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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

Income Tax Officer, Parwanoo vs. Ajay Kadian, Kala Amb (Sirmour)

In the result, the appeal of the revenue stand dismissed

ITA 660/CHANDI/2024[2021-22]Status: DisposedITAT Chandigarh24 Feb 2026AY 2021-22

Bench: Hon’Ble Shri Rajpal Yadav & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकर अपील सं. / Ita No.660/Chandi/2024 (िनधा"रण वष" / Assessment Year: 2021-22) Ito Shri Ajay Kadian बनाम/ Sco 35F, Hpmc Road Block-O, Ras Industries, Trilokpur Road Vs. Sector-2, Parwanoo (H.P.) - 173220 Kala, Amb. Sirmour (H.P.) 173030 "थायीलेखासं./जीआइआरसं./Pan/Gir No. Bndpk-3045-A (अपीलाथ"/Appellant) (""थ" / Respondent) : अपीलाथ"कीओरसे/ Appellant By : Sh. Harry Rikhy (Advocate) – Ld. Ar ""थ"कीओरसे/Respondent By : Sh. Manav Bansal (Cit) - Ld. Dr सुनवाईकीतारीख/Date Of Hearing : 16.02.2026 घोषणाकीतारीख /Date Of Pronouncement : 24.02.2026 आदेश / O R D E R Manoj Kumar Aggarwal () 1. Aforesaid Appeal By Revenue For Assessment Year (Ay) 2021-22 Arises Out Of An Order Of Learned Commissioner Of Income Tax (Appeals), Nfac [Cit(A)] Dated 29-03-2024 In The Matter Of An Assessment Framed By Ld. Assessing Officer [Ao] U/S 143(3) Of The Act On 26-12-2022. From Grounds Of Appeal, It Is Quite Evident That The Issues That Fall For Our Consideration Are – (I) Addition On Account Of Alleged Bogus Purchase; & (Ii) Addition Of Cash Deposit & Time

For Appellant: Sh. Harry Rikhy (Advocate) – Ld. ARFor Respondent: Sh. Manav Bansal (CIT) - Ld. DR
Section 133(6)Section 143(3)

lead ingots through recycling of waste lead acid batteries. In support of purchases, the assessee furnished financial statements, bank account details, list of sundry creditors, purchase register, ledger extracts etc. To verify the purchases, notices were issued u/s 133(6) to 36 parties most of which remained non-responsive. Only ... assessee. Nevertheless, the assessee has furnished requisite documents with respect to these purchases which include purchase invoices, financial statements, bank account details, list of sundry creditors, purchase register, ledger extracts etc. The payments to the suppliers are through banking channels only. The Ld. AO has not questioned the ledger entries

Channamma Rachappa Saradagi, Bagalkot vs. Income Tax Officer, Ward-6(3)(1), Bangalore

Appeal of the assessee is partly allowed

ITA 2065/BANG/2025[2022-23]Status: DisposedITAT Bangalore23 Feb 2026AY 2022-23

Bench: Shri Prashant Maharishi & Shri Soundararajan K.Assessment Year : 2022-23 Mrs. Channamma Rachappa Saradagi, Vs. The Income Tax Officer, Prop. M/S. Srinidhi Transports, Ward 6(3)(1), Sangondeshwar Nagar, Kamatagi, Bangalore. Amingad, Bagalkot – 587 120. Pan: Aweps 8300D Appellant Respondent Appellant By : Shri Siddesh N Gaddi, Ca Respondent By : Shri K. Saravanan, Addl.Cit (Dr)(Itat), Bengaluru. Date Of Hearing : 28.01.2026 Date Of Pronouncement : 23.02.2026 O R D E R Per Prashant Maharishi1. Captioned Appeal For Ay 2022-23 Is Filed By Mrs. Channamma Rachappa Saradagi Against The Appellate Order Passed By The National Faceless Appeal Centre, Delhi (Nfac) [Ld. Cit(A)] Dated 29 August 2025 Wherein The Appeal Filed By The Assessee Against The Assessment Order Dated 22Nd Of March 2024 Passed Under Section 143 (3) Read With Section 144B Of The Income Tax Act, 1961 [The Act] Passed By The Learned Assessing Officer Was Dismissed. Therefore The Assessee Is In Appeal Before Us. Page 2 Of 11

