ITR Invalidated for Alleged ₹10 Crore Gross Receipts Without S. 44AB Audit: Karnataka HC Sets Aside CPC Order, Directs Fresh Consideration [Read Order]
The question of audit under Section 44AB would depend on the outcome of the fresh proceedings
![ITR Invalidated for Alleged ₹10 Crore Gross Receipts Without S. 44AB Audit: Karnataka HC Sets Aside CPC Order, Directs Fresh Consideration [Read Order]](https://images.taxscan.in/h-upload/2026/02/25/2126997-site-image25-1jpg.webp "ITR Invalidated for Alleged ₹10 Crore Gross Receipts Without S. 44AB Audit: Karnataka HC Sets Aside CPC Order, Directs Fresh Consideration [Read Order]")
In a recent ruling, the Karnataka High Court has intervened in a dispute over the income tax return for AY 2024–25, which had been invalidated by the CentralProcessing Centre (CPC) on the ground that the company’s gross receipts exceeded ₹10 crores without a mandatory audit under Section 44AB of the IncomeTax Act. The case arises after the Kasthuri Medias Pvt Ltd return...
In a recent ruling, the Karnataka High Court has intervened in a dispute over the income tax return for AY 2024–25, which had been invalidated by the CentralProcessing Centre (CPC) on the ground that the company’s gross receipts exceeded ₹10 crores without a mandatory audit under Section 44AB of the IncomeTax Act.
The case arises after the Kasthuri Medias Pvt Ltd return was rejected by the Central Processing Centre (CPC) because its declared receipts exceeded ₹10 crores, thereby triggering the audit requirement under Section 44AB of the Income Tax Act. Since no audited accounts were filed, the return was marked invalid.
Appearing for the petitioner, the counsel Narendra Kumar J. Jain argued that the turnover figure was incorrectly construed, as part of the receipts related to the sale of assets and not business turnover. Excluding such amounts, the company maintained that its turnover fell below the ₹10 crore threshold, and hence the audit requirement did not apply.
E. I. Sanmathi, learned counsel appearing for one of respondent explained that the communication (Annexure‑E) was computer‑generated by the Centralised Processing Centre.
The High Court observed that the petitioner’s contention merited consideration. The impugned order was accordingly set aside, and the matter remitted to the Deputy Commissioner of Income Tax.
The bench, Justice S. Sunil Dutt Yadav, held the petitioner to appear before the Deputy Commissioner of Income Tax on 16.03.2026 without requiring any further notice. Also instructed that the Petitioner demonstrate that the turnover is less than Rs. 10 crores and the question of audit under Section 44AB of the Income Tax Act would not apply.
The bench also said that, after considering the company’s explanation, the Deputy Commissioner is to record the contentions and forward a report with his opinion to the CPC for further opinion.
Accordingly, the writ petition was disposed of.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
