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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 Infineon Technologies India Private Limited, Bangalore vs. Deputy Commissioner of Income Tax Circle-3(1)(1), Bangalore

ITA 3355/BANG/2018[2014-15]Status: DisposedITAT Bangalore25 Aug 2022AY 2014-15

Bench: Shri Chandra Poojari & Smt. Beena Pillaiit(Tp)A No. 3355/Bang/2018 Assessment Year : 2014-15 M/S. Infineon Technologies India Pvt. The Deputy Ltd., Commissioner Of 9Th Floor, Prestige Income Tax, Thirulakshmi, Circle – 3(1)(1), No. 11, Mg Road, Vs. Bangalore. Bangalore. Pan: Aabcs6967N Appellant Respondent : Shri K.R. Vasudevan, Assessee By Advocate : Shri Sumer Singh Meena, Revenue By Cit Dr Date Of Hearing : 12-07-2022 Date Of Pronouncement : 25-08-2022 Order Per Beena Pillaipresent Appeal Is Filed By Assessee Against Assessment Order Dated 26/10/2018 By The Ld.Dcit, Circle – 3(1)(1), Bangalore On Following Grounds Of Appeal: “A. Transfer Pricing The Grounds Mentioned Hereinafter Are Without Prejudice To One Another. 1. The Learned Assessing Officer ('Learned Ao'), Learned Transfer Pricing Officer ('Learned Tpo') & The Honourable Dispute Resolution Panel ('Hon'Ble Drp') Grossly Erred In Adjusting The Transfer Price By Inr 9,56,93,721/- With Respect To The International

For Respondent: Shri K.R. Vasudevan
Section 92C

have already been accounted for. Page 21 of 29 IT(TP)A No. 3355/Bang/2018 18.4 Alternatively, he submitted that under TNMM, working capital subsumes sundry creditors and therefore separate addition is not called for. 18.5 This Bench referred to decision of Special Bench of this Tribunal in case of Instrumentation ... international transaction as per explanation to section 92 B of the Act. It has been argued that, working capital adjustment subsumes sundry creditors. In such situation computing interest on outstanding receivables and lone and advances to international transaction would amount to double taxation. Hon'ble Delhi Tribunal in case

Dlh Kamla Developers, Mumbai vs. DCIT CC- 3(4), Mumbai

ITA 1373/MUM/2019[2013-14]Status: DisposedITAT Mumbai22 Aug 2022AY 2013-14

Bench: Shri Amit Shukla, Jm & Shri M. Balaganesh, Am आयकरअपीलसं./ I.T.A. No. 1373 & 1374/Mum/2019 (ननधधारणवर्ा / Assessment Year: 2013-14 & 2014-15) Dcit Cen. Cir. -3(4), Dlh Kamla Developers 19Th Floor, Air India Ground Floor, Shanti बनाम/ Vimal, P. M. Road, Vile Building, Nariman Point, Vs. Parle East, Mumbai-400 021 Mumbai-400 057 स्थधयीलेखधसं./जीआइआरसं./ Pan No. Aahfd0790K (अपीलधथी/Appellant) (प्रत्यथी / Respondent) : अपीलधथीकीओरसे/ Appellant By : None प्रत्यथीकीओरसे/Respondent By : Shri T. Shankar, Ld. Dr सुनवधईकीतधरीख/ : 22.08.2022 Date Of Hearing घोर्णधकीतधरीख / : 22.08.2022 Date Of Pronouncement आदेश / O R D E R Per Amit Shukla: The Aforesaid Appeals Have Been Filed By The Assessee Against The Separate Impugned Order Of Even Date 24.12.2018, Passed By Ld. Cit(A)-51, Mumbai For The Quantum Of Assessment Passed U/S 143(3)/153A For Ay 2013-14 & Section 143(3) For Ay 2014-15. 2

For Appellant: NoneFor Respondent: Shri T. Shankar, Ld. DR
Section 131Section 132Section 132(4)Section 143(3)Section 153ASection 68

cash received as per point no. 1; 4. The said unsecured loan is utilized for business operations and also for payment to the bogus sundry creditors in order to allegedly prove that the transaction of loan as well as sundry creditors is genuine; 5. The assessee pays interest through banking

M/S. Yelahanka - Ap Border Tollways Private Limited, Bengaluru vs. Income Tax Officer, Ward-7(1)(4), Bangalore

In the result, the appeal filed by the assessee stands allowed for statistical purposes

