Very little on its own. GST turnover and income-tax turnover are computed on different bases, for different periods and under different definitions, so a difference is a question, not a finding. The officer has to take the reconciliation on record and then show what, if anything, is unexplained; the corpus's ordinary rules on rejecting the books and on the burden under s.68 still apply to whatever survives.
The mismatch notice is now one of the commonest scrutiny triggers, because GST turnover is reported to the department and surfaced in Form 26AS and the Annual Information Statement. When that reporting was introduced the Department of Revenue's own position, as reported at the time, was that the figure was informational: "The GST turnover shown in the form is just for the information of taxpayers." That does not stop an officer using it, but it is worth knowing that the department itself did not present it as an assessment tool.
The differences are structural, and most of them are not evidence of anything. GST returns are filed for a tax period and are commonly revised or corrected in a later month, so the twelve GSTR-3Bs for a year rarely foot to the annual accounts. GST is levied on supply, and supply is not income — stock transfers between branches with different registrations, cross charges, schedule I supplies to related persons, and supplies of capital assets all enter GST turnover without entering the profit and loss account. Conversely, other income, interest, and profit on sale of assets can enter the income-tax turnover without being a supply. The commentary makes the point flatly: financial statements and GST returns need not match, and GST returns and income-tax returns need not match.
Then there is the tax component itself, which is where a surprisingly large number of these notices die. s.145A provides that, notwithstanding anything to the contrary in s.145, the valuation of purchase and sale of goods and inventory shall be in accordance with the method of accounting regularly employed and "further adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation." An assessee reporting turnover net of GST in the profit and loss account, against bank credits or GST returns that are gross of GST, will show a difference equal to the tax — and it is not income. The Delhi Tribunal in ACIT v. Sh. Tarun Tulsian, ITA No. 7657/Del/2025, decided 11 May 2026, upheld the deletion of a s.68 addition of about Rs 6.68 crore on exactly that footing, the Tribunal recording that the assessee had "successfully explained the difference as attributable to indirect tax i.e. 'GST' component which has gone unrebutted from the Revenue side." I could corroborate that order on only one host, so treat it as a lead rather than as settled authority.
What the officer can lawfully do is narrower than what these notices usually assume. A difference is material on which he may call for an explanation under s.142(1) and verify under s.133(6). If the explanation is not accepted he has to say why, and if he proposes to substitute his own figure of turnover he is rejecting the books, which engages s.145(3) and the requirements the corpus sets out under rejecting-the-books-and-estimating-the-income. If instead he treats the difference as an unexplained credit he has moved into s.68, which needs an entry credited in the books and carries its own burden — and where the credits are recorded sales already forming part of declared turnover, the nature and source are on the face of the books.
There is one place where the comparison is built into the return itself: clause 44 of Form 3CD requires a break-up of total expenditure into entities registered and not registered under GST. That is a reporting requirement, not a charging provision, but it is where a good deal of the department's expenditure-side matching now starts.
These notices arrive with a number and an implication, and the reply that works is not an argument but a reconciliation. A practitioner who produces a clean bridge — annual GST turnover, less non-income supplies, less GST component, plus non-supply income — usually ends the enquiry; one who argues in the abstract invites an addition under s.68 at the s.115BBE rate.
The Assessing Officer rejected my explanation for cash credits. Must he then prove where the money actually came from before taxing it?
Is a notice under s.143(2) a jurisdictional precondition, or merely a procedural step the Assessing Officer can skip?
Additions were made to my book profits in earlier years. Can I use that money to explain a cash credit or an unexplained payment in a later year?
I made unexplained investments after the close of my accounting year. Which year can the officer tax them in, and can he reopen an earlier year to do it?
My liability is certain but I cannot put a final figure on it yet and I will not pay it for years. Can I still deduct the provision?
I am an MES contractor and the department supplies me cement and steel at fixed rates. The Income-tax Officer added the value of that material to my cash receipts before applying a flat rate. Can he?
I sell developed plots and book the whole sale price on the mercantile basis, but I still have to build the roads and drains I promised the buyers. Can I deduct the estimated cost of that work now?
My closing stock is worth more than it cost me. Does the rise in value get taxed, and does it matter that the goods were lying outside the place where I trade?
Every page in this library links to what it was written from, so you can check it rather than take our word for it.
