“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

United Shippers Ltd., Mumbai vs. Dy CIT 3 (3), Mumbai

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

ITA 7801/MUM/2019[2016-17]Status: DisposedITAT Mumbai15 Jul 2022AY 2016-17

Bench: Shri Aby T Varkey & Shri Amarjit Singhunited Shippers Limited Vs. Deputy Commissioner Of 3Rd Floor, Prospect Income Tax-3(3) Chambers, D.N. Road, Air India Building, Fort, Mumbai – 400 001 Nariman Point, Mumbai – 400 021 स्थायी लेखा सं./ जीआइआर सं./ Pan/Gir No: Aaacu0764C Appellant .. Respondent

For Appellant: Aakash Marthak &For Respondent: Ms. Vranda U. Matkari

Section 143(1)Section 143(3)Section 36(1)(a)Section 36(1)(va)Section 41(1)Section 43B

taxed u/s 41(1) of the Act as cessation of liability. On query the assessee explained that it had reviewed the position of sundry creditors payable as on 30.09.2018 and had taken a view that Rs. 12,96,260/- were not likely to be claimed, therefore, it had decided

M/S Subex Limited, Bangalore vs. Income Tax Officer Ward-6(1)(4), Bangalore

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

ITA 107/BANG/2019[2014-15]Status: DisposedITAT Bangalore14 Jul 2022AY 2014-15

Bench: Smt. Beena Pillai & Shri. Laxmi Prasad Sahuit(Tp)A No. 107/Bang/2019 Assessment Year : 2014-15 M/S. Subex Ltd., Rmz Ecoworld, The Income Tax Outer Ring Road, Officer, Devarabisanahalli, Ward – 6 (1)(4), Bangalore – 560 103. Bangalore. Vs. Pan: Aabcs9255R Appellant Respondent Assessee By : Shri Ajay Rotti, Ca : Shri Sunil Kumar Singh, Cit- Revenue By Dr Date Of Hearing : 07-06-2022 Date Of Pronouncement : 14-07-2022 Order Per Beena Pillaipresent Appeal Is Filed By Assessee Against Order Dated 26/10/2018 Passed By Ld.Ito, Ward – 6(1)(4), Bangalore For A.Y. 2014-15 On Following Grounds Of Appeal: “The Grounds Stated Hereunder Are Independent Of & Without Prejudice To One Another. The Appellant Submits As Under: 1. Assessment & Reference To Learned Transfer Pricing Officer Are Bad In Law 1.1. The Income Tax Officer. Ward — 6(1)(4), Bangalore (Learned Assessing Officer Or 'Ld. Ao') Erred In Making A Reference To The Deputy Commissioner Of Income-Tax, Transfer Pricing —Range 2(2)(1) (Learned Transfer Pricing Officer' Or 'Ld. Tpo'), Inter Alia, Since He Has Not Recorded

For Appellant: Shri Ajay Rotti, CA

Section 143(3)Section 144C(13)Section 92C(3)

international transaction as per explanation to section 92 B of the Act. Alternatively, it also argued 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

ITO 24 (3)(1), Mumbai vs. Omprakash N. Pariani (HUF), Mumbai

In the result, the appeal of the Revenue is dismissed

ITA 2960/MUM/2018[2013-14]Status: DisposedITAT Mumbai13 Jul 2022AY 2013-14

Bench: Shri Amarjit Singh & Ms. Kavitha Rajagopalassessment Year: 2013-14 Income Tax Officer-24(3)(1), Shri Omprakash N. Pariani (Huf) Mumbai. Vs. 1101, Samarth Prasad, Swami Samarth Nagar, Lokhandwala Circle, Andheri (East), Mumbai. Pan No.Aaah 06552R Appellant Respondent C.O. No.146/Mum/2019 (In 2960/Mum/2018) (By Assessee) Assessee By : Shri Paresh Shaparia, Ca Revenue By : Shri R A Dhyani (D.R.) Date Of Hearing : 16.06.2022. Date Of Pronouncement : 13.07.2022. O R D E R Per Amarjit Singh, A.M. This Appeal Filed By The Revenue & Cross Objection Filed By The Assessee Are Arising Against The Order Of Commissioner Of Income Tax (Appeals)-36, Mumbai For The Assessment Year 2013-14 Passed U/S.143(3) Of The Income Tax Act, 1961 (In Short ‘The Act’).

