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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. Ahiliabai Sardessai, Panaji vs. Income Tax Officer, Ward 2(4), Panaji

In the result, the appeal filed by the assessee stands allowed

ITA 8/PAN/2021[2014-15]Status: DisposedITAT Panaji29 Aug 2023AY 2014-15

Bench: Shri Inturi Rama Rao & Shri Partha Sarathi Chaudhuryआयकर अपील सं. / Ita No.08/Pan/2021 िनधा"रण वष" / Assessment Year : 2014-15 M/S. Ahiliabai Sardessai, Vs. Ito, Ward-2(4), Panaji. 301, Lotus Court, M. G. Road, St. Inez Junction, Panaji- 403001. Pan : Aagfa9044G Appellant Respondent Assessee By : Shri N. J. Prabhudesai Revenue By : Shri N. Shrikanth Date Of Hearing : 17.08.2023 Date Of Pronouncement : 29.08.2023 आदेश / Order Per Inturi Rama Rao, Am: This Is An Appeal Filed By The Assessee Directed Against The Order Of The National Faceless Appeal Centre, Delhi [‘Nfac’] Dated 26.03.2021 For The Assessment Year 2014-15. 2. Briefly, The Facts Of The Case Are That The Appellant Is A Partnership Firm Engaged In The Business Of Mining. The Return Of Income For The Assessment Year 2014-15 Was Filed On 30.09.2014 Declaring A Loss Of Rs.4,92,14,101/- & The Same Was Revised At Loss

For Appellant: Shri N. J. PrabhudesaiFor Respondent: Shri N. Shrikanth
Section 143(3)Section 14ASection 41(1)

Rules’) and deleted the addition u/s 14A r.w. Rule 8D(2)(ii). The ld. CIT(A) also deleted the addition on account of sundry creditors of Rs.48,45,698/-. 4. Being aggrieved by the disallowance u/s 14A r.w. Rule 8(D)(2)(iii), the appellant is in appeal before

Fomento Karnataka Mining Company Private Limited (Now Amalgamated With Fomento Resources Private Limited, Panaji vs. Joint Commissioner of Income Tax, Margao Range, Margao

In the result, the appeal filed by the assessee stands partly allowed

ITA 26/PAN/2021[2009-10]Status: DisposedITAT Panaji29 Aug 2023AY 2009-10

Bench: Shri Inturi Rama Rao & Shri Partha Sarathi Chaudhuryआयकर अपील सं. / Ita No.26/Pan/2021 िनधा"रण वष" / Assessment Year : 2009-10 Fomento Karnataka Mining Vs. Jcit, Margao Range, Company Private Limited, Margao, Goa. (Now Amalgamated With Fomento Resources Private Limited), 102, 1St Floor, Kamat Metropolis-I, Behind Caculo Mall, St. Inez, Panaji, Goa- 403001. Pan : Aaacf7487K Appellant Respondent Assessee By : Shri Nishant Thakkar Revenue By : Shri N. Shrikanth Date Of Hearing : 17.08.2023 Date Of Pronouncement : 29.08.2023 आदेश / Order Per Inturi Rama Rao, Am: This Is An Appeal Filed By The Assessee Directed Against The Order Of Ld. Commissioner Of Income Tax (Appeals)-2, Panaji [‘The Cit(A)’] Dated 27.08.2021 For The Assessment Year 2009-10. 2 2. Briefly, The Facts Of The Case Are That The Appellant Is A Company Incorporated Under The Provisions Of The Companies Act, 1956. It Is Engaged In The Business Of Processing & Trading In The Iron Ore. The Return Of Income For The Assessment Year 2009-10 Was Filed On 30.09.2009 Declaring Total Income Of Rs.26,40,77,220/-. Against The Said Return Of Income, The Assessment Was Completed By The Joint Commissioner Of Income Tax, Margao Range, Margao (‘The Assessing Officer’) Vide Order Dated 30.12.2011 Passed U/S 143(3) Of The Income Tax Act, 1961 (‘The Act’) At A Total Income Of Rs.26,63,57,955/-. While Doing So, The Assessing Officer Made Disallowance U/S 14A Of Rs.15,49,787/-, Disallowance On Account Of Sundry Creditors Extracting As Fictitious Of Rs.7,30,948/-. 3. Being Aggrieved, An Appeal Was Filed Before The Ld. Cit(A) Contending That No Disallowance U/S 14A Is Required To Be Made In The Absence Of Any Expenditure Incurred To Earn The Exempt Income. It Was Also Contended That No Addition On Account Of Outstanding Creditors Is Required To Be Made, As The Credits Represent The Opening

For Appellant: Shri Nishant ThakkarFor Respondent: Shri N. Shrikanth
Section 143(3)Section 14ASection 14A(2)

income of Rs.26,63,57,955/-. While doing so, the Assessing Officer made disallowance u/s 14A of Rs.15,49,787/-, disallowance on account of sundry creditors extracting as fictitious of Rs.7,30,948/-. 3. Being aggrieved, an appeal was filed before the ld. CIT(A) contending that no disallowance ... Officer ought not to have made resort to the provisions of section 14A of the Act. As regards to the disallowance on account of sundry creditors, it is submitted that the credits represent the opening balance and, therefore, no addition can be made for the year under consideration