“trade creditors”

Cash Credits & Unexplained ItemsSection 68Section 68238 judgments

The decision most relied on for trade creditors is Orient Trading Co. Ltd. v. CIT (49 ITR 723), cited in 123 judgments on BharatTax.

Leading authorities on trade creditors

Orient Trading Co. Ltd. v. CIT

49 ITR 723 · 1963 · High Court

123

citing judgments

When a cash credit is found, the assessee discharges the initial burden by proving the identity of the creditor and the genuineness of the transaction, shifting the burden to the Revenue. The assessee is not required to prove the source of the creditor's funds (source of source).

CIT v. Korlay Trading Co. Ltd.

232 ITR 820 · 1998 · High Court

122

citing judgments

To discharge the onus under Section 68, an assessee must establish the identity of the creditor, the genuineness of the transaction, and the creditworthiness of the creditor. Merely providing basic documentary evidence or a file number is insufficient; each credit entry requires a separate, detailed explanation.

CIT v. Gotan Lime Khaniz Udyog

256 ITR 243 · 2002 · High Court

citing judgments

The mere rejection of an assessee's books of account under Section 145(3) does not automatically warrant an addition to the returned income. The Assessing Officer must consider the books alongside historical data and other collected material after confronting the taxpayer.

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.

Aravali Trading Co. v. ITO

8 DTR 199 · 2008 · High Court

citing judgments

An assessee discharges their onus under Section 68 for cash credits by proving the identity of the creditor, the genuineness of the transaction, and the creditor's creditworthiness. The assessee is not required to prove the source of the creditor's funds ('source of source'), unless evidence suggests the money originated from the assessee itself.

552 (SC) Zaveri Diamonds v. CIT 11-12 3

118 Taxmann.com 166 · 2020 · High Court

citing judgments

The court considers the evidentiary value of unaudited books and loose papers when assessing income, particularly concerning trade creditors and their verification.

Chief CIT v. Kesaria Tea Company Limited

254 ITR 434 · 2002 · Supreme Court

citing judgments

For Section 41(1) of the Income Tax Act to apply, the mere expiry of the limitation period does not constitute cessation of liability; there must be an explicit act by the creditor, such as a release or admission of write-off, confirming that the liability has ceased without the possibility of revival.

Hindustan Tea Trading Co. Ltd. v. CIT

263 ITR 289 · 2003 · High Court

citing judgments

Under Section 68, the assessee discharges the initial onus by producing sufficient material and explanation for cash credits. Once material is provided, the Assessing Officer must conduct a proper and thorough inquiry into it, as a half-hearted inquiry or overlooking materials is impermissible.

Judgments citing trade creditors

M/S. B.C.Bhuyan Constructions Pvt. Ltd., Bhubaneswar vs. DCIT, Corporate Circle-1(1), Bhubaneswar

In the result, both the appeals of the assessee stand partly allowed

ITA 443/CTK/2016[2013-14]Status: DisposedITAT Cuttack19 Jan 2023AY 2013-14

Bench: Before S/Shri George Mathan, Judicial & Arun Khodpia & Arun Khodpia & Arun Khodpiaassessment Year :2010-2011 2011

For Appellant: S/Shri P.C.Sethi/Ashok Kumar Moharana, ARsFor Respondent: Shri M.K.Gautam, CIT DR/Shri S.C.Mohanty, Sr DR

disallowance of the sundry creditors is not permissible insofar as out of the total disallowance of Rs.3.11 crores, Rs.2.42 crores related to the trade creditors and the balance was in respect of the statutory dues, which have been paid before the due date of filing of the return ... credits is a figure appearing in the balance sheet and the assessee had not been able to show that said sundry creditors were actually trade creditors. 7. In reply, ld AR drew our attention to pages 166 to 167 of PB, which were the details of the sundry creditors representing

M/S. B.C.Bhuyan Constructions Pvt. Ltd., Bhubaneswar vs. DCIT, Corporate Circle-1(1), Bhubaneswar

In the result, both the appeals of the assessee stand partly allowed

ITA 442/CTK/2016[2012-13]Status: DisposedITAT Cuttack19 Jan 2023AY 2012-13

Bench: Before S/Shri George Mathan, Judicial & Arun Khodpia & Arun Khodpia & Arun Khodpiaassessment Year :2010-2011 2011

For Appellant: S/Shri P.C.Sethi/Ashok Kumar Moharana, ARsFor Respondent: Shri M.K.Gautam, CIT DR/Shri S.C.Mohanty, Sr DR

DCIT, Central Circle-1, Udipur vs. M/S. Wagad Constrution Company, Udaipur

In the result, appeals of the Revenue are dismissed

ITA 30/JODH/2020[2014-15]Status: DisposedITAT Jodhpur12 Jan 2023AY 2014-15

For Appellant: Shri S.L. Poddar (Advocate)For Respondent: Shri Venkatesh V. (JCIT-Sr.DR)

