“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

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

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

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

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

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

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

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

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

Shiv Shakti Constructons, Gautam Budh Nagar vs. ACIT Cental Circle-2, Noida

In the result, all the Revenue’s Appeals are dismissed

ITA 2555/DEL/2022[2016-17]Status: DisposedITAT Delhi27 Jul 2023AY 2016-17

Bench: Shri Challa Nagendra Prasad & Shri Pradip Kumar Kedia

For Appellant: Shri Harish Choudhary CAFor Respondent: Shri H.K. Choudhary, CIT-DR

Rs.15,22,47,537/- by completely ignoring the fact that the assessee has been unable to prove the genuineness of purchases and the corresponding sundry creditors. On bare perusal of the balance sheet of the assessee it is clear that the bogus sundry creditors have been generated to create FDRs ... identity and creditworthiness of the sundry/other creditors and genuineness of transactions. Whereas the primary onus was on the assessee to prove the same. The sundry creditors were also held bogus on the basis of statement of accountant of the assessee Sh. Kuldeep Joshi who admitted that the creditors

Shiv Shakti Constructions, Gautam Budh Nager vs. ACIT, Central Circle-2, Noida

In the result, all the Revenue’s Appeals are dismissed

ITA 2554/DEL/2022[2015-16]Status: DisposedITAT Delhi27 Jul 2023AY 2015-16

Bench: Shri Challa Nagendra Prasad & Shri Pradip Kumar Kedia

For Appellant: Shri Harish Choudhary CAFor Respondent: Shri H.K. Choudhary, CIT-DR

ITO, Ward-8(3), New Delhi vs. Eunite Technologies P.Ltd, `New Delhi

ITA 7330/DEL/2019[2014-15]Status: DisposedITAT Delhi27 Jul 2023AY 2014-15

Bench: Sh. N.K.Billaiya & Sh. Anubhav Sharmaita No.7330/Del/2019, A.Y. 2014-15 Ito, Vs. M/S. Eunite Technologies Pvt. Ltd. Ward-8(3), 22, Ramanuja Computer Complex, New Delhi Okhla Industrial Area, Phase-Ii, New Delhi- 110020 Pan No. Aagcs8425G (Appellant) (Respondent)

Section 133(6)Section 143(3)Section 41(1)

Total income was assessed at Rs. 2,78,59,359/-. 2.1 The assessee has shown sundry creditors to the extent of Rs. 17,89,54,946/- during the year under consideration. The Ld. AO has issued the notice u/s 133(6) to the creditors to verify the identity, creditworthiness ... that outstanding balances of the parties is yet to be repaid fully. The Ld. AO has treated the creditors bogus as sundry creditors does not exists at the address and appellant has failed to produce the representative of these companies despite various opportunities provided to them and credit balance

Assistant Commissioner of Income Tax Circle-1, Jammu vs. M/S Mohd Asraf Sheikh, Jammu

In the result, the appeal of the Revenue is allowed

ITA 212/ASR/2019[2015-16]Status: DisposedITAT Amritsar26 Jul 2023AY 2015-16

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

For Appellant: Sh. Vinay Jamwal, CAFor Respondent: Smt. Ratinder Kaur, Sr. DR

Section 68

case and in law the Ld. CIT(A) was in error in deleting the addition made by the AO on account of unverified sundry creditors without appreciating the facts of the case and material brought on record which remained uncontroverted. 2. Whether in the facts and circumstances of the case ... more grounds of appeal.” 3. Briefly, the facts as per record are that the AO has noted that the assessee has shown large sundry creditors in the course of scrutiny proceeding. The AO has provided sufficient opportunities to the appellant assesse to prove the identity of creditor, creditworthiness and genuineness

Mahesh Wood Products Private Limited, Delhi vs. ACIT, Central Circle-13, New Delhi

