Section 242 — Jurisdiction of Assessing Officers. Successor to s.124 of the 1961 Act.
Section 242 is in Chapter XIV — Tax Administration, which runs from section 236 to section 261.
Sub-section (1) fixes the territorial reach of an Assessing Officer vested with jurisdiction over an area by a direction or order under section 241(1), (2) or (3). Within that area he has jurisdiction over any person carrying on a business or profession whose place of business or profession is in the area, or where it is carried on at more places than one, whose principal place is in the area; and over any other person residing in the area.
Sub-section (2) sends a question whether an Assessing Officer has jurisdiction to assess a person to the specified income-tax authority. Sub-section (3) deals with a question spanning areas of different such authorities: it is determined by the authorities concerned, or, if they are not in agreement, by the Board or by such specified income-tax authority as the Board may notify.
Sub-section (4) bars a person from calling the jurisdiction in question after the earlier of two points, in three situations. Clause (a), where he has made a return under section 263(1): after one month from service of a notice under section 268(1) or 270(8), or after completion of the assessment. Clause (b), where he has made no such return: after expiry of the time allowed by the notice under section 268(1) or 280(2) for making the return, or by the notice under section 271(2) to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer. Clause (c), where action has been taken under section 247 or 248: after one month from service of a notice under section 294(1)(a), or after completion of the assessment.
Sub-section (5), subject to sub-section (4), requires the Assessing Officer, where an assessee calls his jurisdiction in question and he is not satisfied with the correctness of the claim, to refer the matter for determination under sub-section (2) or (3) before the assessment is made. Sub-section (6) preserves, notwithstanding the section or any section 241 order, every Assessing Officer's full powers under the Act over income accruing, arising or received within any area over which he has been vested with jurisdiction.
Jurisdiction has to be certain before an assessment is worth anything, but it cannot stay open indefinitely, because an objection raised after the assessment is complete would undo work done in good faith on both sides. The section gives a plain territorial test, a route for resolving disputes between authorities, and a short window inside which the assessee must raise the point or lose it, balanced by sub-section (5).
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Time to call jurisdiction in question where a return has been made | One month from the date of service of the notice, or completion of the assessment, whichever is earlier | Return made under section 263(1); notice under section 268(1) or 270(8) | Sub-section (4)(a) |
| Time to call jurisdiction in question where no return has been made | The time allowed by the notice for making the return, or by the show cause notice, whichever expires earlier | Notice under section 268(1) or 280(2) for making the return, or notice under section 271(2) to show cause why the assessment should not be completed to the best of the judgment of the Assessing Officer | Sub-section (4)(b) |
| Time to call jurisdiction in question after a section 247 or 248 action | One month from the date of service of the notice under section 294(1)(a), or completion of the assessment, whichever is earlier | Where an action has been taken under section 247 or 248 | Sub-section (4)(c) |
The objection is lost by silence. In each limb of sub-section (4) the bar falls at the earlier of two points, so an assessment completed quickly can close the window before the month is up, and in clause (b) the time allowed by whichever notice expires first governs — there is no separate month at all where no return has been filed. Raising the point in time is not merely formal: sub-section (5) then obliges the Assessing Officer, if he does not accept the claim, to refer the matter for determination before making the assessment. The territorial test turns on the principal place of business where there is more than one, so a taxpayer with several premises cannot pick his officer by pointing to a branch. Sub-section (6) is a separate head of power that does not depend on where the person is.
A company files its return under section 263(1) and is served with a notice under section 268(1) on 5 June, its principal place of business being outside the officer's area. It must call the jurisdiction in question by 5 July, or before the assessment is completed if that happens earlier. If it does so within time and the Assessing Officer is not satisfied with the claim, sub-section (5) requires him to refer the matter for determination under sub-section (2) or (3) before making the assessment. If it says nothing until the draft order arrives in November, sub-section (4)(a) bars the objection altogether.
Immediately on service of a scrutiny notice under section 268(1), or a notice under section 270(8), 280(2), 271(2) or 294(1)(a) — the date of service starts the clock in sub-section (4). The objection is made to the Assessing Officer, and the determination comes from the specified income-tax authority.
where his business or profession is carried on in more places than one, if the principal place of his business or profession is situated within the area
the Assessing Officer shall, if not satisfied with the correctness of the claim, refer the matter for determination under sub-section (2) or (3) before the assessment is made
See the full 1961 to 2025 concordance.