on pronounced in the open court on 23.06.2026.

Sd/- Sd/- VIKRAM SINGH YADAV VIKRAM SINGH YADAV SIDDHARTHA NAUTIYAL SIDDHARTHA NAUTIYAL ACCOUNTANTMEMBER MEMBER JUDICIALMEMBER MEMBER Mumbai Dated: 23.06.2026.

More judgments on Section 44AB

All 2,486 judgments and leading authorities on Section 44AB →

Recent GST High Court judgments

Search GST case law →