JAMIA MILLIA ISLAMIA

FACULTY OF LAW

TAX LAW ASSSIGNMENT

CONTENT
INTRODUCTION

“Taxes are the price that we pay to live in a civilized society.”

~ Justice Oliver Wendell Holmes. 1

Though as individuals, we don’t like the concept of parting with a share of our
hard-earned money, as a member of a civil society, paying taxes is not just
fulfilling our duties, but a very important aspect of the growth of the nation, which
directly or indirectly affects our very own growth. Governments need to collect
taxes in order to function. Federal, state and local governments impose tax
assessments against real property, personal property and income. The Income Tax
Act, 1961 (hereinafter referred to as the Act) is an Act to consolidate and amend

1
Quotes by Justice Oliver Wendell Holmes, available at:
th
https://www.goodreads.com/author/quotes/432185.Oliver_Wendell_Holmes_Jr_ ( last Visited On 10 may 2023)
the law relating to income tax. However, not everyone is liable to pay taxes on
income under the Act. The Act makes certain exceptions and exempts certain kinds
and extents of income from taxation. Those who are liable to pay tax and whose
incomes are assessed under the Act are known as “Assessees”. Section 2(7)2 of the
act defines an income tax assessee as anyone who is required to pay taxes on any
earned income or incurred loss in a single assessment year. Section 2(9)3 of the act
defines the term assessment year as, unless the context otherwise requires, the term
‘assessment year’ means the period of twelve months commencing on the 1st day of
April every year. Thus, the Govt. maintains its accounts for a period of 12 months
i.e. from 1st April to 31st March every year. As such it is known as financial year.
The income tax department has also selected same year for its assessment
procedure. “Assessee” can also be referred to as each and every person for whom:

1. Is there any action being taken under the act to evaluate his income?
2. The income of another person for which he is taxed?
3. Any loss incurred by him, or any other person or persons entitled to a tax refund.

Assessees can be categorized as,

1. Deemed Assessee
2. Representative Assessee
3. Normal Assessee
4. Assessee-in-default

2
Income Tax Act, 1961. S.2(7)
3
Ibid. S. 2(9)
Further, Under Section 2(31), a 'Person' is An Association of Persons (AOP) or a
Body of Individuals (BOI) or a Local Authority or an Artificial Juridical Person,
whether, such Person or Body or Authority or Juridical Person, was formed or
established or incorporated with the object of deriving income, profits or gains.4
Hence, assesses can be either natural persons or artificial judicial persons,
including but not limited to corporations, firms, trusts, local authorities etc.

The website of the Income Tax Department5 lists the following types, which shall
be included in the meaning of person who shall be liable to pay the income tax –

• An individual,
• A Hindu Undivided Family,
• A corporation,
• A firm,
• An ‘association or persons’ or ‘body of individuals’,
• A local authority,
• Any other artificial juridical person not falling in any of the above categories.

The focus area of this study is to delve into the meaning of assesses and what are
the different kinds of it who are liable to pay tax under the act. This paper shall
further analyze the lacunae presents in the present assigned topic and the
suggestions and conclusion shall be provided at the end to give this paper a proper
coherent structure.

I. DEFINITION OF ASSESSE

4
Ibid. S.2(31).
5 th
Income tax Department, India, available at: https://www.incometax.gov.in/iec/foportal/ (last visited on 10 may
2023)
According to Black’s Law dictionary, term assessee has originated from the word
assess which means to ascertain or fix the value of.6 In connection with taxation of
property, In the case of Montana-Dakota Power Co. v. Weeks,7it was held that
assesee means to make a valuation and appraisal of property, usually in connection
with listing of property liable to taxation, and implies the exercise of discretion on
the part of officials charged with duty of assessing, including the listing or
inventory of property involved, determination of extent of physical property, and
placing of a value thereon. According to Ballentine’s dictionary the word assess
means to list and value properties for the purpose of taxation.8 Further, it describes
that the word comes from the Latin words "ad," meaning "to," and "sedere,"
meaning "sit," through the Middle Latin "assessare," to "fix a rate" or "impose a
tax." Thus, within limitations, the word "assessment" and "tax" can be employed.9
According to the Indian Laws, the term assessee is a person who is liable to pay
any tax or any sum of amount payable or have any obligation to pay tax as per the
Section 2(7)10 of the Income Tax Act,1961.

