As per S.2(7) of the Income Tax Act, 1961, unless the context otherwise requires, the term “assessee” means a person by whom any tax or any other sum of money is payable under this Act, and includes-

(a) every person in respect of whom any proceeding under this Act has been taken for the assessment of his income or assessment of fringe benefits or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or of the amount of refund due to him or to such other person;

(b) every person who is deemed to be an assessee under any provision of this Act;

(c) every person who is deemed to be an assessee in default under any provision of this Act.

Normally the term ‘Assessee’ is considered as one who is supposed to pay tax. However, its advisable to understand complete meaning of the term as envisaged under the Income Tax Act, as above.

Definition of Assessee :

Assessee [Section 2(7)] : Assessee means a person by whom any tax or any other sum of money is payable under this Act. It includes every person in respect of whom any proceeding has been taken for the assessment of his income or assessment of fringe benefits. Sometimes, a person becomes assessable in respect of the income of some other persons. In such a case also, he may be considered as an assessee. This term also includes every person who is deemed to be an assessee or an assessee in default under any provision of this Act.

To better understand the term assessee based on above definition, we need to understand the following as well:

a. Normal Assessee

• any person against whom proceedings under Income Tax Act are going on, irrespective of the fact whether any tax or other amount is payable by him or not;
• any person who has sustained loss and filed return of loss u/s 139(3);
• any person by whom some amount of interest, tax or penalty is payable under this Act;
• any person who is entitled to refund of tax under this Act.

b. Representative Assessee

A person may not be liable only for his own income or loss but he may also be liable for the income or loss of other persons e.g. agent of a non-resident, guardian of minor or lunatic etc. In such cases, the person responsible for the assessment of income of such person is called representative assesses. Such person is deemed to be an assessee.

Meaning of ‘representative assessee’ :

Section 160(1)(i) defines the expression “representative assessee‟ for all purposes of assessment to income -tax to mean the agent of a non-resident in respect of the income of the non-resident which is deemed to accrue or arise to him in India under section 9(1) of the Income-tax Act, 1961. The expression “agent‟, in this context, must also be taken to include a person who is treated or deemed to be an agent by the Assessing Officer for the purposes of making assessment on him under section 163 of the Income-tax Act, 1961.

The term “assessee‟ under section 2(7) include a representative assessee within its scope. The Assessing Officer is statutorily empowered to issue notice under section 163 to any person to deem him as the agent of the non-resident foreign collaborator. The term „agent‟ should, for this purpose, be taken to include:

(i) any person in India who is employed by or on behalf of the non-resident; or

(ii) any person in India who has any business connection with the non-resident within the meaning of Explanation 2 to section 9(1)(i); or

(iii) any person in India from or though whom the non-resident is in receipt of any income, whether directly or indirectly; or

(iv) any person in India who is the trustee of the non-resident; or

(v) any person in India who, whether resident or non-resident, has acquired by means of a transfer, a capital asset in India.

However, a broker in India who in respect of any transaction does not deal directly with or on behalf of a non-resident principal but deals with or through a non-resident broker should not be deemed to be an agent under section 163(1) in respect of the income attributable to those transactions provided both the following conditions are fulfilled:

(a) the transactions must be carried on in the ordinary course of business through the first mentioned broker; and

(b) the non-resident broker must be one who carries on such transactions in the ordinary course of his business and not as a principal.

c. Deemed Assessee

• In case of a deceased person who dies after writing his will the executors of the property of deceased are deemed as assessee.
• In case a person dies intestate (without writing his will) his eldest son or other legal heirs are deemed as assessee.
• In case of a minor, lunatic or idiot having income taxable under Income-tax Act, their guardian is deemed as assessee.
• In case of a non-resident having income in India, any person acting on his behalf is deemed as assessee.

d. Assessee-in-default

A person is deemed to be an assessee-in-default if he fails to fulfill his statutory obligations. In case of an employer paying salary or a person who is paying interest, it is their duty to deduct tax at source and deposit the amount of tax so collected in Government treasury. If he fails to deduct tax at source or deducts tax but does not deposit it in the treasury, he is known as assessee-in-default.