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“sundry creditors”

Cash Credits & Unexplained ItemsSection 68Section 681,806 judgments

The decision most relied on for sundry creditors is CIT v. Shri Vardhman Overseas Ltd. (343 ITR 408), cited in 76 judgments on BharatTax.

Leading authorities on sundry creditors

CIT v. Shri Vardhman Overseas Ltd.
343 ITR 408 · 2012 · High Court
76
citing judgments

An addition under Section 68 cannot be made for genuine sundry creditors or trade payables merely carried forward from previous assessment years if there is no fresh credit in the relevant assessment year. Section 41(1) does not apply to acknowledged outstanding liabilities without actual remission or cessation.

CIT v. Pancham Dass Jain
205 CTR 444 · 2006 · High Court
55
citing judgments

Section 68 of the Income-tax Act is not attracted to amounts representing purchases made on credit or outstanding trade creditors, especially when the genuineness of the purchases is accepted by the department.

CIT v. Prameshwar Bohra
301 ITR 404 · 2008 · High Court
47
citing judgments

An amount already credited in the books of account in an earlier assessment year cannot be added again as an unexplained cash credit under Section 68 of the Income-tax Act in a subsequent assessment year.

CIT v. Nitin S. Garg
208 Taxmann 16 · 2012 · High Court
47
citing judgments

A trading liability acknowledged and continued to be shown in the balance sheet cannot be treated as cessation of liability under Section 41(1) merely because it remained outstanding for several years, unless the assessee has written it off in its books. The Assessing Officer must prove that the assessee obtained a benefit.

CIT v. Bhogilal Ramjibhai Atara
43 Taxmann.com 55 · 2014 · High Court
43
citing judgments

Section 41(1) of the Income Tax Act applies only where there is remission or cessation of a trading liability during the previous year relevant to the assessment year, and not merely because the assessee cannot provide confirmations for sundry creditors.

CIT v. Padamchand Ramgopal
76 ITR 719 · 1970 · Supreme Court
40
citing judgments

Minor irregularities in books of account cannot be the sole basis for rejection of the books or for making an estimated trading addition, especially when the assessee has provided explanations for discrepancies. The case distinguishes itself by focusing on receipts not brought into account rather than expenses claimed.

CIT v. Sita Devi Juneja
325 ITR 593 · 2010 · High Court
39
citing judgments

A liability cannot be presumed to have ceased to exist merely because it has been outstanding for several years. Without a bilateral act between the assessee and the creditor indicating cessation, additions under section 41(1) are not permissible.

CIT v. Best Wood Industries and Saw Mills
11 Taxmann.com 278 · 2011 · High Court
38
citing judgments

Once an assessment is reopened for a valid reason under Section 148(2), the Assessing Officer can bring to tax any escaped income that comes to their notice during the reassessment, even if it was not the original basis for reopening.