For Appellant: Shri Paresh Shaparia, CAFor Respondent: Shri R A Dhyani (D.R.)

Section 143(2)Section 143(3)Section 36(1)Section 44A

During the course of assessment, on perusal of the Balance Sheet, the Assessing Officer noticed that there was outstanding balance of Rs.401.67 lakhs as sundry creditors. On query, the assessee explained that sundry creditors of Rs.401.67 lakhs were utilised for purchase of material for construction and related expenses. The assessee

M/S. Subex Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle- 6(1)(2), Bangalore

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

ITA 2579/BANG/2019[2015-16]Status: DisposedITAT Bangalore11 Jul 2022AY 2015-16

Bench: Shri Chandra Poojari & Smt. Beena Pillaiit(Tp)A No. 2579/Bang/2019 Assessment Year : 2015-16 M/S. Subex Ltd., The Deputy Rmz Ecoworld, Commissioner Of Outer Ring Road, Income Tax, Devarabisanahalli, Circle – 6(1)(2), Bangalore – 560 103. Vs. Bangalore. Pan: Aabcs9255R Appellant Respondent Assessee By : Shri Ajay Rotti, Ca : Shri Sumer Singh Meena, Revenue By Cit-Dr Date Of Hearing : 11-07-2022 Date Of Pronouncement : 11-07-2022 Order Per Beena Pillaipresent Appeal Is Filed By Assessee Against The Final Assessment Order Dated 23/10/2019 Passed By Ld.Dcit, Circle – 6(1)(2), Bangalore For A.Y. 2015-16 On Following Grounds Of Appeal: “The Grounds Stated Hereunder Are Independent Of & Without Prejudice To One Another. The Appellant Submits As Under: 1. Erroneous Transfer Pricing Adjustments Arising From Interest On Trade Receivables 1.1. The Deputy Commissioner Of Income Tax, Circle - 6(1)(2), Bangalore (Learned Assessing Officer' Or 'Ld. Ao') / Assistant Commissioner Of Income Tax, Transfer Pricing Circle - 1(3)(1) ('Learned Transfer Pricing Officer' Or 'Ld.

For Appellant: Shri Ajay Rotti, CA

Section 234ASection 234BSection 271(1)(c)

M/S Avani Autoworld, Thane vs. ACIT 28 (1), Navi Mumbai

In the result, appeal by assessee is dismissed

ITA 7443/MUM/2019[2015-16]Status: DisposedITAT Mumbai06 Jul 2022AY 2015-16

Bench: Shri Vikas Awasthy & Shri M. Balaganeshआअसं. 7443/मुं/2019 ("न.व. 2015-16) M/S. Avani Auto World, Balaji House, Srushti Complex, Inside Hiranandani Estate, G.B.Road, Thane (West)- 400 607. Pan: Aatfa-3293-J ...... अपीलाथ" /Appellant बनाम Vs. Acit- 28(1), Room No.306, 3Rd Floor, Tower No.6, Vashi Rly. Station Complex, Vashi, Navi Mumbai 400 703 . ..... ""तवाद"/Respondent अपीलाथ" "वारा/ Appellant By : None ""तवाद" "वारा/Respondent By : Shri Vachaspati Tripathi सुनवाई क" "त"थ/ Date Of Hearing : 06/07/2022 घोषणा क" "त"थ/ Date Of Pronouncement : 06/07/2022 आदेश/ Order Per Vikas Awasthy, Jm: This Appeal By The Assessee Is Directed Against The Order Of Commissioner Of Income Tax (Appeals)-26, Mumbai ( In Short ‘The Cit(A) ’) Dated 14/10/2019 For The Assessment Year 2015-16. 2. This Appeal Was Listed For Hearing For The First Time On 19/05/2021. The Notice Of Hearing Of Appeal Was Sent To The Assessee Through Rpad On The Address Mentioned In Form No.36. The Notice Sent To The Assessee Was Not 2 Received Back From Postal Authorities Unserved, Hence, Deemed To Be Served. Neither The Assessee Nor Any Authorized Representative For The Assessee Appeared On The Date Fixed I.E. On 19/05/2021. Thereafter, The Appeal Was Adjourned To 20/07/2021. Fresh Notice Was Served On The Assessee Through Rpad. Despite Service Of Notice, The Appeal Of Assessee Remain Unrepresented. No Letter Seeking Adjournment Was Either Received. Similar Was The Situation On Subsequent Dates Of Hearing. It Seems That The Assessee Is Not Keen To Pursue The Appeal, Therefore, The Appeal Is Taken Up For Hearing With The Assistance Of Ld. Departmental Representative & The Documents Available On Record.

