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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

Dnyanraj Yashvant Nikam, Mumbai vs. Pr, CIT -17, Mumbai

In the result, the appeal of the assessee is dismissed

ITA 1719/MUM/2021[2010-11]Status: DisposedITAT Mumbai01 Dec 2022AY 2010-11

Bench: Shri Aby T. Varkey, Jm & Shri Gagan Goyal, Am आयकर अपील सं/ I.T.A. No.1719/Mum/2021 (निर्धारण वर्ा / Assessment Year: 2010-11) Dnyanraj Yashvant Nikam Pcit बिधम/ 110, 2Nd Floor, Mody Street, Room No. 120, 1St Floor, Vs. Jamathkhana Building Fort, Kautilya Bhavan, C-41 To Mumbai-400001. C-43 G-Block Bkc, Bandra (E), Mumbai- 400051. स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Abmpn6980B (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) Assessee By: None Revenue By: Smt. Mahita Nair (Sr. Ar) सुनवाई की तारीख / Date Of Hearing: 14/11/2022 घोषणा की तारीख /Date Of Pronouncement: 01/12/2022 आदेश / O R D E R Per Aby T. Varkey, Jm: This Is An Appeal Preferred By The Assessee Against The Order Of The Ld. Principal Commissioner Of Income Tax-17, [Hereinafter Referred To As The “Pcit”], Mumbai Dated 09.03.2021 For Assessment Year 2010-11 Passed Under Section 263 Of The Income Tax Act, 1961 (Hereinafter Referred To As “The Act”).

For Appellant: NoneFor Respondent: Smt. Mahita Nair (Sr. AR)
Section 142(1)Section 143(3)Section 144Section 263

PCIT has found fault with the action of AO on the ground that even though the AO (second round) has called for details of sundry creditors & advances shown in the balance-sheet along with supporting documents; the same was not submitted by the assessee. According to the Ld. PCIT ... PCIT to decide the case on its merits. Thereafter, the Ld. PCIT was of the opinion that the AO has not examined the issues (sundry creditors & advances shown in balance-sheet of Rs.24,31,071/-) properly; and that AO in the second round has not applied his mind as required