For Appellant: Shri Siddesh N Gaddi, CAFor Respondent: Shri K. Saravanan, Addl.CIT (DR)(ITAT), Bengaluru
Section 143Section 144BSection 36Section 37(1)Section 68

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT AND SHRI SOUNDARARAJAN K., JUDICIAL

Deputy Commissioner of Income Tax-(1), Raipur vs. Rajesh Kumar Singh, Raipur

In the result, this appeal of Revenue is allowed for statistical purposes

ITA 455/RPR/2025[2022-23]Status: DisposedITAT Raipur19 Feb 2026AY 2022-23

Bench: Shri Partha Sarathi Chaudhury, Jm & Shri Avdhesh Kumar Mishra, Am आयकर अपील सं. / Ita No: 455/Rpr/2025 (िनधा"रण वष" Assessment Year: 2022-23) Deputy Commissioner Of Income Tax, Vs Rajesh Kumar Singh, New Purena, Circle-1(1), Aaykar Bhawan, Ravigram, Ravigram S O, Civil Lines, Raipur, C. G., 492001. Raipur, Chhattisgarh, 492001 Pan: Ajnps2776H (अपीलाथ"/Appellant) (""थ" / Respondent) : िनधा"रती की ओर से / Assessee By : Shri Suraj Gupta, Advocate (Virtually) राज" की ओर से / Revenue By : Dr. Priyanka Patel, Sr. Dr सुनवाई की तारीख / Date Of Hearing : 03/02/2026 घोषणा की तारीख / Date Of : 19/02/2026 Pronouncement आदेश / O R D E R Per Avdhesh Kumar Mishra, Am: This Appeal For Assessment Year (‘Ay’) 2022-23 Filed By The Revenue Is Directed Against The Order Dated 13.05.2025 Of The Commissioner Of Income Tax (Appeals), [‘Cit(A)’], National Faceless Appeal Centre (‘Nfac’), Delhi Passed Under Section 250 Of The Income Tax Act, 1961 (‘Act’).

For Appellant: Shri Suraj Gupta, AdvocateFor Respondent: Dr. Priyanka Patel, Sr. DR
Section 133(6)Section 250Section 69C

form of confirmation and invoice/voucher were also requisitioned. In response to SCN dt. 19.02.2024, the assessee submitted details of creditors including top 10 sundry creditors. However, as per available information, the assessee has also made purchases from the following parties as detailed below during the year under consideration

Shiv Shakti Constructions, Gautam Budh Nagar vs. DCIT, Central Circle-II, Noida

In the result, the appeal of the assessee in ITA

ITA 34/DEL/2023[2021-22]Status: DisposedITAT Delhi16 Feb 2026AY 2021-22

Bench: Shri Mahavir Singh & Shri Manish Agarwalasstt. Year: 2021-22 Shiv Shakti Constructions Vs Deputy Commissioner Of Incom- A-142, Omaxe, Nri City, Pari Tax Chowk, Greater Noida, Central Circle-Ii, 2Nd Floor, Arto Complex, Gautam Budh Nagar-201306, Uttar Pradesh Sector-33 Noida-201301 (Appellant) (Respondent) Pan No. Aazfs6406R & Asstt. Year: 2021-22 Deputy Commissioner Of Incom- Vs Shiv Shakti Constructions Tax A-142, Omaxe, Nri City, Pari Central Circle-Ii, Chowk, Greater Noida, 2Nd Floor, Arto Complex, Gautam Budh Nagar-201306, Sector-33 Uttar Pradesh Noida-201301 (Appellant) (Respondent) Pan No. Aazfs6406R

For Appellant: NoneFor Respondent: Ms. Rajinder Kaur, CIT (DR)
Section 132Section 143(3)

DCIT VS Shiv Shakti Constructions Creditors . The AO also noted that the Assessee’s firm owes an unusually large quantum of amounts to its Sundry Creditors, as per the awaited balance-sheet/ accounts of the Assessee for AY 2015-16 to AY 2021-22. The AO in the Assessment Order ... have detailed out the chart wherein the amount of total Sundry Creditors, , incremental increase and Sundry Creditors viz-a-viz gross contract receipts were analysed in term of percentage. The AO noted that the Investigation Wing of the Income Tax Department has examined various individuals post search proceedings