For Appellant: NoneFor Respondent: Shri Vachaspati Tripathi

Section 68

assailed solitary addition of Rs.64,47,720/- u/s. 68 of the Income Tax Act, 1961 [ in short ‘the Act’] on account of unproved sundry creditors. The Assessing Officer made aforesaid addition as the assessee failed to furnish necessary details. Even before the First Appellate Authority the assessee could not furnish

Mrs. Sheetal Gokul Parikh, Mumbai vs. ITO Ward 30(2)(6), Mumbai

In the result, the appeal filed by the assessee is allowed for In the result, the appeal filed by the assessee is allowed for In the result, the appeal filed by the assessee is allowed for statisti...

ITA 918/MUM/2020[2007-08]Status: DisposedITAT Mumbai05 Jul 2022AY 2007-08

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail () Assessment Year: 2007-08 Mrs. Sheetal Gokul Parikh, Income Tax Officer 33, Ghanshyam Dube Chawl No. 2, Ward 30(2)(6), Deep Narayan Dube Road, Vs. Earlier Ward 24(2)(2), Pragatinagar, Dahisar (E), Kautilya Bhavan, Bkc, Mumbai-400068. Mumbai-400051. Pan No. Aizpp 6142 M Appellant Respondent

For Appellant: Mr. Dipen Tanna, ARFor Respondent: Mrs. Smita Nair, DR

Section 144Section 147Section 148Section 250

making additions of Rs. 21,51,264/- in the hands of the appellant o in the hands of the appellant on account of unexplained Sundry creditors being 50% of total sundry account of unexplained Sundry creditors being 50% of total sundry account of unexplained Sundry creditors being 50% of total ... sundry creditors as at 31.03.2007 of Rs. 43,02,528/ creditors as at 31.03.2007 of Rs. 43,02,528/-. b) Your Appellant contends that the addition made on account of b) Your Appellant contends that the addition made on account of b) Your Appellant contends that the addition made

Income Tax Officer 15(3)(4), Mumbai vs. M/S.Sunshakti Oil Refinery Private Limited, Mumbai

ITA 6006/MUM/2017[2012-13]Status: DisposedITAT Mumbai05 Jul 2022AY 2012-13

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm M/S Sunshakti Oil Refinery Income Tax Officer, Private Limited Ward 15(3)(4) Room No. 15B, D–46, S–11, Mg Complex, Vs. Aayakar Bhavan, Mk Road, Amarjyot Chs, Sector–14, Mumbai-400 020 Vashi, Navi Mumbai (Respondent) (Appellant) Pan No. Aapcs2034N Assessee By : None Revenue By : Shri Hoshang B. Irani, Dr Date Of Hearing: 05.07.2022 Date Of Pronouncement : 05.07.2022

For Appellant: NoneFor Respondent: Shri Hoshang B. Irani, DR

Section 14Section 68

circumstances of the case and in law, the Ld CIT(A) erred in deleting the addition of Rs. 5,62,986/- on account of sundry creditors, ignoring that the assessee had merely filed confirmations, whereas the genuineness of transactions were questionable. M/s Sunshakti Oil Refinery Private Limited