In the result the appeal of the assessee is allowed

ITA 1949/DEL/2022[2017-18]Status: DisposedITAT Delhi26 Jul 2023AY 2017-18

Bench: Shri G.S. Pannu, Hon’Ble & Shri Amit Shuklaasstt. Year: 2017-18 M/S. Mahesh Wood Products Vs. Asstt. Commissioner Of Private Limited 2042, Income Tax, Central Katra Tambacco, Khari Baoli, Circle-13, New Delhi. Central Delhi – 110 006 Pan Aaacm0118Q (Appellant) (Respondent)

For Appellant: Shri Suresh Gupta, CAFor Respondent: Dr. Maninder Kaur, Sr. Dr

Section 143(3)Section 68

other issues which have been raised is with regard to addition of Rs. 3,60,659/- by treating the difference in outstanding balance of sundry creditors as unexplained credit. 3. Brief facts are that Assessee Company is engaged in the business of manufacturing and trading of ‘katha’. It has filed ... Lastly, with regard to the addition on account of variation in the balance, the Assessing Officer had called for information from 12 the sundry creditors. He noted that from the information received, there was a difference in the balance shown by these parties, M/s. Aryan Enterprises, M/s. Ions Flow

M/S. Vaibhav Cotton Company, Rajkot vs. The Income Tax Officer, Ward-2 (1) (5), Rajkot

In the result, the appeal filed by the Assessee is hereby dismissed

ITA 367/RJT/2018[2013-14]Status: DisposedITAT Rajkot26 Jul 2023AY 2013-14

Bench: Shri Waseem Ahmed (Accountant Member), Shri T.R. Senthil Kumar (Judicial Member)

Section 143(3)

purchase and sales details of registered purchases alongwith ledger and supportive evidence, Gross Profit/Net Profit ratio of the previous two years, ledger account of sundry creditors and sundry debtors. As the assessee failed to furnish the above details why the books of accounts should not be rejected and Gross Profit

M/S. U.P. Dyeing & Printing Works, Uttar Pradesh vs. ITO, Meerut

In the result, appeal of the assessee on this ground is allowed

ITA 3484/DEL/2017[2012-13]Status: DisposedITAT Delhi25 Jul 2023AY 2012-13

Bench: Dr. B. R. R. Kumarsh. Yogesh Kumar Us

For Appellant: Sh. Sanjay Malik, AdvFor Respondent: Sh. Anuj Garg, Sr. DR

Section 143(3)

assessee for AY 2010-11. Since, the issue is on the similar ground, we hold that no addition is called for treating the sundry creditors pertaining to the undisputed purchase of the year. Appeal of the assessee on this ground is allowed. 5. In the result, appeal of the assessee

Royal Bombay Yatch Club, Mumbai vs. ITO Ward 17(3)(2), Mumbai

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

ITA 1602/MUM/2023[2017-18]Status: DisposedITAT Mumbai21 Jul 2023AY 2017-18

Section 143(3)Section 41(1)

received from non-resident or from any club and hence the alleged amount is purely fictitious and imaginary. b. Disallowance of amount of sundry creditors under section 41(1) unpaid for three years Rs. 15,48,309. It may be noted that subsequent to the period of three years till

B.C. Bhuyan Construction Pvt. Ltd., Bhubaneswar vs. DCIT, Corporate Circle- 1(1), Bhubaneswar

In the result, appeal of the assessee stands partly allowed for statistical purposes

ITA 356/CTK/2019[2014-15]Status: DisposedITAT Cuttack20 Jul 2023AY 2014-15

Bench: Before S/Shri George Mathan, Judicial & Girish Agrawalwalassessment Year : 2014-15 B.C.Bhuyan Construction Pvt B.C.Bhuyan Construction Pvt Vs. Dcit, Corporate Circle Dcit, Corporate Circle - Ltd., Plot No.90, Palasuni, Ltd., Plot No.90, Palasuni, 1(1), Rasulgarh, Bhubaneswar Rasulgarh, Bhubaneswar Bhubaneswar Bhubaneswar Pan/Gir No. Pan/Gir No.Aadcb 3304 N (Appellant (Appellant) .. ( Respondent Respondent) Assessee By : Shri P.C.Sethi, Adv Revenue By Revenue By : Shri Saroj Kumar Mahapatra, Saroj Kumar Mahapatra, Pr. Cit Dr Date Of Hearing : 20/07 7/2023 Date Of Pronouncement : 20/0 /07/2023

