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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

Balhanuman Commodities Private Limited, Kolkata vs. CIT(A), NFAC

The appeal of the assessee is allowed for statistical purposes

ITA 1129/KOL/2024[2012-13]Status: DisposedITAT Kolkata23 Dec 2024AY 2012-13

Bench: Shri Sonjoy Sarma & Shri Rakesh Mishrai.T.A. No.1129/Kol/2024 Assessment Year: 2012-13 Balhanuman Commodities Pvt. Ltd..……………………....Appellant 309, B. B. Ganguly Street, W.B – 700012. [Pan: Aadcb6195K] Vs. Cit(A), Nfac………………..….…….…............................…..…..... Respondent Appearances By: Shri Manish Tiwari, Advocate, Appeared On Behalf Of The Appellant. Shri Somnath Das Biswas, Sr. Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : December 17, 2024 Date Of Pronouncing The Order : December 23, 2024 आदेश / Order Per Sonjoy Sarma: The Present Appeal Has Been Preferred By The Assessee Against The Order Dated 22.03.2024 Of The National Faceless Appeal Centre [Hereinafter Referred To As ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. Brief Facts Of The Case Are That The Assessee Filed Its Return Of Income For The Relevant Assessment Year By Declaring An Income Of Rs.5590/-. The Case Of The Assessee Was Selected For Scrutiny Assessment. The Case Of The Assessee Was Assessed U/S 144 Of The Act & Statutory Notices Were Issued To The Assessee. But The Notices Could Not Be Served On The Assessee As The Business Of The Assessee Had Been Closed & There Was No Response To The Notices Issued. Due To The Non- Compliance, The Assessing Officer Compelled To Frame The Assessment Order U/S 144 Of The Act. On The Basis Of Material Available On Record, The Assessing Officer Added A Sum Of Rs.30,50,000/- Representing

Section 144Section 250Section 250(6)

available on record, the Assessing Officer added a sum of Rs.30,50,000/- representing I.T.A. No.1129/Kol/2024 Assessment Year: 2012-13 Balhanuman Commodities Pvt. Ltd sundry creditors treating the same as bogus liabilities. Finally, the assessment order was passed u/s 144 including the addition of Rs.30,50,000/- into the total