Assessee in Default-Consequences

As per Income Tax Act, 1961 the term “assessee in default” has nowhere been defined. However the term, in general is interpreted to refer to an assessee who has defaulted in discharging its obligations with respect to payment of tax, interest etc. under Income tax.

There is a widespread belief that an assessee becomes in default only when the assessee fails to honour the notice of demand issued under section 156 which is totally misplaced. There are many deeming sections which render assessee in default directly without the requirement of issuance of any notice.

E.g. Section 201 (1) of Income Tax Act expressly states that any person liable to deduct TDS on the income distributed, makes default in the deduction and/or payment of TDS, shall be treated “assessee in default” and penalty u/s 221 of Income Tax Act shall be payable by such assessee. section-201-interest-late-payment-tds

Also refer:   assessee-in-default

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