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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

Mr Vikas Jayram Bhukan, Pune vs. ITO Ward 12(3), Pune

In the result, the appeal filed by the assesse is allowed

ITA 2483/PUN/2024[2012-13]Status: DisposedITAT Pune30 May 2025AY 2012-13

Bench: Shri Manish Borad & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.2483/Pun/2024 िनधा"रण वष" / Assessment Year : 2012-13 Mr. Vikas Jayram Bhukan, Vs. Ito, Ward-12(3), Pune. Survey No.34, House No.80, Azad Chowk, Opposite Ramma, Lohegaon, Near Gram Panchayat, Pune- 411047. Pan : Alqpb0811K Appellant Respondent Assessee By : Shri Bhuvanesh Kankani Revenue By : Shri Kumar Manish Singha Date Of Hearing : 08.04.2025 Date Of Pronouncement : 30.05.2025 आदेश / Order Per Vinay Bhamore, Jm: This Appeal Filed By The Assessee Is Directed Against The Order Dated 03.09.2024 Passed By Ld. Cit(A)/Nfac For The Assessment Year 2012-13. 2. The Appellant Has Raised The Following Grounds Of Appeal :- “1. On The Facts & Circumstance Prevailing In The Case & As Per Provisions & Scheme Of The Act It Be Held That The Notice For Levy Of Penalty Was Defective Since No Specific Charge Of Violation, Was Made Out In The Notice & Thus The Consequent Penalty So Levied Be Kindly Deleted.

For Appellant: Shri Bhuvanesh KankaniFor Respondent: Shri Kumar Manish Singha
Section 271(1)(c)Section 274

other 6 recipients have filed their tax returns etc. The appellant has furnished certain details like return of income of 2 persons, bank statements, sundry creditors to whom payments have been made etc. But these do not clearly prove that the appellant has made the payment to the persons concerned

Deputy Commissioner of Income Tax, Central Circle - 1(3), Chennai vs. M. Mahadevan, Chennai

ITA 1826/CHNY/2024[2019-20]Status: DisposedITAT Chennai30 May 2025AY 2019-20

Bench: Shri Ss Viswanethra Ravi & Shri Amitabh Shuklaआयकर अपील सं./Ita No.1824/Chny/2024, Assessment Years: 2013-14 आयकर अपील सं./Ita No.1825/Chny/2024, Assessment Years: 2014-15 आयकर अपील सं./Ita No.1826/Chny/2024, Assessment Years: 2019-20 Deputy Commissioner Of Income Tax, Central Circle-1(3), Chennai. M.Mahadevan, No.24, Park Avenue Street, Shenoy Nagar, Chennai-600 030. [Pan: Aajpm5888R] (अपीलार्थी/Appellant) अपीलार्थी की ओर से/ Assessee By (प्रत्यर्थी/Respondent) : Shri G.Gireesh, C.A प्रत्यर्थी की ओर से /Revenue By : Ms.C.Vatchala, Cit सुनवाई की तारीख/Date Of Hearing : 08.04.2025 घोषणा की तारीख /Date Of Pronouncement : 30.05.2025 आदेश / Order Per Amitabh Shukla, A.M : The Below Mentioned Appeals Have Been Filed By The Appellant Revenue For Ay-2013-14, Ay-2014-15 & 2019-20 Contesting The Order Of Ld. First Appellate Authority Indicated Column-E, Herein Below:- S. No. A Appeal Nos. B Ays C Appellant D Cit(A) Order Details E Respondent F 1

For Respondent: Ms.C.Vatchala, CIT

Deposits Inventories Food & Beverages Packing materials Hosuekeeping materials Stationery Bank Total Assets (A) Clabilities: City Union Bank OD and Term loans Loan from Director Sundry Creditors Total Liabilities ... Bank 22,135 Total Assets (A) 8,24,20,596 TIL. Liabilities: City Union Bank OD and Term Loans Loan from Director Sundry Creditors Total Liabilities(8) IV. V. Sale Consideration (C) Goodwill

Morparia and Ranka Construction Co., Mumbai vs. ITO 17(2)(3), Mumbai

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

ITA 2786/MUM/2024[2014-2015]Status: DisposedITAT Mumbai28 May 2025AY 2014-2015

Bench: Shri Saktijit Dey & Shri Girish Agrawalassessment Year: 2014-15 Morparia & Ranka Ito 17(2)(3), Mumbai Construction Co. Aaykar Bhavan, Mumbai Office No.307, 3Rd Floor, 400023 Gundecha Chamber, Nagindas Vs. Master Road, Fort, Mumbai 400023 Pan: Aabfm0391D (Appellant) (Respondent) Present For: Assessee : Shri. Vimal Punmiya, Ca Revenue : Shri. Bhangepatil Pushkaraj Ramesh, Sr. Dr Date Of Hearing : 25.04.2025 Date Of Pronouncement : 28.05.2025 O R D E R Per Girish Agrawal: This Appeal Filed By The Assessee Is Against The Order Of National Faceless Appeal Centre (Nfac), Delhi, Vide Appeal No. Cit(A), Mumbai- 28/10833/2016-17 Dated 15.04.2024 Passed Against The Assessment Order By Income Tax Officer 17(2)(3), Mumbai U/S. 143(3) Of The Income- Tax Act, 1961 (Hereinafter Referred To As The “Act”), Dated 28.12.2016 For Assessment Year 2014-15. 2. Grounds Taken By The Assessee Are Reproduced As Under: “1. On The Facts & In The Circumstances Of The Case & In Law The Learned Commissioner Of Income Tax (Appeals) Erred In Confirming Addition Made Of Rs.56500000/- Under Section 28(Iv) Of The Act Which Represents Amount Received & Now Repayable To M/S Crb Capital Market Ltd On Account Of 2