ITA 458/BANG/2022[2016-17]Status: DisposedITAT Bangalore22 Aug 2022AY 2016-17

Bench: Shri Chandra Poojari & Smt. Beena Pillaiassessment Year : 2016-17 M/S. Yelahanka-Ap Border Tollways Pvt. Ltd., # 702, Provident The Income-Tax Welworth City, Officer, Yelahanka- Ward – 7[1][4], Doddaballapur Road, Bengaluru. Vs. Marashandra, Bengaluru – 562 163. Pan: Aaacy7243E Appellant Respondent Assessee By : Shri V. Srinivasan, Advocate : Shri Sankar Ganesh K, Jcit Revenue By Dr Itat Date Of Hearing : 08-08-2022 Date Of Pronouncement : 22-08-2022 Order Per Beena Pillaipresent Appeal By The Assessee Has Been Filed By Assessee Against The Order Dated 28/03/2022 Passed By The Ld.Cit(A)-11, Bangalore Relating To Assessment Year 2016-17 On Following Grounds Of Appeal: “1. The Orders Of The Authorities Below In So Far As They Are Against The Appellant Are Opposed To Law, Equity, Weight Of Evidence, Probabilities, Facts & Circumstances Of The Case.

For Appellant: Shri V. Srinivasan, Advocate
Section 133Section 142(1)Section 143(2)Section 41Section 68

selected for limited scrutiny under CASS by serving a notice under section 143(2) on 10.07.2017 for the following reasons: i) Large amount of Sundry creditors ii) Large Current Liability in comparison to total assets. iii) Large value of specified domestic transactions. The reply to the above notice was submitted ... Proceedings. 2.4 Subsequently, a show cause notice was issued on 27.11.2019, asking the assessee to produce the following details: i) Details of the following Sundry Creditors: M/s. Ramalingam Construction Co. (P) Ltd : Rs.46,79,24,480 M/s. Ayesha India Pvt Ltd : Rs.1,30,78,145 M/s. Asvika Advisory Services

Asst CIT Circle- 7 (3)(3), Mumbai vs. M/S Piramal Glass Ltd, Mumbai

In the result, appeal by the Revenue is dismissed

ITA 8060/MUM/2019[2003-04]Status: DisposedITAT Mumbai05 Aug 2022AY 2003-04

Bench: Shri Vikas Awasthy & Shri M. Balaganeshआअसं. 8060/मुं/2019 ("न.व. 2003-04) Cit, Circle 7(3)(2), Room No.128A, 1St Floor, Aaykar Bhavan, M.K.Road, Mumbai - 400 020 ...... अपीलाथ" /Appellant बनाम Vs. M/S. Piramal Glass Ltd. (Earlier Known As Gujarat Glass Pvt. Ltd.) 1 Piramal Towerannexe, Ganpatrao Kadam Marg, Lower Parel, Mumbai – 400 013. Pan: Aabcg-0093-R ..... ""तवाद"/Respondent अपीलाथ" "वारा/ Appellant By : Shri Minlind Chavan ""तवाद" "वारा/Respondent By : Shri Ronak Doshi सुनवाई क" "त"थ/ Date Of Hearing : 13/05/2022 घोषणा क" "त"थ/ Date Of Pronouncement : 05 /08/2022 आदेश/ Order Per Vikas Awasthy, Jm: This Appeal By The Revenue Is Directed Against The Order Of Commissioner Of Income Tax (Appeals)-13, Mumbai [In Short ‘The Cit(A)] Dated 22/10/2019 For The Assessment Year 2003-04. 2. Shri Ronak Doshi Appearing On Behalf Of The Assessee Submitted At The Outset That Revenue In Appeal Has Raised Eight Effective Grounds. Majority Of The Grounds Raised In Appeal By Revenue Are Either Covered By The Order Of 2 Tribunal In Assessee’S Own Case In Ita No.9645/Mum/2004 For Assessment Year 2001-02 Decided On 02/08/2016 Or By The Order Of Hon'Ble Bombay High Court In The Case Of Assessee Titled Pcit Vs. Piramal Glass Ltd. In Income Tax Appeal No.556 Of 2017 Decided On 11/06/2019. 3. Per Contra, Shri Minlind Chavan Representing The Department Vehemently Defending The Assessment Order Prayed For Reversing The Findings Of Cit(A) & Upholding The Additions Made In The Assessment Order. However, Ld. Departmental Representative Fairly Stated That Substantial Issues Raised In The Appeal Have Been Considered By The Tribunal In Assessee’S Own Case For Preceding Assessment Years.

