Who is an assessee under the Income-tax Act, 1961 (as set, 1961 Act, AY 2018-19)

Meaning of assessee

Section 2(7) treats as an assessee any person who is liable to pay tax, or any other sum of money (interest, a fee or a penalty, for instance), under the Act. The word person is itself defined widely in section 2(31): it covers an individual, a Hindu undivided family, a company, a firm, an association of persons or body of individuals, a local authority and every artificial juridical person. An assessee is therefore not only someone who ends the year owing tax.

Persons covered by the definition

Section 2(7) goes on to bring in three further groups:

1. A person against whom proceedings have begun (section 2(7)(a)). Anyone for whom a proceeding under the Act has been started is an assessee, whether the proceeding is to assess his own income, the income of someone else for whom he is answerable, a loss suffered by him or by that other person, or a refund owed to him or to that other person. A person who files a return of loss, or claims a refund, is an assessee even though no tax is due from him.
2. A deemed assessee (section 2(7)(b)). Some provisions treat a person as an assessee in place of another. The legal representative of a person who has died is one (section 159(3)); a representative assessee, such as the guardian of a minor or the agent of a non-resident, is another (section 160(2)).
3. An assessee in default (section 2(7)(c)). A person who was bound to deduct tax at source and fails to deduct it, or deducts it and does not pay it over, is deemed to be an assessee in default for that tax (section 201(1)).

Examples

• Ms. Riya, a salaried individual whose income for previous year 2017-18 is taxable, is an assessee for assessment year 2018-19 on her own income.
• A shop owner whose business made a loss and who files a return of that loss is an assessee because a proceeding to assess the loss has been taken.
• An employer that failed to deduct tax from its staff's salaries is an assessee in default.