Also assessee can be termed as each and every person for whom,
 Any proceedings have been taken under the act for the assessment of his
income
 Fringe benefits
 Income of any other person for whom he is considered accessible
 Any loss sustained by him or by such other person or
 Person entitled to any tax refund.11

6
Henry Campbell Black, Blacks Law Dictionary , p. 455 (St. Paul, Minn. West Publishing Co.
1968, 4th edn., 2021).
7
D.C.N.D., 8 F.Supp. 935, 936.

8
James A. Ballentine, VI Ballentine’s Law Dictionary 443 (Matthew Bender & Company,, 3rd edn., 2018).

9
Ibid.
10
Supra Note. 2
11
Who is an assesee, India, available at: https://tax2win.in/guide/who-is-an-assessee ( last visited on 13 May
2023)
 II. CATEGORIES OF ASESSEE ACCORDING TO THE INCOME TAX
ACT

“Assessee” means a person by whom income-tax or any other sum of money is

payable under the Act.12 It includes—

i. First category - A person (i.e., an individual ; a Hindu undivided family ; a

company ; a firm; an association of persons or body of individuals, whether
incorporated or not ; a local authority; and every artificial juridical person)
by whom any tax or any other sum of money (including interest and penalty)
is payable under the Act (irrespective of the fact whether any proceeding
under the Act has been taken against him or not).13

ii. Second category - A person in respect of whom any proceeding under the
Act has been taken (whether or not he is liable for any tax, interest or
penalty). Proceeding may be taken— a. either for the assessment of the
amount of his income or of the loss sustained by him ; or
b. of the income (or loss) of any other person in respect of whom he is
assessable ; or c. of the amount of refund due to him or to such other
person.14

12
Income Tax Act 1961.

13
Dr. V.K Singhania and Dr. Monica Singhania, VI Students Guide to Income Tax Including GST 4 (Taxmann
Publications (P.) Ltd, 62nd edn., 2020-21).

14
Ibid.
iii. Third category - Every person who is deemed to be an assessee. For
instance, a representative assessee is deemed to be an assessee by virtue of
section 160(2)15.

iv. Fourth category - Every person who is deemed to be an assessee in

default under any provision of the Act. For instance, under section 201(1),
any person who does not deduct tax at source, or after deducting fails to pay
such tax, is deemed to be an assessee in default. Likewise, under section
218, if a person does not pay advance tax, then he shall be deemed to be an
assessee in default.16
The details of the following categories or kinds of “Assessee” is discussed further.

III. KINDS OF ASSESSEE

Basically, from the above study, it can be noted that there are four types of
Assessee according to the Income Tax Act, 1961. They are,

1. Normal Assessee

An individual liable to pay taxes to the government for his income earned for a
particular financial year or who has already been paying taxes during the preceding
years belongs to the Normal Assessee category. Any individual who makes
payments to the government as interest or penalty or is entitled to receive a tax
refund under the IT Act too is an assessee and is grouped under the normal
assessee category.

2. Deemed Assessees

15
Supra Note 2. S.160(2)
16
Supra Note. 14
An individual given the responsibility by legal authorities to pay taxes for another
is a deemed assessee. The considered assesses usually:

i) Either the executors or legal heirs of a dead person. The dead person has
already passed on the property to the executors.

ii) If the departed person has not left a will, the elder son or another legal heir
can be considered an assessee.

iii) The guardian of a minor or a mentally unstable person is considered a

deemed assessee.

iv) In the case of a non-resident Indian with sources of income in India, his
agent is treated as a deemed assessee.

3. Assessee-in-Default

An individual who had failed to file his ITR within the stipulated period is an
assessee-in-default. An employer comes under this category if he does not submit
the TDS deducted from his employees' salaries to the government in time. Before
disbursing the compensation, an employer deducts the TDS amount from the same
and should submit it to the government. By failing to do so, he becomes an
assessee-in-default.

