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Is there a way or tool where in we can test business scenarios and not update the records in CRM?
If the full scenario involves changing CRM data, then no. It's possible that you may have workflows or plugins that run as a result of changes, and the only way to fully test these is to make the data changes.
Instead, the normal approach would be create a test copy of the organisation database, and run your tests on that. However, if your scenarios also involve integration with other systems, you'll need to consider how you get test environments for the other systems
I would definitely recommend taking a backup of your database, restoring it and importing it as a new organization. Normally you would do this in a test server, but if you don't have that available you can import it as a new organization in your production server.
Doing this enables you to test most things without changing any production data.
Okay. Thanks for the quick response. However, is there any such testing tool available?
Not that I know of.