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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

Ravi Mohanlal Bhalotia, Bhiwandi vs. CIT Appeals, NFAC, New Delhi

In the result, the appeal of the assessee is partly allowed

ITA 118/MUM/2022[2015-2016]Status: DisposedITAT Mumbai29 Nov 2022AY 2015-2016

Bench: Shri Amarjit Singh & Shri Rahul Chaudharyravi Mohanlal Bhalotia Vs. Cit(A), 12/1, Midc Saravali, Nfac Bhiwandi, Dist. Delhi Thane- 421302 स्थायी लेखा सं./जीआइआर सं./ Pan/Gir No: Abipb1342B Appellant .. Respondent Appellant By : Sudhir Hunargikar & Madhav Khisti Respondent By : Mahita Nair Date Of Hearing 23.11.2022 Date Of Pronouncement 29.11.2022 आदेश / O R D E R Per Amarjit Singh (Am): The Present Appeal Filed By The Assessee Is Directed Against The Order Passed The Nfac, Dated 23.11.2022 For A.Y. 2015-16. The Assessee Has Raised The Following Grounds Before Us: “1. The Learned Cit (A) National Faceless Appeal Centre Is Not Justified In Determining The Total Income Of At Rs.72,77,155/- As Against Returned Income Of Rs. 12,67,080/-. 2. The Learned Cit (A) National Faceless Appeal Centre Has Erred In Making Addition Of Rs.60,10,075/- On Account Of Non-Genuine Purchases Despite The Fact That Ledger Confirmations Along With Copies Of Purchase Bills Were Submitted During The Course Of E-Proceedings.

For Appellant: Sudhir Hunargikar &For Respondent: Mahita Nair
Section 133(6)Section 143(3)Section 37(1)

notice u/s 143(3) of the Act was issued on 30.09.2016. During the course of assessment the A.O noticed that assessee has shown sundry creditors to the extent of Rs.1,01,19,495/- from the following parties: Sr. No. Party Name Amount 1. Chawla Sales Rs.25

Ab Inbev Gcc Services India Private Limited (Earlier Known As Gcc Services India Private Limited), Bangalore vs. The Deputy Commissioner of Income Tax, Circle-3(1)(1), Bangalore

In the result, the appeal filed by the assessee stands partly allowed as indicated hereinabove

ITA 290/BANG/2022[2017-18]Status: DisposedITAT Bangalore14 Nov 2022AY 2017-18

Bench: Smt. Beena Pillai & Shri Laxmi Prasad Sahuit(Tp)A No. 290/Bang/2022 Assessment Year : 2017-18 M/S. Ab Inbev Gcc Services India Pvt. Ltd., (Earlier Known As Gcc Services India Pvt. Ltd.), The Deputy 12Th & 13Th Floor, Commissioner Of Peridot Block, Bagmane Income Tax, World Technology Centre Circle 3(1)(1), Sez, Vs. Bangalore. Marthalli Road, Kr Puram, Bangalore – 560 048. Pan: Aafcg8223M Appellant Respondent Assessee By : Shri Chavali Narayan, Ca : Dr. Manjunath Karkihalli, Revenue By Cit-Dr Date Of Hearing : 20-09-2022 Date Of Pronouncement : 14-11-2022 Order Per Beena Pillaipresent Appeal Is Filed By Assessee Against The Final Assessment Order Passed By The Nfac, Delhi Dated 21/02/2022 For A.Y. 2017-18 On Following Grounds Of Appeal:

For Appellant: Shri Chavali Narayan, CA
Section 115JSection 143(1)Section 244ASection 270ASection 92B

explanation to section 92 B of the Act. Alternatively, it also argued by the Ld.AR that in TNMM, working capital adjustment subsumes sundry creditors. In such situation computing interest on outstanding receivables as loans and advances to associated enterprise would amount to double taxation. Hon’ble Delhi Tribunal in case

ITO 28 )(2)(3), Navi Mumbai vs. M/S N G Group, Navi Mumbai

In the result, the appeal of the learned Assessing Officer is dismissed and the appeal of the assessee is partly allowed

ITA 6748/MUM/2019[2011-12]Status: DisposedITAT Mumbai01 Nov 2022AY 2011-12

Bench: Shri Amit Shukla, Jm & Shri Prashant Maharishi, Am M/S Ng Group Ito, 28(2)(3) Plot No.8, Sector 11, Opp R. No. 310, 3 Rd Floor, Juinagar Rly Station, Vashi Rly Station Complex, Vs. Vashi Navi Mumbai Sanpada, Mumbai-400 703 Navi Mumbai–400 709 (Respondent) (Appellant) Pan No. Aaffn9159E M/S Ng Group Ito, 28(2)(3) Plot No.8, Sector 11, Opp R. No. 310, 3 Rd Floor, Juinagar Rly Station, Vashi Rly Station Complex, Vs. Sanpada, Vashi Navi Mumbai Mumbai-400 703 Navi Mumbai–400 709 (Respondent) (Appellant) Pan No. Aaffn9159E Assessee By : Ms. Nishita Mandalaywala, Ar Revenue By : Dr. Mahesh Akhade, Cit Dr Date Of Hearing: 04.08.2022 Date Of Pronouncement: 01.11.2022

For Appellant: Ms. Nishita Mandalaywala, ARFor Respondent: Dr. Mahesh Akhade, CIT DR
Section 36(1)(ii)Section 41(1)Section 68

holding that no event had taken place in the year under consideration to indicate remission or cessation of liabilities, without appreciating the fact that sundry creditors reflected in the Balance sheet of the assessee reveals certain amounts outstanding and the parties whose name appear in the list of suspicious dealers ... Assessee was found to have purchase of ₹3,69,394/- from these parties and therefore, 100% of such purchases were disallowed. e. There were sundry creditors reflected in the balance sheet whose name also appears in list of suspicious dealers published by the Sales Tax Department