Section 143(1)

deleted. 5. We have heard the rival contentions, perused the material available on record and gone through the orders of the Revenue authorities. The trade creditors are admittedly standing in the books of accounts of the assessee for a long time and, therefore, these are not pertaining to the year ... under consideration. It is also not the case of the AO that the assessee has introduced fresh trade creditors during the year under consideration. Once the trade creditors were accepted by the AO in the year these were first time in the books of accounts, then the genuineness

The Dy. Commr. of Income Tax, Cir.-1(1), Rajkot-Gujarat vs. M/S Backbone Projects Limited., Ahmedabad

In the result, the appeal filed by the Revenue is hereby dismissed

ITA 404/RJT/2017[2013-14]Status: DisposedITAT Rajkot06 Jan 2023AY 2013-14

Bench: Ms. Annapurna Gupta (Accountant Member), Shri T.R. Senthil Kumar (Judicial Member)

Section 142(1)Section 143(3)

record. 4.4 During the course of remand proceedings and on the basis of details of sundry creditors information u/s 133(6) to various trade creditors were called for and the same, has been received and found to be in order. 4.5 In respect of an additional evidences and details ... claimed that the Ld. CIT(A) was correct in deleting the addition made by the Assessing Officer after due verification of records, books and trade creditors by summoning u/s. 133(6) of the Act by the Assessing Officer and found no adverse findings in the assessee’s books, records

M/S. Applied Materials India Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle- 1(1)(1), Bangalore

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

ITA 2582/BANG/2019[2015-16]Status: DisposedITAT Bangalore30 Dec 2022AY 2015-16

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Respondent: Shri T. Suryanarayana

Ld.AR submitted that the Ld.TPO proposed transfer pricing adjustment in respect of outstanding receivables in Page 61 IT(TP)A No. 2582/Bang/2019 respect of trade creditors being the AEs by using 6 months LIBOR + 450 basis points and CUP as the most appropriate method. 7.2 The Assessee wishes to submit

Duckwoo Autoind Pvt. Ltd., Thiruvallur vs. PCIT-1, Chennai

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

ITA 232/CHNY/2021[2015-16]Status: DisposedITAT Chennai21 Dec 2022AY 2015-16

Bench: Shri Mahavir Singh, Hon’Ble & Shri G. Manjunatha, Hon’Bleआयकर अपील सं./Ita No.232/Chny/2021 िनधा"रण वष" /Assessment Year: 2015-16

For Respondent: Mr.S.Maruthu Pandian, CIT

Section 142(1)Section 143(2)Section 143(3)Section 263Section 271(1)(b)

were called for: i. Breakup of purchases party wise. ii. Breakup of domestic purchases and imports along with party-wise details. iii. Details of trade creditors along with opening and closing balances. iv. Details of LCs availed/proofs of payments made in respect of Imports/domestic purchases. v. Proof for customs duty

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)

able to furnish only unsigned extract of confirmation of accounts. In appeal proceeding, assessee filed alleged confirmations. It was stated that parties were trade creditors: Goods were taken on credit and sums due were repaid in succeeding accounting year. In course of remand proceeding, the AO had issued letters

Fireeye Cybersecurity Private Limited, Bengaluru vs. Deputy Commissioner of Income Tax, Circle-3(1)(1), Bangalore

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

ITA 292/BANG/2021[2016-17]Status: DisposedITAT Bangalore10 Nov 2022AY 2016-17

Bench: Smt. Beena Pillai & Shri Laxmi Prasad Sahuit(Tp)A No. 292/Bang/2021 Assessment Year : 2016-17 M/S. Mandiant Cyber Security Pvt. Ltd. (Formerly Known As Fireeye The Deputy Cybersecurity Pvt. Commissioner Of Ltd.), Income Tax, No. 5, Front Wing Circle – 3(1)(1), Salarpuria Infinity, Vs. Bengaluru. 2Nd Floor, Bannerghatta Road, Bengaluru – 560 029. Pan: Aaccf1341A Appellant Respondent : Shri T. Suryanarayana, Assessee By Senior Advocate Revenue By : Shri Vilas Shinde, Cit Dr Date Of Hearing : 26-09-2022 Date Of Pronouncement : 10-11-2022 Order Per Beena Pillaipresent Appeal Arises Out Of Order Passed By National E- Assessment Centre, Delhi Dated 30/04/2021 On Following Revised Grounds Of Appeal:

