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Income Tax Assessee under the Income Tax Act

Updated on: May 2nd, 2023

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7 min read

In accordance with the provisions of the Income Tax Act, 1961, an income tax assessee is an individual who pays tax or any sum of money.

According to Section 2(7) of the act, an income tax assessee is defined as someone who is obligated to pay taxes on earned income or incurred losses in a single assessment year. This term also includes individuals who fall under the following criteria:

1. Those who are subject to evaluation of their income under the act.

2. Individuals for whom the income of another person is taxed.

3. Those who have incurred losses and are entitled to a tax refund, as well as any other affected individuals.

The Income Tax Act defines several categories of "persons" who are subject to income tax:

1. Individual

2. Hindu Undivided Family

3. Partnership Firm

4. Company

5. Association of Persons (AOP) or Body of Individuals (BOI)

6. Local Authority

7. Artificial Judicial Body (not covered by any of the above categories)

Normal Assessee

An individual who is obligated to pay taxes on the income earned during a financial year is known as a normal assessee. This applies to every individual who has earned income or incurred losses in previous financial years and is liable to pay taxes in the current financial year.

Normal assessees include individuals who pay interest or penalties, or those expecting a tax refund. For example, consider a salaried individual named Mr. A, who has consistently paid taxes on time for the past 5 years. Mr. A is considered a normal assessee under the Income Tax Act, 1961.

Representative Assessee

A representative assessee is someone who is liable to pay taxes on behalf of a third party who has incurred income or losses. This situation arises when the individual liable for taxes is a non-resident, minor, or mentally incapacitated. These individuals are unable to file taxes themselves, so they rely on agents or guardians to represent them.

Let's take the case of Mr. X, who has been residing abroad for 7 years. While he is away, he receives rental income from two properties he owns in India. Mr. X seeks the assistance of his relative, Mr. Y, to file taxes in India. In this scenario, Mr. Y acts as a representative assessee. If the assessing officer decides to investigate the tax filing, Mr. Y will be required to provide the necessary documents as the guardian of the properties and representative of Mr. X.

Deemed Assessee

A deemed assessee is an individual who is assigned the responsibility of paying taxes by legal authorities. This includes:

1. The eldest son or legal heir of a deceased person who did not leave a will.

2. The executor or legal heir of a deceased person's property, as written in the will.

3. The guardian of a mentally incapacitated person or minor.

4. The agent of a non-resident Indian receiving income from India.

For instance, Mr. P owns a commercial building from which he earns rental income. He has written a will stating that the property should be transferred to his niece after his death. Upon his demise, his niece becomes the executor of the property, i.e. deemed assessee. She will be responsible for paying taxes on the rental income.

Assessee-in-default

An assessee-in-default is an individual who fails to fulfill their statutory obligations as per the income tax act, such as not paying taxes or filing their income tax return. For example, an employer is required to deduct taxes from employees' salaries and submit them to the government by the specified due date. If the employer fails to do so, they will be considered an assessee-in-default.

Roles/Responsibilities and Duties of an Assessee

Assessees are responsible for filing their returns on time and paying their taxes promptly. However, there are instances where an assessee may fail to file their return within the prescribed timeline. In such cases, they may receive a notice from the Income Tax department or the relevant Assessing Officer, requesting an explanation for the delay. The assessee must respond to the officer's query and file their returns as soon as possible.

Let's take a closer look at the roles and responsibilities of an assessee when receiving a notice:

1. Upon receiving the notice, the assessee must file their tax returns for the relevant assessment year.

2. After filing the returns, they may request a copy from the assessing officer, which states the reasons for issuing the notice.

3. If the assessee believes the reasons cited in the copy are invalid, they have the right to file an objection and question the legality of the notice.

4. The assessee must ensure they have valid reasons for filing the objection and challenging the government's notification.

5. If the officer dismisses the objections, the assessee may request additional explanations from the Assessing Officer.

6. The assessee can choose to contest the legitimacy of the notice even before the planned assessment or re-assessment is completed by filing a writ petition with the relevant High Court.

7. Even after the planned assessment is completed, the assessee can challenge the legitimacy of the notice by filing a writ petition with the respective High Court.

8. The assessee must provide relevant income details within 30 days of the notice's issuance date, not the date of receiving the notification. It is important to clearly state the income subject to tax payment and provide all associated income details to the authorities to avoid complications later on.