Section 242 — Jurisdiction of AO | ITA 2025

Section 242 — - JURISDICTION OF ASSESSING OFFICERS

Section 242 is the substantive equivalent of 1961 s. 124 -- the operational framework for allocating SPECIFIC ASSESSEE to SPECIFIC ASSESSING OFFICER (AO). The provision mandates that once AO has been vested with jurisdiction over assessee per s. 241 directions, that AO is competent for ALL purposes; jurisdictional objections must be raised TIMELY (within 1 month of notice / before assessment). Critical defence provision -- assessees who fail to raise timely jurisdictional objection lose right; AO without jurisdiction cannot validly assess; FA 2020 NFAC framework partly displaces traditional AO-PAN jurisdiction for scrutiny but jurisdictional AO retained for collection / recovery / specific functions.

Statutory text — Income-tax Act, 2025

Marginal note -- Jurisdiction of Assessing Officers

(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). Power to transfer cases.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 -- s. 242	INCOME-TAX ACT, 1961 -- s. 124
Sub-s. (1) -- AO competent for all purposes once vested	1961 s. 124(1)
Sub-s. (2) -- Jurisdictional objection timing	1961 s. 124(3)
Time-limit for raising objection	1961 s. 124(3)(a)/(b)

STATUTORY ARCHITECTURE

AO's jurisdictional competence: (I) Once vested per s. 241 directions / orders, AO is COMPETENT FOR ALL PURPOSES OF THE ACT regarding assessee. (II) JURISDICTIONAL OBJECTION TIMING (sub-s. 2): (a) Where return filed: within 1 month of receipt of notice u/s 142(1)/143(2)-equivalent (s. 268/270 in 2025 Act); (b) Where return not filed: within time allowed by notice + 1 month; (c) Failure to raise timely = waiver of objection; (d) AO can also be challenged when proceedings already finalised: limited grounds. (III) Once objection raised: (a) AO refers to Pr CIT/CIT for determination; (b) Determination binding; (c) Appellate route: writ at HC (Article 226). FA 2020 NFAC FRAMEWORK INTERACTION: scrutiny under faceless mode handled by NFAC dynamic-allocation; jurisdictional-AO retained for: collection / recovery / search-and-seizure / surveys / certain specific functions.

CASE LAW

(i) Calcutta Discount Co v. ITO (SC, 1961) -- foundational: jurisdictional defect renders order void. (ii) ITO v. Lakhmani Mewal Das (SC, 1976) -- jurisdiction must be challenged timely. (iii) PCIT v. Maruti Suzuki India (SC, 2019) -- post-amalgamation jurisdiction issues. (iv) Recent NFAC challenges -- jurisdictional / natural-justice issues.

PRACTITIONER NOTES

(i) PAN-AO MAPPING -- check on e-filing portal; verify before each compliance step. (ii) TIMELY OBJECTION -- if jurisdiction issue, raise within 1 month of notice; document. (iii) NFAC vs JURISDICTIONAL -- understand which functions handled by which authority. (iv) WRIT REMEDY -- jurisdictional defect = strong writ ground.

CROSS-REFERENCES

Section 241 -- Jurisdiction framework.
Section 243 -- Transfer of cases.
Section 245 -- Faceless jurisdiction.
Section 270 -- Assessment.

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