For Appellant: Shri P.C.SethiFor Respondent: Shri Saroj Kumar Mahapatra

Section 143(3)Section 40A(3)

shuttering materials; ii) Addition u/s.40A(3) from bank statement and impounded material; iii) Bogus labour payments; iv) Bogus expenses shown as sundry creditors and non-deduction of TDS in respect of Director’s remuneration. v) addition of interest income as per 26AS 4. It was the submission that ... bonus of Rs.1,70,68,000/-. It was the further submission that the Assessing Officer further proceeded to disallow the sundry creditors being purchase in respect of Classic Engineers of Rs.38,98,562/- and Kanchan Industries of Rs.32,79,673/-. It was the submission that the Assessing Officer

Shri Rajan Sharma C/O Meek Enterprises, Phagwara vs. Income Tax Officer, Phagwara

In the result, appeal of the assessee is allowed

ITA 53/ASR/2023[2014-15]Status: DisposedITAT Amritsar17 Jul 2023AY 2014-15

Bench: Dr. M. L. Meena & Sh. Anikesh Banerjee

Section 129Section 133(6)Section 143(2)Section 143(3)Section 250rSection 41(1)Section 68

account of fictitious credits u/s 68/cessation of liability u/s 41(1) of the Income Tax Act 1961 by treating the sundry creditors namely Unique Traders as fictitious. 2 That the C1T(A) was not justified in sustaining the addition of Rs. 2443000 made by the AO on account of fictitious ... credits u/s 68/cessation of liability u/s 41(1) of the Income Tax Act 1961 by treating the sundry creditors namely B.L Seth Traders as fictitious. 3 That while sustaining the addition made by the AO the CIT(A) failed to appreciate explanations of assessee and the evidence filed

M/S. Bharat Aluminium Company Ltd., New Delhi vs. DCIT, New Delhi

In the result, all the appeals of the assessee are partly allowed for statistical purpose

ITA 2741/DEL/2017[2012-13]Status: DisposedITAT Delhi17 Jul 2023AY 2012-13

Bench: Sh. Saktijit Deydr. B. R. R. Kumar

For Appellant: Sh. Kanchan Kaushal, FCAFor Respondent: Sh. P. Praveen Sidharth, CIT DR

Section 115JSection 80I

India Pvt. Ltd. has irrecoverably written off the amount of Rs.16.09 lacs receivables from the assessee. The assessee continued to claim the same as sundry creditors in their books of accounts. The facts proves that the assessee is absolved of their liability of Rs.16.09 lacs and hence, we hold that

M/S. Bharat Aluminium Company Ltd., New Delhi vs. DCIT, New Delhi

In the result, all the appeals of the assessee are partly allowed for statistical purpose

ITA 3568/DEL/2016[2011-12]Status: DisposedITAT Delhi17 Jul 2023AY 2011-12

Bench: Sh. Saktijit Deydr. B. R. R. Kumar

For Appellant: Sh. Kanchan Kaushal, FCAFor Respondent: Sh. P. Praveen Sidharth, CIT DR

Section 115JSection 80I

M/S. Bharat Aluminium Company Ltd., New Delhi vs. DCIT, New Delhi

In the result, all the appeals of the assessee are partly allowed for statistical purpose

ITA 5118/DEL/2015[2010-11]Status: DisposedITAT Delhi17 Jul 2023AY 2010-11

Bench: Sh. Saktijit Deydr. B. R. R. Kumar

For Appellant: Sh. Kanchan Kaushal, FCAFor Respondent: Sh. P. Praveen Sidharth, CIT DR