Judgments citing sundry creditors

M/S. Ccommercial Carriers Ltd, Ballygunge, Kolkata vs. Pr. CIT, Ranchi

In the result, the appeal of the assessee is allowed

ITA 28/RAN/2021[2016-17]Status: DisposedITAT Ranchi07 Aug 2025AY 2016-17

Bench: Shri Sonjoy Sarma & Shri Ratnesh Nandan Sahayi.T.A. No.28/Ran/2021 Assessment Year: 2016-17 M/S Commercial Carriers Ltd.....................…...........................……….……Appellant 1F & G, Swinhoe Castle, Swinhoe Street, Ballygunge, W.B – 700019. [Pan:Aaacc6949F] Vs. Pcit, Ranchi……………..…..…..….…..….........……........……...…..…..Respondent Appearances By: Shri C M Roy, Ar, Appeared On Behalf Of The Appellant. Shri Rajib Jain, Cit- Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : August 04, 2025 Date Of Pronouncing The Order : August 07, 2025 Order Per Sonjoy Sarma: The Present Appeal Has Been Preferred By The Assessee Against An Order Dated 18.03.2021 Of The Principal Cit, Ranchi [Hereinafter Referred To As ‘Pcit’] Exercising Revision Jurisdiction U/S 263 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’) Revising The Original Assessment Order Dated 26.12.2018 Passed Under Section 143(3) Of The Act. 2. Brief Facts Of The Case That The Assessee Is A Company Engaged In The Transport & Infrastructure Business. During Assessment Proceedings, The Assessing Officer (Ao) Passed An Order Under Section 143(3), Determining The Total Income At ₹9,95,690, After Making Disallowances, Including ₹3 Lakhs On Trip Expenses & ₹6,95,692 Under Section 37 Of The Act. However, On Examination Of The Assessment Records, The Ld. Pcit Ranchi, Observed That Sundry Creditors Amounting To ₹2,42,35,736 Were Shown In The Audited Balance Sheet, But No Enquiry Or Verification Was Made During Assessment Proceeding & Similarly Issue Relating To Investment In Purchase Of Trucks & Trailers Amounting To ₹5,10,44,030 Was Recorded; However, The Assessee Had

Section 142(1)Section 143(3)Section 263Section 37

expenses and ₹6,95,692 under section 37 of the Act. However, on examination of the assessment records, the Ld. PCIT Ranchi, observed that Sundry creditors amounting to ₹2,42,35,736 were shown in the audited balance sheet, but no enquiry or verification was made during assessment proceeding ... with the above order, assessee is in appeal before this tribunal. At the time of hearing, ld. AR stated that the issue relating to sundry creditors was duly examined during the original assessment proceeding and the Assessing Officer issued notice u/s 142(1) dated 15.01.2018, the relevant portion

Chakolas Interfun, Thrissur vs. DCIT Circle 1(1)& Tps, Thrissur

In the result, the appeal filed by the assessee stands partly allowed for statistical purposes

ITA 289/COCH/2025[2017-18]Status: DisposedITAT Cochin05 Aug 2025AY 2017-18

Bench: Shri Inturi Rama Rao, Am & Shri Sonjoy Sarma, Jm Assessment Year: 2017-18 Chakolas Interfurn .......... Appellant Town Hall Road, Thirussur 680020 [Pan: Aabfc5355R] Vs. Acit, Circle – 2(1), Thrissur .......... Respondent Assessee By: Shri V. Venugopalan, Ca Revenue By: Smt. Leena Lal, Sr. D.R. Date Of Hearing: 04.06.2025 Date Of Pronouncement: 05.08.2025 O R D E R Per: Inturi Rama Rao, Am This Appeal Filed By The Assessee Is Directed Against The Order Of The National Faceless Appeal Centre, Delhi [Cit(A)] Dated 24.03.2025 For Assessment Year (Ay) 2017-18. 2. Brief Facts Of The Case Are That The Appellant Is A Partnership Firm. The Return Of Income For Ay 2017-18 Was Filed On 24.10.2017 Declaring Total Income Of Rs. 31,92,225/-. Against The Said Return Of Income, The Assessment Was Completed By The Acit, Circle-2(1), Thrissur (Hereinafter Called "The Ao") Vide Order Dated 16.12.2019

For Appellant: Shri V. Venugopalan, CAFor Respondent: Smt. Leena Lal, Sr. D.R
Section 143(3)Section 145A

valued the inventory by including the component of tax and the AO also made addition of Rs. 25,75,000/- disbelieving the sundry creditors and Rs. 28,49,258/- for failure of the assessee to prove the genuineness, creditworthiness and identity of the creditors. 3. Being aggrieved, an appeal ... filed before the CIT(A), who vide the impugned order confirmed the addition on account of sundry creditors of Rs. 25,75,000/- and also confirmed the addition on account of Rs. 7,53,110/- on account of under valuation of closing stock shown by the appellant. 4. Being aggrieved

