Rules 262 to 265 of the Draft Income-tax Rules, 2026 establish the disciplinary procedure for addressing misconduct by authorised income-tax practitioners under Section 515 of the Income-tax Act.
Rule 262 provides that when the prescribed authority has prima facie evidence suggesting that a practitioner has committed misconduct in connection with income-tax proceedings, it must frame definite charges and communicate them in writing to the practitioner along with a statement of allegations. The practitioner is required to submit a written defence within the specified time and indicate whether a personal hearing is desired.
Rule 263 states that the prescribed authority may either conduct the inquiry itself or appoint an Inquiry Officer not below the rank of an Assistant Commissioner of Income-tax to investigate the matter, and the practitioner must be informed of such appointment.
Rule 264 governs the inquiry process, allowing the Inquiry Officer to examine documentary and oral evidence, while granting the practitioner the right to cross-examine witnesses and present evidence in defence. After completing the inquiry, the officer must prepare a report detailing findings and reasons on each charge.
Rule 265 empowers the prescribed authority to review the inquiry report and record its own findings, giving reasons if it disagrees with the Inquiry Officer. If misconduct is established, the authority may disqualify the practitioner from representing assessees for a specified period and remove the practitioner’s name from the official register, while providing a copy of the inquiry report and reasons for the decision to the practitioner.
Extract of Rule No. 262,263,264,265of Draft Income-tax Rules, 2026
Rule 262
Charge-sheet
Where the prescribed authority on the basis of information in its possession is of the opinion that prima facie an authorised income-tax practitioner is guilty of misconduct in connection with any income-tax proceedings, it shall frame definite charges against the income-tax practitioner and shall communicate them in writing to him together with a statement of the allegations in support of the charges. The authorised income-tax practitioner shall be required to submit within such time as may be specified by the prescribed authority a written statement of his defence and also to state whether he desires to be heard in person.
Rule 263
Inquiry Officer
The prescribed authority shall, unless it proposes to conduct the inquiry itself, appoint an Inquiry Officer, not below the rank of an Assistant Commissioner of Income-tax to conduct the inquiry and shall inform the authorised income-tax practitioner of the appointment of such an Inquiry Officer.
Rule 264
Proceedings before Inquiry Officer.
1. On receipt of the written statement of defence, or if no such statement is received within the time specified, the Inquiry Officer shall inquire into such of the charges as are not admitted.
2. The Inquiry Officer shall, in the course of the inquiry, consider such documentary evidence and take such oral evidence as may be relevant or material in regard to the charges. The authorised income-tax practitioner shall be entitled to cross-examine witnesses examined in support of the charges and to give evidence in person. If the Inquiry Officer declines to examine any witness on the ground that his evidence is not relevant or material, he shall record his reasons in writing.
3. At the conclusion of the inquiry, the Inquiry Officer shall prepare a report of the inquiry, recording his findings on each of the charges together with the reasons therefor.
Rule 265
Order of the prescribed authority.
1. The prescribed authority shall consider the report of the Inquiry Officer and record its findings on each charge and, where it does not agree with the findings of the Inquiry Officer, shall record the reasons for its disagreement.
2. If the prescribed authority is satisfied on the basis of its findings on the Inquiry Officer’s report that the authorised income-tax practitioner is guilty of misconduct in connection with any income-tax proceedings, it shall pass an order directing that the authorised income-tax practitioner shall be disqualified to represent an assessee under section 515(1) for such period as it may determine and his name shall be removed from the register for that period.
3. The prescribed authority shall while communicating its order under sub-rule (2) furnish to the authorised income-tax practitioner a copy of the report of the Inquiry Officer and a statement of its findings together with the reasons for disagreement, if any, with the findings of the Inquiry Officer.
