Chapter XIV - Tax Administration
Section 242
Section 242: jurisdiction of Assessing Officers
Section 242 determines, in practical terms, which Assessing Officer has jurisdiction over a particular taxpayer - based on where the taxpayer's business is carried on or where they reside - and sets out the limited window within which a taxpayer can dispute that jurisdiction.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Where an Assessing Officer has been vested with jurisdiction over any area by virtue of any direction or order issued under section 241(1) or (2) or (3), he shall have jurisdiction within the limits of such area,—
(a) in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situated within the area, or 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; and
(b) in respect of any other person residing within the area.
(2) Where a question arises under this section as to whether an Assessing Officer has jurisdiction to assess any person, the question shall be determined by the specified income-tax authority.
(3) Where under this section, a question arises relating to areas within the jurisdiction of different specified income-tax authorities, the question shall be determined––
(a) by the specified income-tax authorities concerned; or
(b) by the Board or by such specified income-tax authority as the Board may, by notification, specify in this behalf, if they are not in agreement.
(4) No person shall call in question the jurisdiction of an Assessing Officer,––
(a) where he has made a return under section 263(1), after the expiry of one month from the date on which he was served with a notice under section 268(1) or 270(8) or after the completion of the assessment, whichever is earlier;
(b) where he has made no such return, after the expiry of the time allowed by the notice under section 268(1) or 280(2) for the making of 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, whichever is earlier;
(c) where an action has been taken under section 247 or 248, after the expiry of one month from the date on which he was served with a notice under section 294(1)(a) or after the completion of the assessment, whichever is earlier.
(5) Subject to the provisions of sub-section (4), where an assessee calls in question the jurisdiction of an Assessing Officer, then 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.
(6) Irrespective of anything contained in this section or in any direction or order issued under section 241, every Assessing Officer shall have all the powers conferred under this Act on an Assessing Officer in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued under section 241(1) or (2) or (3).
Introduction
An Assessing Officer's area comes first from a Section 241 direction or order. Within that area, Section 242 uses the principal place of a business or profession for a person carrying on one, and residence for other persons.
A jurisdiction challenge is time-sensitive. The cut-off differs depending on whether a return was filed and whether a search or requisition action occurred; a challenge made in time must be referred for determination if the Assessing Officer disagrees.
Key takeaways
Business location or residence
For a business or profession, the relevant place is its location or principal place; for another person, it is the area of residence.
Challenge deadlines vary
Section 242(4) sets different limits for a filed return, no return, and action under Section 247 or 248. The earlier of the stated notice period and assessment completion can apply.
Timely disputes go for determination
If the taxpayer challenges jurisdiction within time and the Assessing Officer disagrees, the officer must refer it to the specified authority before assessment.
How jurisdiction is determined
Where an Assessing Officer has been vested with jurisdiction over an area under a direction or order issued under Section 241(1), (2) or (3), he has jurisdiction within that area over: a person carrying on business or profession, if the place of business/profession (or its principal place, if more than one) is within the area; and any other person residing within the area.
Resolving jurisdiction disputes
If a question arises about whether an Assessing Officer has jurisdiction to assess a person, it is determined by the specified income-tax authority. Where the question involves areas under the jurisdiction of different specified authorities, it is determined by those authorities jointly, or by the Board (or an authority the Board notifies) if they disagree.
Time limits for challenging jurisdiction
A taxpayer cannot call an Assessing Officer's jurisdiction into question:
- Where a return has been filed under Section 263(1) - after one month from being served a notice under Section 268(1) or 270(8), or after assessment is completed, whichever is earlier
- Where no return has been filed - after the time allowed by the notice under Section 268(1) or 280(2) for filing the return, or by the notice under Section 271(2) to show cause against a best-judgment assessment, whichever is earlier
- Where action has been taken under Section 247 or 248 (search or requisition) - after one month from being served a notice under Section 294(1)(a), or after assessment is completed, whichever is earlier
What happens if jurisdiction is challenged in time
If a taxpayer questions jurisdiction within the permitted time and the Assessing Officer is not satisfied the challenge is correct, he must refer the matter for determination as above before completing the assessment.
Irrespective of anything else in this section or in directions under Section 241, every Assessing Officer has all the powers conferred on an Assessing Officer under the Act in respect of income accruing, arising or received within the area over which he has been vested with jurisdiction.
Step-by-step flow for checking an Assessing Officer's jurisdiction under Section 242
- 1
Has the Assessing Officer been given jurisdiction over an area under Section 241(1), (2) or (3)?
- No: Section 242(1) does not give area jurisdiction; check the other directions under Section 241.
- Yes: Go to the next step.
- 2
Does the person fall within the area?
A person carrying on a business or profession is within the area if the place of business is there or, with more than one place, the principal place is there (Section 242(1)(a)). Any other person is within the area if residing there (Section 242(1)(b)).
- 3
Is the objection raised in time?
Section 242(4): if a return under Section 263(1) was made, within one month from service of a notice under Section 268(1) or 270(8), or before completion of assessment, whichever is earlier. If no return was made, before the time allowed by the notice under Section 268(1), 280(2) or 271(2) expires, whichever is earlier. After action under Section 247 or 248, within one month from service of a notice under Section 294(1)(a), or before completion of assessment, whichever is earlier.
- No: The person can no longer call the jurisdiction in question.
- Yes: Go to the next step.
- 4
Is the Assessing Officer satisfied with the objection?
- Yes: The Assessing Officer accepts the claim.
- No: Under Section 242(5) the officer must refer the question for determination before making the assessment.
- 5
Who decides the question?
The specified income-tax authority (Section 242(2)). If the areas fall under different specified income-tax authorities, they decide it together; if they do not agree, the Board or an authority it notifies decides (Section 242(3)).
Practical checklist
Do
- Raise a jurisdiction objection within the time specified in section 242 if the applicable facts support it.
- Keep the notice, filing date and any jurisdiction order together so the deadline can be checked.
Avoid
- Assume a late objection will be heard without the statutory referral process.
Illustrative example
Worked example: a trader with shops in two cities
Hypothetical facts (illustration only, not a real taxpayer): Mr. Rao lives in City A. He runs shops in City A and City B; his principal place of business is in City B. He files his return under Section 263(1). An Assessing Officer whose area is City A serves him a notice under Section 268(1) on an assumed date of 10 August. The assessment has not been completed. Each city has its own specified income-tax authority.
Applicable test
Mr. Rao carries on business in more than one place, so Section 242(1)(a) looks at the principal place of business, which is in City B. His residence in City A does not decide it.
Time limit
He filed a return, so under Section 242(4)(a) he must object within one month from 10 August, or before assessment is completed if that is earlier. He objects within that month.
Reference
If the City A officer is not satisfied, Section 242(5) requires a reference before assessment. As the two cities fall under different specified income-tax authorities, they decide together, and if they disagree the Board or its notified authority decides (Section 242(3)).
If he had waited
Had he objected after that one month, he could not have questioned the jurisdiction at all.
Outcome
- On these facts the principal place in City B points to the City B Assessing Officer.
- The 10 August date is assumed; the one-month limit is from Section 242(4)(a).
Frequently asked questions
How long does a taxpayer have to challenge an Assessing Officer's jurisdiction after filing a return?
One month from being served a notice under Section 268(1) or 270(8), or until the assessment is completed - whichever is earlier.
What decides which Assessing Officer has jurisdiction over an individual?
For someone carrying on business or profession, it is the location (or principal location) of that business or profession; for anyone else, it is the area where they reside.
Need help applying this provision to your situation?
Talk to our tax team about challenging or confirming AO jurisdictionLast updated 9 October 2026