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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

DCIT, Gurugram vs. Rajesh Kumar, Sonepat

In the result, cross-appeal filed by the Revenue is dismissed

ITA 82/DEL/2023[2018-19]Status: DisposedITAT Delhi07 Aug 2024AY 2018-19

Bench: Shri Kul Bharat & Shri Avdhesh Kumar Mishra[Assessment Year : 2018-19] Rajesh Kumar, Vs Acit, C/O-Shiva Constructions Co., Central Circle-2, Plot No.69, Sidharth Enclave, Gurgaon. Delhi Road Sonipat, Sonipat, Haryana-131001. Pan-Bkspk2518K Appellant Respondent [Assessment Year : 2018-19] Dcit, Vs Rajesh Kumar, Gurgaon. C/O-Shiva Constructions Co., Plot No.69, Sidharth Enclave, Delhi Road,Sonipat, Haryana-131001. Pan-Bkspk2518K Appellant Respondent Appellant By Shri Umesh Takkar, Ca & Shri Saurabh Nagpal, Ca Respondent By Shri P N Barnwal, Sr.Dr Date Of Hearing 03.07.2024 Date Of Pronouncement 07.08.2024 Order Per Kul Bharat, Jm : These Two Cross-Appeals Filed By The Assessee & The Revenue, Are Directed Against The Order Passed By Ld. Commissioner Of Income Tax(Appeals) [“Ld.Cit(A)”]-3, Gurgaon Dated 31.10.2022 For The Assessment Year 2018-19. Both Appeals Of The Assessee & The Revenue Are Heard Together & Are Being Disposed Off By Way Of Common Order For The Sake Of Brevity.

Section 133ASection 139(1)Section 142(1)Section 143(2)Section 147Section 148Section 40Section 41(1)Section 43BSection 68

addition of INR 9,11,85,602/-. He further deleted the addition of INR 1,03,80,925/- and the addition related to sundry creditors of INR 3,40,55,423/- was also deleted alongwith rest of the additions made by the AO related to cessation of liability and disallowance ... fact and circumstance of the case Ld. AO is not justified in making the addition of Rs. 3,40,55,423/- out of sundry creditors. Adhoc addition has been made without giving any basis or pin pointing any specific party which is not genuine. All the creditors are for expenses

Rajesh Kumar, Sonepat vs. ACIT, Central Circle-2, Gurgaon

In the result, cross-appeal filed by the Revenue is dismissed

ITA 61/DEL/2023[2018-19]Status: DisposedITAT Delhi07 Aug 2024AY 2018-19

Bench: Shri Kul Bharat & Shri Avdhesh Kumar Mishra[Assessment Year : 2018-19] Rajesh Kumar, Vs Acit, C/O-Shiva Constructions Co., Central Circle-2, Plot No.69, Sidharth Enclave, Gurgaon. Delhi Road Sonipat, Sonipat, Haryana-131001. Pan-Bkspk2518K Appellant Respondent [Assessment Year : 2018-19] Dcit, Vs Rajesh Kumar, Gurgaon. C/O-Shiva Constructions Co., Plot No.69, Sidharth Enclave, Delhi Road,Sonipat, Haryana-131001. Pan-Bkspk2518K Appellant Respondent Appellant By Shri Umesh Takkar, Ca & Shri Saurabh Nagpal, Ca Respondent By Shri P N Barnwal, Sr.Dr Date Of Hearing 03.07.2024 Date Of Pronouncement 07.08.2024 Order Per Kul Bharat, Jm : These Two Cross-Appeals Filed By The Assessee & The Revenue, Are Directed Against The Order Passed By Ld. Commissioner Of Income Tax(Appeals) [“Ld.Cit(A)”]-3, Gurgaon Dated 31.10.2022 For The Assessment Year 2018-19. Both Appeals Of The Assessee & The Revenue Are Heard Together & Are Being Disposed Off By Way Of Common Order For The Sake Of Brevity.

Section 133ASection 139(1)Section 142(1)Section 143(2)Section 147Section 148Section 40Section 41(1)Section 43BSection 68

addition of INR 9,11,85,602/-. He further deleted the addition of INR 1,03,80,925/- and the addition related to sundry creditors of INR 3,40,55,423/- was also deleted alongwith rest of the additions made by the AO related to cessation of liability and disallowance ... fact and circumstance of the case Ld. AO is not justified in making the addition of Rs. 3,40,55,423/- out of sundry creditors. Adhoc addition has been made without giving any basis or pin pointing any specific party which is not genuine. All the creditors are for expenses

Sheetal Collection, Jalgaon vs. DCIT, Circle-2, Jalgaon

ITA 1074/PUN/2024[2014-15]Status: DisposedITAT Pune01 Aug 2024AY 2014-15

Bench: Hon’Ble Shri G. D. Padmahshali & Shri Vinay Bhamoreassessment Year : 2014-15 M/S Sheetal Collection Shop No. 16, Fule Market, Jalgaon-425001 Pan: Acifs1530K. . . . . . . . Appellant V/S Dy. Commissioner Of Income Tax, Circle-2, Jalgaon. . . . . . . . Respondent Appearances Assessee By : Mr V V Kawdia [‘Ld. Ar’] Revenue By : Mr Umashankar Prasad [‘Ld. Dr’] Date Of Conclusive Hearing : 25/07/2024 Date Of Pronouncement : 01/08/2024 Order Per G. D. Padmahshali, Am; Against Din & Order No. Itba/Apl/S/250/2023-24/1063185555(1) Dt. 22/03/2024 Passed U/S 250 Of The Income-Tax Act, 1961 [‘The Act’ Hereinafter] Passed By The Commissioner Of Income Tax Appeal-11 Pune [‘Cit(A)’ Hereinafter] Which In Turn Arisen Out Of Order Of Assessment Passed U/S 143(3) Of The Act By The Dy. Commissioner Of Income Tax, Circle-2, Jalgaon [‘Ao’ Hereinafter] Anent To Assessment Year 2014-15 [‘Ay’ Hereinafter] The Assessee Is In Appeal. 2. Tersely Stated The Facts Of The Case Are That; 2.1 The Assessee Is A Partnership Firm & Engaged In Retail Trading Business Of Readymade Garments. During The Year Under Consideration A Survey Action U/S 133A Of The Act On The Assessee Firm Was Carried Out & A Statement Of Its Partner Was Recorded. In Answering To Question Number 16 The Partner Declared/Admitted Certain

For Appellant: Mr V V Kawdia [‘Ld. AR’]For Respondent: Mr Umashankar Prasad [‘Ld. DR’]
Section 132(4)Section 133ASection 139(1)Section 143(2)Section 143(3)Section 250

1074/PUN/2024 AY 2014-15 undisclosed income in relation to firm’s business activities viz; (a) excess cash ₹7,51,313/- (b) unpaid sundry creditors ₹2,32,087/- (c) excess stock ₹16,08,121/- & (d) towards Gross Profit ₹6,57,442/-. In addition to former specific declaration/admission, further an amount