Section 242 of the Income-tax Act, 2025 — Jurisdiction of Assessing Officers

In plain language

What Section 242 is about

Section 242 of the Income-tax Act, 2025 answers a simple but important question: which Assessing Officer (AO) has the legal power to assess your income? The Income Tax Department is spread across the country, and every taxpayer must be handled by the officer who has been vested with jurisdiction over the relevant area or class of persons. Section 242 lays down the rules for fixing that jurisdiction, for settling disputes when two offices claim (or disclaim) a taxpayer, and — crucially — for how and when a taxpayer can object that "this officer has no authority over me". It is the successor to Section 124 of the Income-tax Act, 1961, and carries forward the same core principles in cleaner, modern language.

How jurisdiction is fixed

• Business or profession: If you carry on a business or profession, the AO for the place of business has jurisdiction. If you operate from several places, the officer for the principal place of business takes charge.
• Everyone else (salaried, pensioners, investors, etc.): Jurisdiction falls on the AO of the area where you reside.
• Area is assigned under Section 241: The AO's territory, class of persons or class of income is fixed by directions/orders issued under Section 241 (jurisdiction of income-tax authorities). Section 242 then operates within those boundaries.

Who resolves jurisdiction disputes

• Single authority level: If a question arises whether an AO has jurisdiction over you, it is decided by the specified income-tax authority (typically the Principal Commissioner / Commissioner).
• Different authorities involved: If the dispute spans areas of two or more specified authorities, they must decide it by mutual agreement; if they cannot agree, the CBDT (Board) — or an authority the Board specifies — decides.
• AO in doubt must refer: Where the AO himself doubts whether he holds jurisdiction, he must refer the matter for determination before completing the assessment.

The time limit to challenge jurisdiction — read this carefully

You cannot sit quiet, let the assessment finish, and then complain about jurisdiction. Section 242 bars a late objection. The outer limits are:

• If you have filed a return: object within one month from service of the notice under Section 268(1) or 270(8), or before the assessment is completed — whichever is earlier.
• If you have not filed a return: object before the expiry of the time allowed in the notice (under Section 268(1), 280(2) or 271(2)), whichever is earlier.
• Search / requisition cases (Sections 247–248): object within one month of the notice under Section 294(1)(a), or before assessment is completed — whichever is earlier.

The AO's overriding powers

Even while a jurisdiction question is pending, an AO does not lose the power to act. The section makes clear that, notwithstanding anything in Section 241 directions, every AO retains all powers under the Act in respect of income accruing or arising within the area assigned to him. This prevents taxpayers from stalling proceedings simply by raising jurisdiction objections. Once the specified authority (or the Board) settles the point, that decision is final for the purpose of the section.

Practical implications for taxpayers

• Your PAN-based jurisdiction is visible on the e-filing portal ("Know Your AO"). In practice most work is now done under the faceless regime (see Section 245), so the "territorial" AO matters mostly for physical, transfer or legacy actions.
• If you receive a notice from an officer you believe is wrong, raise the objection promptly and in writing — ideally within one month — because the right to object lapses fast.
• An assessment is not automatically void merely because of a jurisdiction irregularity if you failed to object in time; courts have consistently treated the time-bar as a real bar.