For Respondent: Shri T. Suryanarayana

consideration. 12. Interest on receivables 12.1 The Ld.AR submitted that the Ld.TPO proposed transfer pricing adjustment in respect of outstanding receivables in respect of trade creditors being the AEs by using 6 months Page 43 IT(TP)A No. 292/Bang/2021 LIBOR + 450 basis points and CUP as the most appropriate

Smt. Lizy George, Bangalore vs. Assistant Commissioner of Income Tax, Circle- 7(1), Bangalore

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

ITA 398/BANG/2020[2005-06]Status: DisposedITAT Bangalore28 Oct 2022AY 2005-06

Bench: Smt. Beena Pillai & Shri Laxmi Prasad Sahuassessment Year : 2005-06

For Appellant: Shri V Ravishankar, AdvocateFor Respondent: Shri Sankar Ganesh K, JCIT (DR)

Section 133ASection 142(1)Section 143(2)Section 145(3)

event, the revenue would not be in a position to rely on the rejected books of account for making the additions on account of trade creditors and also for the purpose of arriving at a closing stock. This is the view taken by at least four High Courts in thefollowing ... rejected by the assessing authority, in which case the same books of accounts could not be relied upon in an addition on account of trade creditors and also for arriving at the closing stock. This is an established principle as has been held in the decisions relied upon

DCIT- 32(1), Mumbai vs. M/S. Glitter Jewels, Mumbai

In the result, the appeal of the In the result, the appeal of the Revenues allowed for statistical allowed for statistical purposes

ITA 1366/MUM/2022[2013-14]Status: DisposedITAT Mumbai27 Sept 2022AY 2013-14

Bench: Shri Om Prakash Kant () & Ms Kavitha Rajagopal () Assessment Year: 2013-14 Dy. Cit-32(1), M/S Glitter Jewels, Room No. 702, 7Th Floor, Kautilya 120/B, Mandpeshwar Ind. Bhavan, Bandra Kurla Complex, Vs. Estate, Opp. Prem Nagar, Bandra (East), Borivali (W), Mumbai-400051. Mumbai-400092. Pan No. Aaafg 5495 R Appellant Respondent Revenue By : Mr. Hoshang B. Irani, Dr Assessee By : Mr. Kiran Mehta & Ravi Dasija, Ars Date Of Hearing : 24/08/2022 Date Of Pronouncement : 27/09/2022

For Appellant: Mr. Kiran Mehta & Ravi Dasija, ARsFor Respondent: Mr. Hoshang B. Irani, DR

Section 133Section 133A

wedding, however deleted the addition unexplained expenditure on wedding, however deleted the addition unexplained expenditure on wedding, however deleted the addition for discrepancy in trade creditors. for discrepancy in trade creditors. Aggrieved with the deletion, the with the deletion, the Revenue is before the is before the Tribunal

Deputy Commissioner of Income Tax, Circle-2(1)(2), Bangalore vs. M/S. Enzen Global Solutions Private Limited, Bangalore

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

ITA 2550/BANG/2019[2016-17]Status: DisposedITAT Bangalore19 Sept 2022AY 2016-17

Bench: Shri N.V. Vasudevan & Ms. Padmavathy Sappeal Nos. & Appellant Respondent Assessment Year

For Appellant: Shri V. Chandrashekar, AdvocateFor Respondent: Shri Manjunath Karkihalli, CIT(DR)(ITAT), Bengaluru

Section 45

purchase value of the Computers. Thus, in conclusion out of the total addition of Rs. 8,09,73,776/- made by way of Unexplained Trade Creditors, a sum of s.58,352/- stands confirmed and the balance amount of Rs. 8,09,15,424/- is deleted.” 31. Aggrieved by the order

M/S. Enzen Global Solutions Private Limited, Bengaluru vs. Income Tax Officer, Ward- 2(1)(4), Banglaoore

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

ITA 2332/BANG/2019[2016-17]Status: DisposedITAT Bangalore19 Sept 2022AY 2016-17

Bench: Shri N.V. Vasudevan & Ms. Padmavathy Sappeal Nos. & Appellant Respondent Assessment Year

For Appellant: Shri V. Chandrashekar, AdvocateFor Respondent: Shri Manjunath Karkihalli, CIT(DR)(ITAT), Bengaluru

Section 45

DCIT Cir 10(3)(1), Mumbai vs. Navin Fluorine International Ltd, Mumbai

In the result, the appeals of the assessee is partly allowed while for the appeals of the revenue is dismissed

ITA 7038/MUM/2018[2011-12]Status: DisposedITAT Mumbai24 May 2022AY 2011-12

Bench: Shri Amit Shukla & Shri Amarjit Singh

For Appellant: Ashok MehtaFor Respondent: S.N. Kabra

Section 115JSection 14Section 143(3)Section 14ASection 41(1)

liability in the Assessment Year 2002- 03. Therefore, respectfully following the said decision we hold that there is no cessation of liability of the trade creditors in this Assessment Year and the assessee has already returned back these trade creditors on 31.03.2012 relevant to the Assessment Year 2012-13. Thus