For Appellant: Shri. Vimal Punmiya, CAFor Respondent: Shri. Bhangepatil Pushkaraj
Section 143Section 143(3)Section 234BSection 28

which included sum of Rs.5,65,00,000/- payable to C.R.B. Capital Markets Ltd. The details were called for to substantiate the sundry creditors of Rs.5,65,00,000/- claimed by the assessee as payable to C.R.B. Capital Markets Ltd. Assessee claimed that this amount has become payable on account

M/S. Simero Vitrified P. Ltd., Morbi vs. The Pr. CIT-3, Rajkot

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

ITA 276/RJT/2019[2016-17]Status: DisposedITAT Rajkot22 May 2025AY 2016-17

Bench: Us Is A Private Limited Company & Engaged In The Business Of Manufacturing Of Vitrified Tiles. The Return Of Income Has Been E-Filed By The Assessee, On 10/09/2016 For Assessment Year (A.Y.) 2016-17, Reporting Loss Of Rs. 5,68,00,829/-, Which Was Later Revised On 09/03/2018, Declaring Total Loss Of Rs. 13,97,40,413/-, Claiming Investment Allowance U/S 32Ac Of The Income Tax Act. The Case Has Been Selected For Complete Scrutiny (Cass) Specifically To Examine The Followings: 1) Whether Outward Foreign Remittance Is From Disclosed Sources & Appropriate Withholding & Reporting Obligation Have Been Complied With; 2) Whether Investment & Income Relating To Properties Are Duly Disclosed; 3) Whether Receipt Of Foreign Remittance Has Been Correctly Offered For Tax And, 4) Whether Sundry Creditors Are Genuine. 4. The Assessment Order U/S 143(3) For The Assessment Year (A.Y.) 2016-17 Was Passed By Dcit, Morbi Circle, Morbi, Being The Assessing Officer (Ao), On 21/12/2018, Allowing The Loss Claimed Of Rs. 13,97,40,413/- To Be Carry Forward To Subsequent Years. 2

Section 143(3)Section 263Section 32ASection 68

investment and income relating to properties are duly disclosed; 3) Whether receipt of foreign remittance has been correctly offered for tax and, 4) Whether sundry creditors are genuine. 4. The Assessment order u/s 143(3) for the assessment year (A.Y.) 2016-17 was passed by DCIT, Morbi Circle, Morbi, being ... enquiry/verification has been carried out by the AO in the share capital/unsecured loan introduced in the year. (6) As regards the genuineness of sundry creditors, the fact remains that out of 100 creditors whose outstanding amount is more than Rs. 1 lac, confirmations from only 11 creditors were furnished

Dulal Bhattacharjee, Kolkata vs. ACIT, Circle 28, Kolkata

The appeal of the assessee is allowed for statistical purposes

ITA 369/KOL/2025[2015-2016]Status: DisposedITAT Kolkata21 May 2025AY 2015-2016

Bench: Shri Sonjoy Sarma & Shri Rakesh Mishrai.T.A. No.369/Kol/2025 Assessment Year: 2015-16 Dulal Bhattacharjee…..………………………………………...….……….Appellant C/O Subash Agarwal & Associates, Advocate Siddha Gibson, 1, Gibson Lane, Suite 213, 2Nd Floor, Kolkata – 700069. [Pan: Aedpb8602E] Vs. Acit, Circle-28, Kolkata.………….....................……........……...…..…..Respondent Appearances By: Shri Siddharth Agarwal, Advocate, Appeared On Behalf Of The Assessee. Shri Kallol Mistry, Jcit, Sr. Dr, Appeared On Behalf Of The Revenue. Date Of Concluding The Hearing : May 15, 2025 Date Of Pronouncing The Order : May 21, 2025 Order Per Sonjoy Sarma: This Appeal Of The Assessee For The Assessment Year 2015-16 Is Directed Against The Order Dated 14.01.2025 Passed By The Ld. Commissioner Of Income-Tax, Appeals, Addl/Jcit(A), Bhopal [Hereinafter Referred To As ‘The ‘Ld. Cit(A)’]. 2. Brief Facts Of The Case Are That The Assessee Is An Individual & Filed His Return Of Income On 26.09.2015 For The Assessment Year 2015- 16 By Declaring Total Income Of Rs.15,84,310/-. Subsequently, The Case Of The Assessee Was Selected For Limited Scrutiny Under Cass Relating To The Issue Of Income/Capital Gains On Sale Of Land Or Building, Sale Of Property Mismatch, Sundry Creditors & Sales Turnover Mismatch. Thereafter, Statutory Notices U/S 142(1) & 143(2) Of The Act Were Issued To The Assessee & The Ld. Ar Of The Assessee Duly Complied To The Notices. During The Assessment Proceedings, It Was Found That The

Section 142(1)Section 43C

selected for limited scrutiny under CASS relating to the issue of income/capital gains on sale of land or building, sale of property mismatch, sundry creditors and sales turnover mismatch. Thereafter, statutory notices u/s 142(1) and 143(2) of the Act were issued to the assessee