Smita Subhash Mehta, Ratnagiri vs. Income-Tax Officer, Ward 1, Ratnagiri

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

ITA 1108/PUN/2025[2018-2019]Status: DisposedITAT Pune05 Aug 2025AY 2018-2019

Bench: Shri Manish Borad & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.1108/Pun/2025 िनधा"रण वष" / Assessment Year : 2018-19 Smita Subhash Mehta, Vs. Ito, Ward-1, Ratnagiri. Pitruchaya, Teen Batti Naka, Khed, Ratnagiri- 415709. Pan : Ankpm7084P Appellant Respondent Assessee By : Shri Anup Bipin Shaha Revenue By : Shri Akhilesh Srivastva Date Of Hearing : 28.07.2025 Date Of Pronouncement : 05.08.2025 आदेश / Order Per Vinay Bhamore, Jm: This Appeal Filed By The Assessee Is Directed Against The Order Dated 28.03.2025 Passed By Ld. Cit(A)/Nfac For The Assessment Year 2018-19. 2. The Appellant Has Raised The Following Grounds Of Appeal :- “1. On The Facts & The Circumstances Of The Case & In Law, The Ld. Cit(A) Erred In Confirming & The Ld. Ao Erred In Making The Addition Of Rs.1,50,79,576/- Under Section 69A Of The Act & The Same Is Based On Surmise & Guesswork. The Addition Be Deleted & The Appellant Be Given Just & Due Relief. 2. On The Facts & The Circumstances Of The Case & In Law, The Ld. Cit(A) Erred In Confirming & The Ld. Ao Erred In Making The Addition Of Rs.1,50,79,576/- Under Section 69A Of The Act Without Considering The Appellant'S Response That The Deposits In The Impugned Account Are Already Accounted For In Her

For Appellant: Shri Anup Bipin ShahaFor Respondent: Shri Akhilesh Srivastva
Section 142(1)Section 147Section 148Section 148ASection 69A

raised by the AO, it is seen that the appellant had uploaded only copies of Financial Statements and IDBI Bank Account Statement which included Sundry Creditors Account, Balance Sheet as on 31.03.2018, extract of Capital Account, Schedule of Fixed Assets, Trading & Profit & Loss Account for the year ended 31.03.2018, regarding

Mahavir Trading Company, Parwanoo vs. ACIT, Circle, Parwanoo

The appeal stands partly allowed

ITA 435/CHANDI/2022[2005-06]Status: DisposedITAT Chandigarh04 Aug 2025AY 2005-06

Bench: Hon’Ble Shri Laliet Kumar, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकरअपीलसं./ Ita No. 435 /Chandi/2022 (िनधा"रणवष" / Assessment Year: 2005-06) M/S Mahavir Trading Company Acit-Circle Parwanoo बनाम/ Booth No. 18 Sector-1 Himachal Pardesh 173220 Vs. Parwanoo (Hp) 173220 "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aaefm-8949-E (अपीलाथ"/Appellant) : (""थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Shri Neeraj Jain (Ca) – Ld. Ar ""थ"कीओरसे/Respondent By : Dr Ranjit Kaur (Addl. Cit) – Ld.Sr.Dr सुनवाईकीतारीख/Date Of Hearing : 26-06-2025 घोषणाकीतारीख /Date Of : 04-08-2025 Pronouncement आदेश / O R D E R Manoj Kumar Aggarwal () 1. Aforesaid Appeal By Assessee For Assessment Year (Ay) 2005-06 Arises Out Of An Order Of Learned Commissioner Of Income Tax (Appeals), Shimla [Cit(A)] Dated 30-01-2020 In The Matter Of An Assessment Framed By Ld. Ao U/S 143(3) On 28-12-2007. This Is Second Round Of Appeal. In The First Round, The Assessment Was Confirmed By Ld. Cit(A) Vide Order Dated 26-05-2008. However, The Matter Was Remanded Back By Tribunal Vide Ita No.795/Chd/2009

