Legal and Administrative Framework Determining the Jurisdiction of Assessing Officers : Clause 242 of the Income Tax Bill, 2025 Vs. Section 124 of the Income-tax Act, 1961

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....ars to be aiming for greater clarity, modernization, and alignment with evolving administrative needs. The following commentary offers a detailed analysis of Clause 242, discussing its objectives, the legislative intent, its detailed provisions, practical implications, and a comparative analysis with Section 124 of the 1961 Act. Objective and Purpose The primary objective of Clause 242 is to delineate the jurisdiction of AOs with precision, thereby minimizing disputes and ensuring efficient tax administration. The provision seeks to: * Establish clear criteria for jurisdiction based on the location of business, profession, or residence. * Provide mechanisms for resolving jurisdictional disputes between different AOs or tax authorities. * Set time limits and procedural bars on when and how a taxpayer can challenge the jurisdiction of an AO. * Ensure that AOs retain their statutory powers over income arising within their assigned areas, even if there are disputes or ambiguities regarding jurisdiction. Historically, jurisdictional challenges have been a significant source of litigation and administrative inefficiency. The legislative intent behind Clause 242 is to codify es....

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....th from the date of service of notice u/s 268(1) or 270(8), or before completion of assessment, whichever is earlier. * (b) Where no return is filed: The challenge must be made before the expiry of the time allowed by notice u/s 268(1) or 280(2) for filing the return, or u/s 271(2) for show cause, whichever is earlier. * (c) Where action is taken u/s 247 or 248: The challenge must be made within one month from the date of service of notice u/s 153C(2) of the 1961 Act or section 294(1)(a), or before completion of assessment, whichever is earlier. By imposing strict timelines, this sub-clause aims to prevent belated objections that could disrupt or invalidate assessment proceedings. Sub-clause (5): Referral of Jurisdictional Challenge If an assessee raises a jurisdictional objection within the prescribed time, and the AO is not satisfied with the correctness of the claim, the AO must refer the matter for determination under sub-clause (2) or (3) before completing the assessment. This ensures that the assessment is not finalized until the jurisdictional question is resolved, thereby protecting taxpayer rights. Sub-clause (6): Powers of Assessing Officers This sub-clause provi....

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....ection 124(5)). Differences and Updates * Reference to Preceding Sections: * Clause 242 refers to directions/orders u/s 241 of the 2025 Bill, whereas Section 124 refers to section 120 of the 1961 Act. This reflects the renumbering and reorganization of provisions in the new Bill. * Specification of Authorities: * Section 124(2) explicitly lists authorities such as Principal Director General, Director General, Chief Commissioner, Commissioner, etc., whereas Clause 242 uses the generic term "specified income-tax authority." This may be intended to provide flexibility for future administrative reforms or restructuring. * Cross-References to Notices and Sections: * Clause 242(4) refers to notices u/ss 263(1), 268(1), 270(8), 280(2), 271(2), 247, 248, 153C(2), and 294(1)(a), whereas Section 124(3) refers to notices u/ss 115WD, 139, 142, 115WE, 143, 115WH, 148, 115WF, 144, 132, 132A, 153A, and 153C. The new Bill appears to consolidate or renumber certain procedural provisions, possibly to streamline procedures or adapt to changes in tax administration (such as faceless assessments). * Action under Search and Seizure: * Section 124(3)(c) specifically addresses actions u/s....

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.... defined elsewhere for clarity. Potentially streamlines administrative processes. Coverage of Search/Seizure Assessments Explicit reference to sections 132, 132A, 153A, 153C (search and requisition assessments). References to sections 247, 248 (presumably new equivalents), and cross-references to section 153C(2) of 1961 Act. Reflects updated legislative framework. Key Observations * While the structural and substantive framework remains largely unchanged, Clause 242 modernizes terminology and aligns cross-references with the new legislative scheme. * The use of "specified income-tax authority" rather than enumerating various designations may allow for greater flexibility as the administrative structure evolves. * The time limits and procedural bars on jurisdictional challenges are preserved, reflecting the legislative intent to prevent abuse of process and ensure timely assessments. * The preservation of AO powers, even in the face of jurisdictional disputes, is reaffirmed, ensuring continuity of tax administration. * The references to both new and existing section numbers (including cross-references to the 1961 Act) suggest a transitional approach, possibly to....