Rule 249 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 249 of the Income-tax Rules, 2026 lets the Principal Chief Commissioner, Chief Commissioner, Principal Director General or Director General remove a valuer's name for error, misrepresentation, conviction, malpractice or misconduct, restore it on sufficient cause, and requires a five-yearly performance review.
The two grounds for removal
Sub-rule (1) of rule 249: the Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Director General of Income-tax or Director General of Income-tax may remove a name from the register of valuers where satisfied — after giving a reasonable opportunity of being heard and after such further inquiry, if any, as he thinks fit — of either of:
| Clause | Ground |
|---|---|
| (a) | The name was entered in the register by error, or on account of misrepresentation or suppression of a material fact |
| (b) | He has been convicted of any offence and sentenced to a term of imprisonment, or has been guilty of any malpractice or misconduct in his professional capacity which, in the authority's opinion, renders him unfit to be kept in the register |
The first ground in rule 249(1) is error — the name should never have been entered. That is not a charge of wrongdoing and needs none: a registration granted on a mistaken view of the applicant's qualification can be undone under clause (a) years later. What protects the valuer is procedural rather than substantive: the reasonable opportunity of being heard applies to both grounds, and so does the authority's power to make further inquiry. Where the ground is error, the hearing is the place to show there was none.
Note the drafting of clause (b). A conviction with a sentence of imprisonment is one limb; malpractice or misconduct in a professional capacity is the other, and that limb is expressly filtered through the authority's opinion that it renders him unfit. Not every professional lapse requires removal — the rule asks whether the person should stay on the register.
Restoration
Sub-rule (2) is a single line and is the whole of the way back: the same authority may, on application and on sufficient cause being shown, restore to the register the name of any person removed from it.
There is no waiting period in rule 249, no bar on restoration after any particular ground of removal, and no prescribed form. What the rule requires is an application and sufficient cause. Removal under this rule is therefore not necessarily permanent, which is a material difference from a disqualification that runs for a fixed period.
The five-yearly review
Sub-rule (3): without prejudice to sub-rules (1) and (2), the authority shall, once in five years, review the performance of all the registered valuers — and may remove a name where satisfied, after a hearing and any further inquiry, that his performance is such that his name should not remain on the Register of Valuers.
Sub-rule (3) of rule 249 does something the two grounds in sub-rule (1) do not. Neither error nor misconduct is in issue; the test is performance. And the review is mandatory — shall, once in five years, for all registered valuers, not merely those against whom something has been alleged. Read with rule 246(6), which requires a registered valuer to pass a notified examination, the 2026 scheme treats registration as something to be periodically re-earned rather than held indefinitely. A valuer should be able to show, every five years, a body of work that stands up.
Who inquires, and with what powers
Sub-rule (4): the authority may conduct the sub-rule (1) or sub-rule (3) inquiry himself, or appoint an Inquiry Officer not below the rank of Joint Commissioner of Income-tax. For that inquiry, both the authority and the Inquiry Officer have the same powers as are vested in a court when trying a suit in respect of:
- discovery and inspection;
- enforcing the attendance of any person, including any officer of a banking company, and examining him on oath;
- compelling the production of books of account and other documents; and
- issuing commissions.
Rule 249(4) as printed gives those powers by reference to a court under the Bharatiya Nyaya Sanhita, 2023. The BNS is the penal code — it defines offences and punishments and vests no court with powers "when trying a suit". Rule 268 of the very same Rules uses the identical four-item formula for the income-tax practitioner inquiry and cites the Code of Civil Procedure, 1908, which is where those powers actually come from. The inconsistency is internal to these Rules and the intended source is not in doubt. The printed wording is reproduced here rather than silently amended; the four powers themselves are stated identically in both rules and are not affected.
Note the rank. The Inquiry Officer under rule 249 must be not below Joint Commissioner; for an income-tax practitioner inquiry under rule 263 the floor is Assistant Commissioner. The valuer inquiry is pitched higher.
Worked example
| Facts | Position under rule 249 |
|---|---|
| Registration granted on a qualification the applicant did not hold | Removal available under clause (a) — error or misrepresentation |
| Valuer suppressed a prior penalty order when applying | Suppression of a material fact — clause (a) |
| Valuer convicted and sentenced to imprisonment | Clause (b), first limb |
| Valuer reprimanded by his institute for a minor lapse | Removal only if the authority forms the opinion it renders him unfit |
| Removal ordered without a hearing | Contrary to sub-rule (1), which requires a reasonable opportunity |
| Valuer removed three years ago now applies to return | Restoration available on sufficient cause — no waiting period in the rule |
| Five-yearly review shows a pattern of unsupported valuations | Removal available under sub-rule (3) without any misconduct finding |
| Inquiry Officer appointed at Deputy Commissioner rank | Below the floor — sub-rule (4) requires not below Joint Commissioner |
| Inquiry Officer summons a bank officer | Within the powers listed in sub-rule (4) |
Compliance checklist
- On any show-cause under rule 249, identify which of the three grounds is being invoked.
- Insist on the reasonable opportunity of being heard — it applies to all three.
- Where the ground is error, use the hearing to establish the qualification actually held.
- Where it is professional misconduct, address the unfitness question, not merely the lapse.
- Check the Inquiry Officer's rank is not below Joint Commissioner.
- Keep working papers against the five-yearly performance review.
- After removal, consider an application for restoration on sufficient cause.
- Track this alongside rule 246(6) — an unpassed examination cancels registration independently.
Common mistakes
- Treating removal as available only for misconduct, when error alone suffices under clause (a).
- Assuming removal is permanent when sub-rule (2) allows restoration.
- Ignoring the five-yearly review until a notice arrives.
- Overlooking the Inquiry Officer's minimum rank.
- Confusing this removal with cancellation under rule 246(7) for failing the examination — different trigger, no hearing there.
Which year this governs
The Income-tax Rules, 2026 are made under the Income-tax Act, 2025. Rule 249 has no 1962 parallel — the predecessor register of valuers sat under the Wealth-tax Act, 1957. Verify the current text before responding to a show-cause notice.