Sri Simhadri Ponnaluru Reddy, Bangalore vs. Deputy Commissioner of Income Tax, Circle - 3(1)(1), Bangalore

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

ITA 1106/BANG/2019[2015-16]Status: DisposedITAT Bangalore05 Jul 2022AY 2015-16

Bench: Shri Chandra Poojari & Smt. Beena Pillaiassessment Year: 2015-16

For Appellant: Shri Ravi Shankar, A.RFor Respondent: Smt. Priyadarshini Baseganni, D.R

Section 143Section 37Section 41(1)

liability. In brief during appellate proceedings this was observed by the AO that the assessee had shown an amount of Rs.45,61,240/- as sundry creditors in his books of accounts. The AO noted that the amount pertained to three persons. namely Ms Bhavna Reddy, Sri Hemang B. Chappia ... after observing that no services were actually rendered by such persons to the assessee. The AO asked the assessee to provide the details of sundry creditors Sri Simhadri Ponnaluru Reddy, Bangalore Page 12 of 15 and confirmation from them. However, despite this. the address and Email ID of these sundry

Nyka Steels P. Ltd., Mumbai vs. DCIT, Panvel Circle, Panvel, Panavel

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

ITA 1780/MUM/2020[2014-15]Status: DisposedITAT Mumbai28 Jun 2022AY 2014-15

For Appellant: Shri S. D. PathakFor Respondent: Shri Aditya Rai (Sr. AR)

Section 133(6)Section 41(1)

assessee is against the action of the Ld. CIT(A) confirming the addition of Rs.16,93,608/- made by AO on account of sundry creditor in respect of M/s. S.P. Engineers Products. 3. Brief facts the AO noted on this issue was that the assessee had declared total income ... During the course of assessment proceedings, the AO noted from perusal of the list of 2 A.Y. 2014-15 Nyka Steel Pvt. Ltd. Sundry Creditors that there were certain parties with whom there were no transactions during the year and their opening credit balance were being carried forward. In order

M/S. Outsourcepartners International Private Limited, Bangalore vs. Assistant Commissioner of Income Tax, Circle- 5(1)(2), Bangalore

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

ITA 35/BANG/2020[2015-16]Status: DisposedITAT Bangalore24 Jun 2022AY 2015-16

Bench: Shri N.V. Vasudevan, Vice Preseident & Shri Padmavathy S

For Appellant: Shri K.R. Vasudevan, AdvocateFor Respondent: Shri V.S. Chakrapani, CIT(DR)(ITAT), Bengaluru

Section 92(1)Section 92B(1)

adjustment regarding the receivables and thus receivables arising out of such transaction have already been accounted for. Alternatively, he submitted that working capital subsumes sundry creditors and therefore separate addition is not called for. 23.1. Ld.TPO computed interest on outstanding receivables under weighted average method using LIBOR + 300 basis points ... factually distinguishable and thus, we reject argument advanced by Ld.AR. 23.8. Alternatively, it has been argued that in TNMM, working capital adjustment subsumes sundry creditors. In such situation computing interest on outstanding receivables and loans and advances to associated enterprise would amount to double taxation

Shri Vardaraj Pralhad Joshi Shi, Mumbai vs. ITO 21(3)(5), Mumbai

In the result, appeal filed by the assessee is treated as allowed for statistical purposes

ITA 589/MUM/2022[2013-14]Status: DisposedITAT Mumbai22 Jun 2022AY 2013-14

Section 133(6)

year 2013- 14. The assessee is aggrieved by the decision of learned CIT(A) in confirming the addition relating to bogus purchases and bogus sundry creditors. 2. The Learned Counsel appearing for the assessee submitted that the assessee did not get enough opportunity to furnish details called ... gather necessary details from creditors for want of time. Hence, the Assessing Officer completed the assessment on 30.3.2016 by adding purchases as well as sundry creditors treating them as bogus. The Learned AR further submitted that learned CIT(A) also did not provide enough opportunity to the assessee. He further