Which cases are most cited on Section 142(2A)?

Godhra Electricity Co. Ltd. v. CIT (225 ITR 746) — 514 citing judgments; CIT v. Winsome Textile Industries Ltd. (319 ITR 204) — 378 citing judgments; CIT v. Walchand & Co. (65 ITR 381) — 314 citing judgments; M/s Sahara India (Farms) v. CIT & Anr. (300 ITR 403) — 268 citing judgments; CIT v. T.V. Sundaram Iyengar & Sons Ltd. (222 ITR 344) — 223 citing judgments.

How many judgments are there on Section 142(2A)?

BharatTax indexes 676 ITAT, High Court and Supreme Court judgments that turn on Section 142(2A) of the Income Tax Act, 1961.

Section 142(2A) of the Income Tax Act

Q: What is the leading case on Section 142(2A) of the Income Tax Act?

Godhra Electricity Co. Ltd. v. CIT (225 ITR 746) is the decision most relied on for Section 142(2A), cited in 514 judgments. Income is not taxable until it actually accrues or is received; hypothetical income, based on a mere claim not yet settled, is not chargeable to tax.

Income-tax Act, 2025: s.268

Section 142(2A) falls under section 142 of the Income-tax Act, 1961, which corresponds to section 268 (Inquiry before assessment) of the Income-tax Act, 2025.

Read section 268 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 142(2A) is Godhra Electricity Co. Ltd. v. CIT (225 ITR 746), cited in 514 of the 676 judgments on BharatTax that turn on this section.

Leading authorities on Section 142(2A)

Godhra Electricity Co. Ltd. v. CIT

225 ITR 746 · 1997 · Supreme Court

514

citing judgments

Income is not taxable until it actually accrues or is received; hypothetical income, based on a mere claim not yet settled, is not chargeable to tax.

CIT v. Winsome Textile Industries Ltd.

319 ITR 204 · 2009 · High Court

378

citing judgments

Section 14A of the Income-tax Act, 1961, which disallows expenditure incurred in relation to exempt income, is not applicable if the assessee has not earned any exempt income in the relevant assessment year.

CIT v. Walchand & Co.

65 ITR 381 · 1967 · Supreme Court

314

citing judgments

The necessity and reasonableness of business expenditure, including the utilization of borrowed funds, must be judged from the perspective of a businessman based on commercial expediency, and cannot be dictated by revenue authorities. The onus is on the assessee to demonstrate the business purpose and commercial expediency.

M/s Sahara India (Farms) v. CIT & Anr.

300 ITR 403 · 2008 · Supreme Court

268

citing judgments

Administrative orders must be consistent with the rules of natural justice.

CIT v. T.V. Sundaram Iyengar & Sons Ltd.

222 ITR 344 · 1996 · Supreme Court

223

citing judgments

Unclaimed deposits received in the course of trading transactions and sundry credit balances written back are taxable as business income under Section 41(1) of the Income-tax Act, 1961, as they constitute a cessation of trading liability.

CIT v. Ankitech (P) Ltd.

340 ITR 14 · 2012 · High Court

202

citing judgments

Deemed dividend under section 2(22)(e) cannot be taxed in the hands of a non-shareholder. The Supreme Court confirmed this view, affirming the Delhi High Court's decision in Ankitech.

Sayaji Iron & Engg. Co. v. CIT

253 ITR 749 · 2002 · High Court

181

citing judgments

For a limited company, expenses cannot be disallowed merely on the grounds of presumed personal use of assets by directors or by treating the expenditure as a non-business purpose. Percentage disallowances of expenses in such cases are not sustainable.

Vijayadevi Naval Kishore Bharatia v. Land Acquisition Officer

5 SCC 83 · 2003 · Supreme Court

167

citing judgments

An approving authority must apply its mind and cannot reverse the findings of an adjudicating authority; it is not an appellate authority for remanding the matter.

DCIT v. Core Health Care Ltd.

298 ITR 194 · 2008 · Supreme Court

165

citing judgments

Interest expenditure incurred for acquiring capital assets, even if capitalized in the books, is deductible if for the purpose of business. Section 36(1)(iii) is a self-contained code regarding such deductions.

Jamshedpur Motor Accessories Stores v. CIT

72 ITR 612 · 1969 · Supreme Court

140

citing judgments

The reasonableness of an expenditure for business purposes must be assessed from the businessman's perspective, not the revenue's, and the primary motive to earn income directly is not a prerequisite for its admissibility as a deduction.

Judgments on Section 142(2A)

Bench: HON'BLE MR. JUSTICE A.K.SIKRI,HON'BLE MR. JUSTICE M.L. MEHTA

Section 142

Commissioner of Income Tax vs. Co. (Regd)

ITA/1417/2010HC Delhi20 Sept 2010

Section 142Section 145Section 260ASection 68

The Commissioner of Incometax vs. M/S.Bachu & Co., Calicut

ITA/7/2002HC Kerala03 Jun 2008

For Appellant: ---------------------------

Section 132(3)Section 142Section 260ASection 271(1)(c)

Sahara India (Firm), Lucknow vs. Commissioner of Income Tax, Central-I & Anr

In the result, both the appeals are allowed to the extent

CIVIL APPEAL No. 2783/2008Supreme Court11 Apr 2008

Bench: An Order Is Made, Is Generally Read Into The Provisions, Particularly When The Order Has Adverse Civil Consequences - Power Conferred On A Statutory Body Or Tribunal May Be Administrative Or Quasi-Judicial - However, There Is No General Rule Of Universal Application As To Its G ~Pplicability - With Regard To Its Application Express Language, Basic Scheme Of The Provision Conferring The Power, Nature Of Power Conferred, Its Purpose & Final Effect 427 H

Section 142Section 8

M/S Sahara India (Firm) Lucknow vs. Commnr. of Income Tax, Central-I

In the result, both the appeals are allowed to the extent

C.A. No.-002783-002783 - 2008Supreme Court11 Apr 2008

Bench: The Three-Judge Bench In View Of A Common Order Dated 14Th December, 2006, Passed By A Two-Judge Bench Of This Court. The Order Reads As Follows: "When The Matter Was Taken Up, Learned Counsel For The Petitioner Placed Reliance On A Decision Of This Court In Rajesh Kr. & Ors. Vs. Deputy Commissioner Of Income Tax & Ors. According To Learned Counsel For The Petitioner, Before Any Direction Can Be Issued Under Section 142 (2A) Of The Income Tax Act, 1961 (In Short ’The Act’) For Special Audit Of The Accounts Of The Assessee, There Has To Be A Pre-Decisional Hearing & An Opportunity Has To Be Granted To The Assessee For The Purpose. A Close Reading Of The Decision Shows That The Observations In This Regard Appear To Have Been Made In The Context Of The Assessments In Terms Of Section 158 Bc (Block Assessment) Of The Act. Such Assessments Are Relatable To A Case When Raid Has Been Conducted At The Premises Of An Assessee. Had That Been So, Limited To The Facts Involved In That Case, We Would Have Negatived The Contentions Of Learned Counsel For The Petitioner. But, Certain Observations Of General Nature Have Been Made. The Effect Of These Observations Appear To Be That In Every Case Where The Assessing Officer Issues A Direction In Terms Of Section 142 (2A) Of The Act, The Assessee Has To Be Heard Before Such Order Is Passed. This Does Not Appear To Us To Be The Correct Position

For Respondent: COMMISSIONER OF INCOME TAX,CENTRAL-I & ANR

Section 142Section 158Section 288