Section 5(2) of the Income Tax Act

Income-tax Act, 2025: s.5

Section 5(2) falls under section 5 of the Income-tax Act, 1961, which corresponds to section 5 (Scope of total income) of the Income-tax Act, 2025.

Read section 5 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 5(2) is Commissioner of Income Tax v. Nova Promoters and Finlease (P) Ltd. (342 ITR 169), cited in 658 of the 430 judgments on BharatTax that turn on this section.

Leading authorities on Section 5(2)

Commissioner of Income Tax v. Nova Promoters and Finlease (P) Ltd.
342 ITR 169 · 2012 · High Court
658
citing judgments

To make an addition under Section 68 for unexplained cash credits, the Assessing Officer must conduct proper inquiry into the identity, genuineness, and creditworthiness of the creditor, especially concerning share application money. The assessee's initial discharge of burden by providing necessary details shifts the onus back to the AO for further investigation, including the source of source.

Parimisetti Seetharamamma v. CIT
57 ITR 532 · 1965 · Supreme Court
142
citing judgments

Not all receipts constitute income chargeable to tax. An Assessing Officer cannot reject a prima facie reasonable explanation on mere probabilities or arbitrary grounds, but must disprove facts.

Carborandum Co. v. CIT
108 ITR 335 · 1977 · Supreme Court
87
citing judgments
J.S. Parkar v. V.B. Palekar
94 ITR 616 · 1974 · High Court
58
citing judgments

An assessee found to be the owner of bullion, etc., must explain its source. The Income Tax Officer must find the assessee to be the owner, not merely in possession.

CIT v. Avtar Singh Wadhwan
247 ITR 260 · 2001 · High Court
53
citing judgments

Salary received by a non-resident for services rendered outside India accrues outside India and is not taxable in India. Only salary earned for work performed in India is regarded as income arising in India and is taxable.

ACIT v. Clough Engineering Ltd.
130 ITD 137 · 2011 · ITAT
52
citing judgments

Interest income, such as on income-tax refunds or fixed deposits, derived by a foreign entity with a Permanent Establishment (PE) in India is taxable under DTAA if the debt-claim is effectively connected or attributable to the PE. For DTAA purposes, the terms 'attributable' and 'effectively connected' are considered to have the same meaning.

New India Insurance v. ACIT
18 SOT 51 · 2007 · ITAT
43
citing judgments
DIT (International Taxation) v. PrahladVijendra Rao
198 Taxmann 551 · 2011 · High Court
42
citing judgments
Som Nath Maini v. CIT
306 ITR 414 · 2008 · High Court
38
citing judgments

An Assessing Officer may reject the genuineness of a transaction if the evidence provided by the assessee is not trustworthy, even if the transaction appears to be conducted through cheques or other formal means. The burden of proving the genuineness of a transaction lies primarily on the assessee.

UPS SCS Asia Ltd. v. Asstt. DIT, (International Taxation)
50 SOT 268 · 2012 · ITAT
37
citing judgments

Managerial services require both planning and execution; mere execution of directions from another party does not qualify as managerial services.

Judgments on Section 5(2)

Income Tax Officer-1(3), Kanpur vs. Smt. Raj Rani Gupta, Kanpur

In the result, the appeal of the Revenue is dismissed

ITA 207/LKW/2020[2014-15]Status: DisposedITAT Lucknow28 Mar 2022AY 2014-15

Bench: Shri. A. D. Jainassessment Year: 2014-15 The Income Tax Officer 1(3) V. Smt. Raj Rani Gupta Kanpur 569-C, Safipur, G. T. Road Ramad Devi, Kanpur Tan/Pan:Ajspg8930G (Appellant) (Respondent) Appellant By: Shri Harish Giudwani, D.R. Respondent By: Application By The Assessee. Date Of Hearing: 09 03 2022 Date Of Pronouncement: 28 03 2022 O R D E R This Is Revenue’S Appeal Against The Order Of The Ld. Cit(A)-I, Kanpur, Dated 15.11.2018 For Assessment Year 2014- 15. 2. The Assessee Has Submitted An Application Dated Nil, Received In The Registry Of This Office On 2.2.2022, Vide Which It Has Been Submitted That The Income Tax Department Has Passed Order In Form No.5 On 13.5.2021 Under The Vivad Se Vishwas Scheme. The Assessee Has Filed The Copy Of Form No.5, I.E., The Order Of The Pcit-1, Kanpur For Full & Final Settlement Of Tax Arrears Under Section 5(2) Read With Section 6 Of The Dtvsva, 2020, For Assessment Year 2014-15. It Was Contended That Since The Assessee Has Opted For Vivad Se Viswas Scheme & Tax Payable On The Departmental Appeals Has Been Deposited & Order For Final Settlement Of Tax Arrears Has Been Passed By The Designated Authority, Therefore, The Appeal Filed By The Department May Be Dismissed As Withdrawn. The Ld. D. R. Has Page 2 Of 2

For Appellant: Shri Harish Giudwani, D.RFor Respondent: Application by the
Section 5(2)Section 6

Income Tax Officer-3(1), Kanpur vs. Shri Bharat Gupta, HUF, Kanpur

In the result, the appeal of the Revenue is dismissed

ITA 175/LKW/2020[2015-16]Status: DisposedITAT Lucknow28 Mar 2022AY 2015-16

Bench: Shri. A. D. Jainassessment Year: 2015-16 The Income Tax Officer 3(1) V. Shri Bharat Gupta, Huf Kanpur 7/109, Swaroop Nagar Kanpur Tan/Pan:Aahhb3982K (Appellant) (Respondent) Appellant By: Shri Harish Gidwani, D.R. Respondent By: Application Of The Assessee. Date Of Hearing: 10 03 2022 Date Of Pronouncement: 28 03 2022 O R D E R This Is Revenue’S Appeal Against The Order Of The Ld. Cit(A)-I, Kanpur, Dated 26.11.2018 For Assessment Year 2015- 16. 2. There Is A Delay Of 382 Days In Filing Of The Appeal. The Revenue Has Filed An Application Dated 24.2.2020 For Condonation Of Delay. Having Carefully Perused The Application For Condonation Of Delay, I Find That There Was Sufficient Cause For The Delay In Filing Of The Appeal. Accordingly, I Condone The Delay & Admit This Appeal For Hearing. 3. The Assessee Has Submitted An Application Dated Nil, Received In The Registry Of This Office On 2.2.2022, Vide Which It Has Been Submitted That The Income Tax Department Has Passed Order In Form No.5 On 24.11.2021 Under The Vivad Se Vishwas Scheme. The Assessee Has Filed The Copy Of Form No.5, I.E., The Order Of The Pcit-1, Kanpur For Full & Final Settlement Of Tax Arrears Under Section 5(2) Read With Section 6 Of The Dtvsva

For Appellant: Shri Harish Gidwani, D.RFor Respondent: Application of the
Section 5(2)Section 6