4. Representative Assessee

Sometimes an individual, besides filing ITR and paying his taxes, must do the
same for another party. By doing so, he becomes a representative assessee. This is
because he represents an individual(s) who cannot file and pay their taxes for
specific reasons. Mostly, non-residents, minors, or mentally unstable persons need
this assistance. Their representative assesses they are mostly their guardians or
agents.

IV. Income Tax Assessee - Duties and Responsibilities.

An Assessee must file their income tax returns and pay their taxes in time.
Sometimes, the assessee fails to file the ITR within the stipulated period. Under
such a circumstance, the IT department or the concerned assessing officer might
notify the assessee enquiring about the delay. It becomes mandatory for the
assessee to respond to the assessing officer stating the reason behind his inability to
file the return in time. He should also see that he files the ITR after receiving the
notice, as it is his responsibility to do so. Following are the duties and
responsibilities of an assessee:

1. Paying Taxes and filing the ITR

A major responsibility of an assessee (belonging to any category) is to pay the

taxes and also file the returns on time for each financial year. The tax return
should be filed by due date such as 31st July, 30th September, etc., or by the
extended date issued by the IT department relevant for each category.

2. When the Assessee fails to file an ITR during the stipulated period he
should do the following:

Even if the assessee has delayed filing his tax return for a financial year, he must
file the ITR immediately after receiving the notice from the department. After
filing the return, he should request the assessing officer to provide him with a copy
stating the reasons for the issuance of the notice. If the assessee is not satisfied
with the answer to his request and finds that the reasons are not valid, he can file
an objection challenging the notice.The assessee must make sure that he has
enough reasons to take recourse to the law against the notice issued to him by the
IT department. The assessee can also request the concerned officer provide other
reasons if the department does not entertain his claims. The assessee may also file
a writ petition in the high court challenging the legality of the notice before the
completion of the scheduled assessment or reassessment. The assessee can carry on
the same process even after completing the scheduled assessment. The assessee
must provide details of the income tax return within thirty days from the notice's
issuance date. The details of the income for which tax payment was delayed or
avoided and other related income details should be submitted to the concerned
officer to prevent complications. The assessee should clarify that he has requested
the assessing officer to explain why the notice was issued. He filed an objection
against the notice because he found the reasons unsatisfactory. Also, he has
objected to the validity of the notice knowingly.

3. Section 161 of Income Tax Act "Liability of representative assessee"

According to Section 16117. (1) Every representative assessee, as regards the
income in respect of which he is a representative assessee, shall be subject to the
same duties, responsibilities and liabilities as if the income were income received
by or accruing to or in favour of him beneficially, and shall be liable to assessment
in his own name in respect of that income; but any such assessment shall be
deemed to be made upon him in his representative capacity only, and the tax shall,
subject to the other provisions contained in this Chapter, be levied upon and
recovered from him in like manner and to the same extent as it would be leviable
upon and recoverable from the person represented by him.

Section 162 of Income Tax Act "Right of representative assessee to recover

tax paid"

Axx162. (1) Every representative assessee who, as such, pays any sum under this
Act, shall be entitled to recover the sum so paid from the person on whose behalf it
17
is paid, or to retain out of any moneys that may be in his possession or may come
to him in his representative capacity, an amount equal to the sum so paid.

(2) Any representative assessee, or any person who apprehends that he may be
assessed as a representative assessee, may retain out of any money payable by him
to the person on whose behalf he is liable to pay tax (hereinafter in this section
referred to as the principal), a sum equal to his estimated liability under this
Chapter, and in the event of any disagreement between the principal and such
representative assessee or person as to the amount to be so retained, such
representative assessee or person may secure from the Assessing Officer a
certificate stating the amount to be so retained pending final settlement of the
liability, and the certificate so obtained shall be his warrant for retaining that
amount.

(3) The amount recoverable from such representative assessee or person at the time
of final settlement shall not exceed the amount specified in such certificate, except
to the extent to which such representative assessee or person may at such time have
in his hands additional assets of the principal.