Section 44AB of the Income Tax Act
Income-tax Act, 2025: s.63
Section 44AB of the Income-tax Act, 1961 corresponds to section 63 (Tax Audit) of the Income-tax Act, 2025.
Read section 63 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 44AB is Ashok Pai v. CIT (292 ITR 11), cited in 812 of the 2,486 judgments on BharatTax that turn on this section.
Leading authorities on Section 44AB
“Concealment of particulars of income” and “furnishing inaccurate particulars of income” are two distinct offences under Section 271(1)(c) of the Income Tax Act. A penalty cannot be levied under one limb if the show cause notice or basis for penalty specifies the other, as this constitutes a complete variance in the reasons for assuming jurisdiction.
Expenditure is deductible in the year it is determined and crystallised as a liability, even if it relates to a transaction of an earlier year, provided accounts are maintained on a mercantile basis.
In cases of alleged bogus or hawala purchases where the existence of transactions is not entirely denied, only the profit element embedded in such purchases, and not the entire purchase price, can be added to the assessee's income. The focus is on determining a reasonable profit percentage for such additions.
The Commissioner of Income Tax (Appeals) cannot expand the scope of an assessment or improve the Assessing Officer's case in a manner that usurps the revisional power of the Commissioner of Income Tax under Section 263 of the Income-tax Act.
If a statute or law prescribes that a thing must be done in a particular manner, then it must be done in that manner alone and in no other way. This principle mandates strict adherence to statutory procedures.
The requirement to file an audit report along with the return of income under section 80-IA(7) and similar provisions is directory, not mandatory. Such a report suffices if filed at any time before the assessment is framed.
When purchases are found bogus, only the profit element embedded therein, and not the entire purchase value, can be added to the assessee's income.
A deduction claimed under Section 80-IB (or 80-IA) cannot be denied solely on the ground of non-filing or delayed filing of the audit report in Form 10CCB, as such procedural requirements can be treated as directory, and delays may be condoned.
A penalty under Section 271B for failure to get accounts audited cannot be levied if a penalty under Section 271A has already been imposed for non-maintenance of books of account.