Section 115JSection 80I

Assistant Commissioner of Income Tax, Circle 2(1), Raipur vs. Psa Construction, Raipur

In the result, appeal of the revenue is dismissed

ITA 145/RPR/2018[2015-16]Status: DisposedITAT Raipur17 Jul 2023AY 2015-16

Bench: SHRI RAVISH SOOD (Judicial Member), SHRI ARUN KHODPIA (Accountant Member)

For Respondent: Shri Piyush Tripathi, Sr. DR

Section 133ASection 145(3)Section 250(4)Section 253

Returns along with challans were duly submitted. 15. Details of Vehicle, Plant running &maintenance expenses were duly filed. 16. Confirmation of Accounts of Sundry Creditors was duly submitted. List of new fixed assets acquired was filed. 12 29.11.201 Learned AO had issued Show . 6 cause Notice and required the assessee

Dinesh Kumar Chaurasia, Tonk vs. PCIT Central, Jaipur

In the result, appeal of the assessee is dismissed

ITA 102/JPR/2023[2018-19]Status: DisposedITAT Jaipur17 Jul 2023AY 2018-19

Bench: SHRI SANDEEP GOSAIN (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Sh. Mahendra Gargieya (Adv.)For Respondent: Sh. Ajey Malik (CIT)

Section 143(3)Section 263Section 5

assessment proceeding the ld. PCIT has called for the assessment records and on examination of the record the ld. PCIT has observed that Sundry Creditors of Rs. 29.46 lakhs are appearing in the balance sheet, without any corresponding purchase transaction in current year. During the course of assessment proceeding assessee ... verify/examine the issues which he ought to have made, stating that: “4. On examination of assessment records, it is noted that sundry creditors of Rs. 29.46 lakhs are appearing in the balance sheet, without any corresponding purchase/ transactions in current year. During the course of assessment proceeding, you have submitted

Uretek India Private Limited, New Delhi vs. ACIT Circle-27(1), New Delhi

In the result, the appeal of the assessee is allowed

ITA 8240/DEL/2019[2015-16]Status: DisposedITAT Delhi14 Jul 2023AY 2015-16

Bench: Shri Kul Bharat & Shri M.Balaganesh[Assessment Year : 2015-16] Uretek India Pvt.Ltd., Vs Acit, C/O-Rohit Malik & Associates, Circle-27(1), 1212A, Chiranjiv Tower, 43, New Delhi. Nehru Place, New Delhi-110019. Pan-Aaacu9168L Appellant Respondent Appellant By Dr. Rakesh Gupta, Adv. & Shri Somil Agarwal, Adv. Respondent By Shri Gurpreet Shah Singh, Sr.Dr Date Of Hearing 08.06.2023 Date Of Pronouncement 14.07.2023 Order

Section 143(1)Section 41(1)Section 68

Total 2,07,29,190 The A/R of the assessee vide note sheet dated 21/12/2017 was show caused as to why 3-years outstanding sundry creditors should not be added back to the income of the assessee as the liability from them has ceased to exist. In response ... chargeable to income tax under the head profits and gains of business or profession. He submitted that since the amounts remained unpaid to the sundry creditors for a period of 4 years or more, the monies were available to the assessee in its business which amounted to a benefit arising

M/S Shri Balaji Builders, 1/43, Rhb Colony, Bhiwadi, Alwar vs. ACIT, Circle-1, Alwar

In the result, the appeal of the assessee is allowed

ITA 192/JPR/2023[2013-14]Status: DisposedITAT Jaipur12 Jul 2023AY 2013-14

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri P.C. Parwal (C.A)For Respondent: Shri A.S. Nehara (Addl.CIT)

Section 133ASection 142(1)Section 143(3)Section 41(1)Section 68

first time during the current appellate proceedings. Furthermore, in the instant case, the issue is the difference between the factual amount of Sundry Creditor and the Sundry Creditors claimed by the appellant to balance his books for the year under consideration. In view of the above facts and circumstances ... reference to the setting aside directions of the Hon’ble ITAT with regard to the addition on account of difference in accounting balance of sundry creditors namely M/s/ Purlia Metal Casting Private Ltd. came to notice during the original assessment proceedings as well as this afresh (set aside) assessment proceedings