For Appellant: Shri Minlind ChavanFor Respondent: Shri Ronak Doshi
Section 32Section 36(1)(iii)

appeal, the Revenue has assailed the findings of CIT(A) in deleting addition made u/s. 41(1) of the Act in respect of sundry creditors exceeding more than three years. The ld. Authorized Representative for the assessee pointed that in the Assessment Year 2001-02 similar addition was made

Dy CIT -14(1)(1), Mumbai vs. M/S. Ayg Realty Ltd., Mumbai

In the result there is no cause of grievance made out by the assessee on which this tribunal can adjudicate hence, challenging the initiation itself is not allowed hence, found to be infructuous

ITA 476/MUM/2021[2012-13]Status: DisposedITAT Mumbai28 Jul 2022AY 2012-13

Bench: Shri Kuldip Singh & Shri Gagan Goyaldy.Cit-14(1)(1), Room No. 432, 4Th Floor, Aayakar Bhavan, Churchgate, Mumbai-400020. ..... Appellant Vs. M/S Ayg Realty Ltd., No. 1, Rajkamal, Cst Road, Kalina, Mumbai-400098. Pan: Aaacc4637J ...... Respondent Choudhury & Choudhury India Ltd. (Now Known As Ayg Realty Pvt. Ltd.), No. 1, Rajkamal, Cst Road, Kalina, Mumbai-400098. Pan: Aaacc4637J ...... Appellant Vs. The Cit (Appeals)-22, Room No. 513, 5Th Floor, Earnest House, Nariman Point, Mumbai-400021. ..... Respondent Assessee By : Sh. Firoz Andhyarujina & Sh. Manek Andhyarujina Revenue By : Sh. Mehul Jain, Sr. Dr Date Of Hearing : 26/05/2022 Date Of Pronouncement : 28/07/2022

For Appellant: Sh. Firoz Andhyarujina &For Respondent: Sh. Mehul Jain, Sr. DR
Section 41(1)

applicability of section 41(1) for cessation of liability since the fact that the assessee has not been able to produce confirmation for sundry creditors outstanding" 3 The Appellant prays that the order of the CIT(Appeals) on the above ground be set aside and that of the Assessing Officer ... over which it has declared net profit of Rs 10796682/-. During the assessment proceedings A.O. made adhoc additions on account of sundry creditors for the purchase of material @ 20% amounting to Rs 11241367/-. Same adhoc addition was made @20% on account of sundry creditors for expenses amounting

Choudhury & Choudhury India Ltd. ( Now Known As Ayg Realty P. Ltd.), Mumbai vs. CIT (Appeal)-22, Mumbai

In the result there is no cause of grievance made out by the assessee on which this tribunal can adjudicate hence, challenging the initiation itself is not allowed hence, found to be infructuous

ITA 1558/MUM/2020[2012-13]Status: DisposedITAT Mumbai28 Jul 2022AY 2012-13

Bench: Shri Kuldip Singh & Shri Gagan Goyaldy.Cit-14(1)(1), Room No. 432, 4Th Floor, Aayakar Bhavan, Churchgate, Mumbai-400020. ..... Appellant Vs. M/S Ayg Realty Ltd., No. 1, Rajkamal, Cst Road, Kalina, Mumbai-400098. Pan: Aaacc4637J ...... Respondent Choudhury & Choudhury India Ltd. (Now Known As Ayg Realty Pvt. Ltd.), No. 1, Rajkamal, Cst Road, Kalina, Mumbai-400098. Pan: Aaacc4637J ...... Appellant Vs. The Cit (Appeals)-22, Room No. 513, 5Th Floor, Earnest House, Nariman Point, Mumbai-400021. ..... Respondent Assessee By : Sh. Firoz Andhyarujina & Sh. Manek Andhyarujina Revenue By : Sh. Mehul Jain, Sr. Dr Date Of Hearing : 26/05/2022 Date Of Pronouncement : 28/07/2022

For Appellant: Sh. Firoz Andhyarujina &For Respondent: Sh. Mehul Jain, Sr. DR
Section 41(1)

applicability of section 41(1) for cessation of liability since the fact that the assessee has not been able to produce confirmation for sundry creditors outstanding" 3 The Appellant prays that the order of the CIT(Appeals) on the above ground be set aside and that of the Assessing Officer ... over which it has declared net profit of Rs 10796682/-. During the assessment proceedings A.O. made adhoc additions on account of sundry creditors for the purchase of material @ 20% amounting to Rs 11241367/-. Same adhoc addition was made @20% on account of sundry creditors for expenses amounting