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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

Chalk Farm Ventures P. Ltd., Mumbai vs. Pr. CIT -1, Thane

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

ITA 906/MUM/2021[2016-17]Status: DisposedITAT Mumbai26 Apr 2022AY 2016-17

Bench: Shri Amarjit Singh, Jm & Shri S. Rifaur Rahman, Am आयकर अपील सं/ I.T.A. No.906/Mum/2021 (ननधधारण वर्ा / Assessment Years: 2016-17) बनधम/ Chalk Farm Ventures Pvt. Pcit-1 Ltd. B Wing, Ashar It Park, Vs. 6Th Floor, Wagle No.202, Delta Building, Hiranandani Gardens, Powai, Industrial Estate, Thane- Mumbai-400076. 400604 स्थधयी लेखध सं./जीआइआर सं./Pan/Gir No. : Aagcc0332A (अपीलाथी /Appellant) (प्रत्यथी / Respondent) .. Assessee By: Shri Sanjay Parikh Revenue By: Shri Ashok Kumar Kardam (Dr) सुनवाई की तारीख / Date Of Hearing: 21/03/2022 घोषणा की तारीख /Date Of Pronouncement: 26/04/2022 आदेश / O R D E R Per Amarjit Singh, Jm: The Assessee Has Filed The Present Appeal Against The Order Dated 26.03.2021 Passed By The Principal Commissioner Of Income Tax-01, Thane [Hereinafter Referred To As The “Pcit”] Relevant To The A.Y.2016-17 In Which The Principal Commissioner Of Income Tax-01 Has Invoked The Provisions U/S 263 Of The I.T. Act, 1961. The Assessee Has Raised The Following Grounds Of Appeal: - 2. “Ground A: Proceeding U/S 263 Of The It Act Is Invalid & Bad In Law 1. The Learned Principal Commissioner Of Income Tax, Thane-1, (Pr. Cit) Erred In Facts & In Passing The Order U/S. 263 Without Appreciating That The Appellant Company Was Under Liquidation & No Order U/S. 263 Could Be Passed Without Giving Adequate Notice To The Liquidator Of The Appellant Company. 2. He Appellant Prays That Your Honour Hold That The Order Passed By The Ao U/S. 263 Is Bad In Law As The Same Is Passed Without Issuing Notice To The Liquidator Of The Appellant Company.

For Appellant: Shri Sanjay ParikhFor Respondent: Shri Ashok Kumar Kardam (DR)
Section 143(3)Section 263Section 371(1)

income, copies of Form 15CA and 15CB, details of expenses alongwith copies of invoices, TDS certificates, Directors Report along with audited accounts, details of sundry creditors, copy of return of income alongwith computation of income, profit & loss account, balance sheet and details of bank accounts with copies of bank statements

Piramal Investment Opportunities Fund, Mumbai vs. Pr. CIT, Range-20, Mumbai

Appeal of the assessee is allowed

ITA 700/MUM/2021[2015-16]Status: DisposedITAT Mumbai11 Apr 2022AY 2015-16

Bench: Shri Vikas Awasthy & Shri M. Balaganeshआअसं. 700/मुं/2021 ("न. व. 2015-16 ) Piramal Investment Opportunities Fund, Piramal Tower, Ganpatrao Kadam Marg, Lower Parel(West), Mumbai 400 013 Pan: Aactp-3767-H ...... अपीलाथ" /Appellant बनाम Vs. Pr.Commissioner Of Income Tax, Range -20, Room No.418, 4Th Floor, Piramal Chamber, Lal Baug, Parel, Mumbai 400 012. ..... ""तवाद"/Respondent अपीलाथ" "वारा/ Appellant By : Shri Ronak Doshi ""तवाद" "वारा/Respondent By : S/Shri R.K.Sahu & Milind Chavan सुनवाई क" "त"थ/ Date Of Hearing : 14/01/2022 घोषणा क" "त"थ/ Date Of Pronouncement : 11/04/2022 आदेश/ Order Per Vikas Awasthy, Jm: This Appeal By The Assessee Is Directed Against The Order Of Principal Commissioner Of Income Tax, Mumbai -20 (In Short ‘The Pcit’) Dated 12/03/2021 For Assessment Year 2015-16, Passed U/S. 263 Of The Income Tax Act, 1961 ( In Short ‘ The Act’ )

For Appellant: Shri Ronak DoshiFor Respondent: S/Shri R.K.Sahu and Milind Chavan
Section 143(2)Section 143(3)Section 263Section 61

income of assessee for the impugned assessment year was selected for limited scrutiny on the following issues: (i) Contract receipts /Fees mismatch. (ii) Sundry Creditors (iii) Sales turnover mismatch. The Assessing Officer issued notice dated 28/07/2016 u/s. 143(2) of the Act, the same is at page ... 194J (As per 26AS) are more than the receipts shown in ITR- 4/5/6 and assessee deposited large cash in saving bank account. 2. Sundry creditors Large increase in sundry creditors with respect to turnover as compared to preceding years. 3. Sales turnover mismatch. Higher turnover reported in Service Tax return