For Appellant: Shri Neeraj Jain (CA) – Ld. ARFor Respondent: Dr Ranjit Kaur (Addl. CIT) – Ld.Sr.DR
Section 133ASection 143(3)

Similarly, no excess cash has been found but there is shortage of cash. Lastly, no specific defect has ben noted in the balances of sundry creditors. Therefore, the addition of Rs.9.09 Lacs as made by Ld. AO could not be sustained. In other words, Ld. AO is directed to accept

Assistant Commissioner of Income-Tax, Central Circle-2, Surat vs. Ms. Janani Exports, Mumbai

ITA 604/SRT/2024[2019-20]Status: DisposedITAT Surat31 Jul 2025AY 2019-20

Bench: Shri Dinesh Mohan Sinha & Shri Bijayananda Prusethआयकर अपील सं./Ita No.604/Srt/2024 (Assessment Year:2019-20) (Hybrid Hearing) Acit, Vs. M/S Janani Exports, Central Circle – 2, 704, Vastu Slip Apt., 7Th Floor, Nr. Surat Parsi Colony, Pump House, Andheri (E), Mumbai - 400093 "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aaefj3969P (Appellant) (Respondent) It(Ss)A Nos.9, 10 & 19/Srt/2024 (Ays:2013-14, 2014-15 & 2018-19) Acit, Vs. M/S Janani Exports, Central Circle – 2, 704, Vastu Slip Apt., 7Th Floor, Nr. Surat Parsi Colony, Pump House, Andheri (E), Mumbai - 400093 "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aaefj3969P (Appellant) (Respondent) It(Ss)A Nos.20 To 22/Srt/2024 (Ays: 2013-14 To 2015-16) M/S Janani Exports, Vs. Acit, 704, Vastu Slip Apt., 7Th Floor, Nr. Central Circle – 2, Parsi Colony, Pump House, Andheri Surat (E), Mumbai - 400093 "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aaefj3969P (Appellant) (Respondent) It(Ss)A Nos.35 To 38/Srt/2024 (Ays: 2016-17 To 2019-20) M/S Janani Exports, Vs. Acit, 704, Vastu Slip Apt., 7Th Floor, Nr. Central Circle – 2, Parsi Colony, Pump House, Andheri Surat (E), Mumbai - 400093 "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aaefj3969P (Appellant) (Respondent)

said ratio has been applied by the AO to the unexplained purchases. However, in case of the appellant, the amount of outstanding sundry creditors for goods as on 01.04.2012, as per the regular books, was Rs.11,28,29,413/- as against opening stock of Rs.4,85,62,805/-. Therefore ... source of entire opening stock was explained by the sundry creditor and no unexplained capital was deployed. Further, in absence of any incriminating evidence, the addition on account of unexplained money for initial investment for unaccounted trading was deleted. ITA Ns.604/SRT/2024 & IT(SS)A Nos.9

Smt. Krushnaba Pravinsinh Jadeja, Rajkot-Gujarat vs. The Dy. Commr. of Income Tax, Cir.-1(1), Rajkot-Gujarat