Navin Fluorine International Ltd, Mumbai vs. DCIT Cir 7(1), Mumbai

In the result, the appeals of the assessee is partly allowed while for the appeals of the revenue is dismissed

ITA 6491/MUM/2018[2011-12]Status: DisposedITAT Mumbai24 May 2022AY 2011-12

Bench: Shri Amit Shukla & Shri Amarjit Singh

For Appellant: Ashok MehtaFor Respondent: S.N. Kabra

Section 115JSection 14Section 143(3)Section 14ASection 41(1)

DCIT Cir 7(1), Mumbai vs. Navine Fluorine International Ltd, Mumbai

In the result, the appeals of the assessee is partly allowed while for the appeals of the revenue is dismissed

ITA 5555/MUM/2014[2010-11]Status: DisposedITAT Mumbai24 May 2022AY 2010-11

Bench: Shri Amit Shukla & Shri Amarjit Singh

For Appellant: Ashok MehtaFor Respondent: S.N. Kabra

Section 115JSection 14Section 143(3)Section 14ASection 41(1)

Navin Fluorine International Ltd, Mumbai vs. DCIT Cir 7(1), Mumbai

In the result, the appeals of the assessee is partly allowed while for the appeals of the revenue is dismissed

ITA 5301/MUM/2014[2010-11]Status: DisposedITAT Mumbai24 May 2022AY 2010-11

Bench: Shri Amit Shukla & Shri Amarjit Singh

For Appellant: Ashok MehtaFor Respondent: S.N. Kabra

Section 115JSection 14Section 143(3)Section 14ASection 41(1)

Rajeshkumar Chamaria, Mumbai vs. ITO 24(3)(5), Mumbai

In the result, both the appeals filed by the assessee are allowed

ITA 798/MUM/2020[2013-14]Status: DisposedITAT Mumbai23 May 2022AY 2013-14

Bench: Shri M. Balaganesh () & Shri Pavan Kumar Gadale ()

Section 143(3)

having evidenceial 7 ITA 797/Mum/2020 ITA 798/Mum/2020 values. We considering the facts, circumstances, provisions of law are of the opinion that the creditors are trade creditors and the payments are made by the assessee in F.Y. 2014-15 cannot be doubted and the revenue has also accepted the payments. Accordingly ... assessee. No such exercise has been done by the AO. This is fatal to the assesseement here. More ever, outstanding creditors which are trade creditors can be added only under the provisions of section 41(1) of the Act. No case has been made out that section

Rajeshkumar Chamaria, Mumbai vs. ITO 24(3)(5), Mumbai

In the result, both the appeals filed by the assessee are allowed

ITA 797/MUM/2020[2014-15]Status: DisposedITAT Mumbai23 May 2022AY 2014-15

Bench: Shri M. Balaganesh () & Shri Pavan Kumar Gadale ()

Section 143(3)

M/S. Wipro Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle-7(1)(2), Bangalore

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

ITA 2556/BANG/2019[2015-16]Status: HeardITAT Bangalore23 May 2022AY 2015-16

Bench: Shri N.V. Vasudevan & Shri B.R. Baskaranit(Tp)A No.2556/Bang/2019 Assessment Year : 2015-16

For Appellant: Shri S. Ganesh, Sr. ARFor Respondent: Shri T. Roumuan Paite, D.R

Section 143(3)

IT(TP)A No.2556/Bang/2019 M/s. Wipro Limited, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “A’’ BENCH: BANGALORE BEFORE SHRI N.V

Venus International, Mumbai vs. DCIT 14(2), Mumbai

ITA 1623/MUM/2017[2010-11]Status: DisposedITAT Mumbai30 Mar 2022AY 2010-11

Bench: Shri Om Prakash Kant () & Shri Amarjit Singh () Assessment Year: 2010-11

For Appellant: Mr. Naresh Jain, ARFor Respondent: Mr. S.N. Kabra, DR

Section 133(6)Section 41(1)Section 69C

assessee is a partnership firm engaged in the business of export of textile fabrics. The Assessing Officer during assessment proceeding observed certain trade liabilities (trade creditors) outstanding for more than five years but on verification, those parties denied any outstanding due from the assessee. The Assessing Officer accordingly treated ... case are distinguishable from the decision relied upon by Ld. AR as in the case of Bhogilal Ramjibhai Atara, the creditors outstanding were not Trading Creditors whereas in the present case, the outstanding creditors are trading creditors. Moreover, in the decision in the case of Dattatry Poultry, the case