Meaning of Assessee u/s 2(7) of the Income Tax Act 1961.

Meaning of Assessee u/s 2(7) of the Income Tax Act 1961.

So, you want to know what is the meaning of “Assessee” u/s 2(7) of The Income Tax Act 1961?

You are in the right place.

Here, you can find not only the meaning of “Assessee” but also its explanation with example.

Let’s start the discussion.

Who is an Assessee?

Are you liable to pay tax?

Then you are an assessee.

No matter you are liable to pay for your own income or for the income of any other person.

Normally when we are talking in general sense then you can say “an assessee is one who pays the tax”.

But for the purpose of income tax, the definition of the assessee is not so easy.

What is the definition?

Let’s go.

Meaning of Assessee u/s 2(7) of the Income Tax Act 1961

An “Assessee” is a Person who is liable to pay tax or any other sum of money (Interest or Penalty) under the Income Tax Act, 1961 and includes:

  • a person in respect of whom any proceeding under the Act has been taken for the assessment of his income or loss or for the amount of refund due to him or for the assessment of income or loss of any other persons;
  • a person who is deemed to be an assessee;
  • a person who is deemed to be an assessee in default under any provision of the Act.

The above definition is in accordance with the Income Tax Act, 1961.

Now we discuss the above definition with proper explanation.

Normal Assessee

Let’s take an example.

Mr. X is an individual.

He is liable to pay tax and accordingly he has filed his return. In this case, Mr. X is a normal assessee. Not only tax, if Mr.X is liable to pay any interest or penalty, in that case also he is a normal assessee.

Again. if he suffers any loss or any refund is due to him, he will be considered as a normal assessee.

Now, if we think in another way. Suppose Mr. X is not liable to pay tax or interest or penalty. Further, he has not incurred any loss or no refund is due to him.

You can say Mr. x is not an assessee.

But in the meantime, Mr. X received a letter of inquiry from the Income Tax Department for the assessment of his income/loss/refund. In that case, also Mr.X will be treated as an assessee.

Hence, in the following cases, a person can be treated as normal assessee:

  • Who is liable to pay taxes for the income earned by him during the previous year;
  • Who is liable to pay interest or penalty under the Income Tax Act.1961;
  • Any person who is eligible for any refund;
  • Any person who suffers a loss during the previous year and file return according to it.
  • Against whom any proceeding has been taken under the act for the assessment of his income or loss or refund due to him.

Representative Assessee

It may also happen that a person is liable to pay income tax for the income or loss incurred by any other person.

In that case, he will be treated as a representative assessee.

For example, Mr. X is a guardian of a minor. That minor has earned some taxable income. In this case, Mr. X is liable to pay the tax on behalf of such minor.

Mr. X is treated as an assessee.

Suppose, the minor has no taxable income. But a legal proceeding has been taken for the assessment of his income/loss/refund. In that case also Mr.X is treated as an assessee or you can say a representative assessee.

Not only minor, if Mr. X is a guardian of a lunatic, then also he may be treated as a representative assessee.

Deemed Assessee

Let’s take an example.

Mr.Y is a non-resident in India. He has some business in India.

For the management of his business, he appoints Mr.X as his agent.

Here Mr.X is treated as deemed to be an assessee.

A person is treated as deemed to be an assessee when he is responsible to pay tax on behalf of some other person.

Like Mr.X, who is responsible to pay tax on behalf of Mr. Y.

Similarly, the legal heir of a deceased person is also a deemed assessee.

Hence, you can say the following are the deemed assessee:

  • Agent of a non-resident.
  • Legal Representative of a deceased person.
  • The legal guardian of a minor or a lunatic.
  • The executor of the property of a deceased person, etc.

Deemed to be an Assessee in Default.

Income Tax Act provides us some responsibility.

Such as paying tax on time, deduction of tax and pay it on time, etc.

If you fail to do so, you will be deemed to be an assessee in default.

For example, Mr. X is an employer. Hence his duty is to deduct tax at source and pay it within the due date. But he fails to do so.

In that case, Mr.X is treated as an assessee in default.

In the following cases, a person is treated as an assessee in default if he:

  • Fails to pay tax.
  • Fails to pay advance tax.
  • Fails to pay interest or penalty.
  • Fails to deduct tax at source.
  • Fails to pay TDS within the due date, etc.

Final Word

I hope you have a clear idea about the meaning of assessee u/s 2(7) of the Income Tax Act 1961.

In case of any query, feel free to comment here.

I will provide you the information.

Until then, thank you. Good By.

Ta-Da.

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