ITA 572/RJT/2015[2012-13]Status: DisposedITAT Rajkot30 Jul 2025AY 2012-13

Bench: Dr. Arjun Lal Saini & Shri Dinesh Mohan Sinhaआयकर अपील सं./Ita No.572/Rjt/2015 (निर्धारण वर्ष / Assessment Year: 2012-13) Krushnaba Pravinsinh Jadeja Vs. Deputy Commissioner Of Income Tax, Circle-1(1), Rajkot, Aaykar Bhavan, Race Course Ring Road, Rajkot-360 001 C.O. R.K. Shukla & Co., 201, 2Nd Floor, Opera Tower, Jawahar Road, Rajkot-360 001 (Assessee) (Respondent) आयकर अपील सं./Ita No.577/Rjt/2015 (निर्धारण वर्ष / Assessment Year: 2012-13) Deputy Commissioner Of Income Tax, Circle-1(1), Rajkot, Aaykar Bhavan, Race Vs. Krushnaba Pravinsinh Jadeja, C.O. R.K. Shukla & Co., Course Ring Road, Rajkot-360 001 201, 2Nd Floor, Opera Tower, Jawahar Road, Rajkot-360001 (Assessee) (Respondent) Assessee By Respondent By Date Of Hearing Date Of Pronouncement : Shri D.M. Rindani, Ld. Ar : Shri Sanjay Punglia, Ld. Cit-Dr : 03/06/2025 : 30/07/2025 Per, Dr. A. L. Saini, Am: आदेश / Order Captioned Cross Appeals Filed By The Assessee & Revenue, Pertaining To Assessment Year (A.Y.) 2012-13, Are Directed Against The Common Order Passed By The Learned Commissioner Of Income Tax (Appeals)-1 Rajkot, Which In Turn Arise, Out Of A Common Assessment Order, Passed By The Assessing Officer, Under Section 143(3) Of The Income Tax Act, 1961, Vide Order Dated 17.02.2015.

Section 142(1)Section 143(2)Section 143(3)Section 68

facts and in law in not appreciating the factual and legal matrix for the disallowance made of Rs. 99,76,000/-, out of sundry creditors u/s. 68 of the I.T. Act. 2. The ld. CIT(A) has erred on facts and in law in not appreciating that the persons shown ... sundry creditors had even failed to fulfill the basic onuses cast upon them. 3. The ld. CIT(A) has erred on facts and in law in not appreciating the factual and legal matrix for the disallowance made

Rinku Rani Panja, Paschim Midnapore vs. I.T.O., Ward - 1(3), Midnapore, Paschim Medinipur

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 1471/KOL/2024[2011-2012]Status: DisposedITAT Kolkata30 Jul 2025AY 2011-2012

Bench: Shri Duvvuru Rl Reddy, Vice-(Kz) I.T.A. No. 1471/Kol/2024 Assessment Year: 2011-2012 Rinku Rani Panja,………..………………..………Appellant D-28, Burdge Town, Kotwali, Midnapore-721101, West Bengal [Pan:Anipp7116R] -Vs.- Income Tax Officer,……………………………..Respondent Ward-1(3), Midnapore, Office Of The Addl./Jt. Commissioner Of Income Tax, Amaravati Building, 1St Floor, Keranitola, Midnaporle-721101, West Bengal Appearances By: N O N E, Appeared On Behalf Of The Assessee Shri Kallol Mistry, Jcit, Sr. D.R., Appeared On Behalf Of The Revenue Date Of Concluding The Hearing: June 24, 2025 Date Of Pronouncing The Order: July 30, 2025 O R D E R

Section 142(1)Section 143(2)Section 147Section 148

travelling & conveyance”. The assessee also showed in her balance-sheet as on 31.03.2011 along with ITR 4S for the AY 2011- 12 on 25.07.2011 sundry creditors balance to the tune of Rs.3,88,124/-. The assessee was asked to produce the details of sundry creditors along with their names, complete ... amount of balance. Getting no compliance from the assessee, the ld. Assessing Officer treated the amount of Rs.3,88,124/- as bogus sundry creditors and added to the total income of the assessee. Finally, the ld. Assessing Officer assessed the total taxable income of the assessee at Rs.27