Maa Narmada Agrotech and Infrastures Ltd, Indore vs. The PCIT-1, Indore

In the result, appeal of assessee is allowed

ITA 117/IND/2022[2017-18]Status: DisposedITAT Indore11 Jul 2023AY 2017-18

Bench: Shri Vijay Pal Rao & Shri B.M. Biyanimaa Narmada Agrotech & Pcit Infrastructures Limited Indore -1 Ug-47, Trade Centre, Vs. Kanchan Bagh Main Road, Indore (Appellant / Assessee) (Respondent/ Revenue) Pan: Aafcm6285 P Assessee By Shri S.N. Goyal & Shri Pranay Goyal, Ars Revenue By Shri P.K. Mishra, Cit-Dr Date Of Hearing 31.05.2023 Date Of Pronouncement 11.07.2023

Section 139(1)Section 143(3)Section 263

There-after, the case was adjourned to 22-11-1996 and 1-12-1995. On 5-12-1995, the Assessing Officer studied the sundry creditors, unsecured loans and desired to furnish affidavits of unsecured loans and details of interest paid and the case was adjourned

ITO, New Delhi vs. M/S. Arjun Ispat India Pvt. Ltd., New Delhi

Accordingly, the grounds raised are allowed for

ITA 2725/DEL/2017[2012-13]Status: DisposedITAT Delhi10 Jul 2023AY 2012-13

Bench: Sh. M. Balaganesh & Sh.Anubhav Sharmaita No. 2725/Del/2017, A.Y. 2012-13 Income Tax Officer Vs. M/S. Arjun Ispat India P. Ward 3(2), Ltd. New Delhi Y-59, Loha Mandi, Naraina, New Delhi-110028 Appellant Respondent

Section 144Section 68

passed upon the assessee making addition of Rs. 10,01,84,690/- on account of lack of proof regarding sundry creditors an addition of Rs. 24,00,000/- was made on account of lack of information regarding identity, creditworthiness and proof of nature of transaction on account ... appeal raising following grounds : “1. The ld. CIT(A) erred in deleting addition of Rs. 1,84,690/- made by the AO being unconfirmed sundry creditors. 2. The Ld. CIT(A) erred in deleting addition of Rs. 24,00,000/- made u/s 68 of the Income Tax Act, 1961 being

Yamu Industries Ltd vs. DCIT, Central Circle-1

In the result, Revenue’s appeal is partly allowed and cross

ITA 3681/DEL/2000[1996-1997]Status: DisposedITAT Delhi06 Jul 2023AY 1996-1997

Bench: Shri Saktijit Dey, Vice- & Shri Girish Agrawalassessment Year: 1996-97 Dcit, Central Circle-31, Versus M/S. Yamu Industries Ltd., New Delhi. 5051, Netaji Subhash Marg, Darya Ganj, New Delhi (Appellant) (Respondent) C.O. No. 04/Del/2004 (In Ita No.3681/Del/2000) Assessment Year: 1996-97 M/S. Yamu Industries Ltd., Versus Dcit, Central Circle-31, 5051, Netaji Subhash Marg, New Delhi. Darya Ganj, New Delhi (Appellant) (Respondent)

For Appellant: NoneFor Respondent: Sh. Ramdhan Meena, Sr. DR

Section 143(2)Section 144Section 254

made following additions : (i). Unexplained income Rs.80,000/- (ii). Disallowance of depreciation Rs. 4,432/- (iii). Increase in Inventories Rs.96,280/- (iv). Increase in sundry creditors Rs.2,66,480/- (v). Adhoc disallowance of expenses Rs.3,48,170/- 7. It is observed, the first appellate authority, while deciding the appeal