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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

Dy CIT - 26(1), Mumbai vs. M/S. Shaheen Enterprises, Mumbai

In the result, the appeal filed by the revenue stands dismissed

ITA 467/MUM/2021[2012-13]Status: DisposedITAT Mumbai12 May 2022AY 2012-13

Bench: Shri Amit Shukla, Jm & Shri Amarjit Singh, Am आयकरअपीलसं./ I.T.A. No. 467/Mum/2021 (निर्धारणवर्ा / Assessment Year: 2012-13) M/S Shaheen Dcit – 26(1), Enterprises, R. No. 623, 6Th Floor, Flat No. 102, Bldg. No. Kautilya Bhavan, बिधम/ 4, Sultanbad Behram Bkc, Bandra East, Vs. Building, S. V. Road, Mumbai-400051 Jogeshwari West, Mumbai-400 051 स्थायीलेखासं./जीआइआरसं./ Pan No. Abmfs7145R (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant : Shri C. T. Mathews, Ld. Dr By प्रत्यथीकीओरसे/Respondent : None By सुनवाईकीतारीख/ : 12.05.2022 Date Of Hearing घोषणाकीतारीख / : 12.05.2022 Date Of Pronouncement आदेश / O R D E R Per Amit Shukla: The Aforesaid Appeal Has Been Filed By The Revenue Against The Impugned Order Dated 27.01.2020, Passed By Ld. Cit(A)-42

For Appellant: Shri C. T. MathewsFor Respondent: None by
Section 143(3)

relevant observation and finding are as under:- 9. It is submitted that during the assessment the Id. AO called for the details of sundry creditors with their names and address and their balances for the. last three years and various other details. A statement showing the names & balance payable

JCIT OSD-CC-7(4), Mumbai vs. Shalimar Houseing Finance Ltd, Mumbai

In the result, both the appeals filed by the revenue are dismissed

ITA 4112/MUM/2019[2014-15]Status: DisposedITAT Mumbai28 Apr 2022AY 2014-15

Bench: Shri Pavan Kumar Gadale & Shri Amarjit Singhita Nos. 4112 & 4083/Mum/2019 (A.Ys: 2014-15 & 2015-16) Jcit (Osd)-Cc-7(4) Vs. M/S. Shalimar Housing Room No. 659, Aaykar & Finance Ltd., Bhavan, Mk Road, 505, Shalimar Morya Mumbai – 400020. Park, Andheri (W), Mumbai – 400053 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaacs6732N Appellant .. Respondent Appellant By : Shri. B.K.Bagchi.Dr Respondent By : Shri.Vijay Mehta.Ar Date Of Hearing 06.04.2022 Date Of Pronouncement 25.04.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm: These Are The Appeals Filed By The Revenue Against The Separate Orders Of The Commissioner Of Income Tax (Appeals)-49, Mumbai, Passed U/S 143(3) & 250 Of The Act.

For Appellant: Shri. B.K.Bagchi.DRFor Respondent: Shri.Vijay Mehta.AR
Section 143(2)Section 143(3)Section 68

financial statement of Lenders reveals abnormal features which is otherwise not possible in normal business transaction such as: a) High Turnover b) High Sundry creditors c) Major portion of entire assets in balance sheet is loans, Debtors and Investments. These assets will almost match Business creditors. d) Tax payments will ... 4112/Mum/2019 M/s Shalimar Housing & Finance Ltd, Mumbai. turnover, means higher financial capacity. This cannot be abnormal, by any means. Similarly, the presence of High Sundry creditors is also not an abnormal feature. The position of creditors should not be viewed in isolation but needs to be matched with the corresponding