Assistant Commissioner of Income Tax, Madurai vs. S. Rajendran, Chitharal

ITA 2904/CHNY/2024[2020-21]Status: DisposedITAT Chennai30 Jul 2025AY 2020-21

Bench: Shri Aby T Varkey & Shri S. R. Raghunathaआयकर अपील सं./Ita Nos.:2903 & 2904/Chny/2024 निर्धारण वर्ष / Assessment Years: 2015-16 & 2020-21 The Assistant Commissioner Of Income Tax, Central Circle -2, Madurai. (अपीलार्थी/Appellant) अपीलार्थी की ओर से/Appellant By प्रत्यर्थी की ओर से/Respondent By सुनवाई की तारीख/Date Of Hearing घोषणा की तारीख/Date Of Pronouncement S.Rajendran, Vs.13-85/42A, Parthittavillai Veedu, Chitharal Pο, Kanyakumari District, Nagercoil – 629 151. [Pan:Afqpr-2835-H] (प्रत्यर्थी/Respondent) Shri. M. Murali, C.I.T. & Shri. Kumar Chandan, J.C.I.T. Shri. T. Vasudevan, Advocate 20.06.2025 30.07.2025 आदेश /Order Per S. R. Raghunatha: These Appeals Filed By The Revenue Are Directed Against The Orders Of The Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre (Nfac), Delhi, For The Assessment Years 2015-16 & 2020-21, Vide Order Dated 19.09.2024 Respectively. Since Facts Are Identical & Issues Are Common, Appeals Filed By The Revenue Were Heard & Are Being Disposed Of By This Consolidated Order.

Section 68

issue of agricultural income of Rs.40,00,000/- returned by assessee. Ground No.3 is on the deletion of addition of sundry creditors of Rs.2,07,82,120/- made by AO on account of unexplained credits u/s.68. Ground No.4 is regarding the deletion of the disallowance of depreciation claimed of Rs.1 ... aside the assessment to verify the following claims made by the assessee: 1 Agricultural Income Rs. 40,00,000 2 Genuineness of the following sundry creditors a) Rahul Son of the Assessee 51,98,944 b) KKM Blue Metals 1,14,82,120 c) KKM Bricks Units

Assistant Commissioner of Income Tax, Madurai vs. S.Rajendran, Chitharal Po

ITA 2903/CHNY/2024[2015-16]Status: DisposedITAT Chennai30 Jul 2025AY 2015-16

Bench: Shri Aby T Varkey & Shri S. R. Raghunathaआयकर अपील सं./Ita Nos.:2903 & 2904/Chny/2024 निर्धारण वर्ष / Assessment Years: 2015-16 & 2020-21 The Assistant Commissioner Of Income Tax, Central Circle -2, Madurai. (अपीलार्थी/Appellant) अपीलार्थी की ओर से/Appellant By प्रत्यर्थी की ओर से/Respondent By सुनवाई की तारीख/Date Of Hearing घोषणा की तारीख/Date Of Pronouncement : : S.Rajendran, Vs.13-85/42A, Parthittavillai Veedu, Chitharal Pο, Kanyakumari District, Nagercoil – 629 151. [Pan:Afqpr-2835-H] (प्रत्यर्थी/Respondent) Shri. M. Murali, C.I.T. & Shri. Kumar Chandan, J.C.I.T. Shri. T. Vasudevan, Advocate 20.06.2025 30.07.2025 आदेश /Order Per S. R. Raghunatha: These Appeals Filed By The Revenue Are Directed Against The Orders Of The Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre (Nfac), Delhi, For The Assessment Years 2015-16 & 2020-21, Vide Order Dated 19.09.2024 Respectively. Since Facts Are Identical & Issues Are Common, Appeals Filed By The Revenue Were Heard & Are Being Disposed Of By This Consolidated Order. :-2-:

Section 68

issue of agricultural income of Rs.40,00,000/- returned by assessee. Ground No.3 is on the deletion of addition of sundry creditors of Rs.2,07,82,120/- made by AO on account of unexplained credits u/s.68. Ground No.4 is regarding the deletion of the disallowance of depreciation claimed of Rs.1 ... annum. However, on perusal of the submissions, the AO disallowed the claim of agricultural income and added Rs.40,00,000/-. 5. In respect of sundry creditors, the AO himself accepted the credit in the name of Mr.Rahul, son of the assessee and did not make addition. However, the remaining sundry