Section 409 — When assessee is deemed to be in default. Successor to s.218 of the 1961 Act.
Section 409 is in Chapter XIX — Collection and Recovery of Tax, which runs from section 390 to section 430.
It identifies three failures that make a person a deemed assessee in default in respect of the instalment or instalments concerned: not paying, on the date specified in section 408, an instalment of advance tax he is required to pay by an order of the Assessing Officer under section 407(1) and (4); not sending the Assessing Officer the intimation under section 407(8) on or before the date the unpaid instalment falls due; and not paying, on the basis of his own estimate of current income, the advance tax payable under section 407(9). Each limb is tied to section 407 — the Assessing Officer's order and the assessee's response to it — rather than to advance tax the assessee computes for himself.
Where the Assessing Officer has ordered advance tax, the assessee must either pay the ordered instalment, or tell the officer why a lower estimate applies and pay on that estimate; failing either, the section makes him an assessee in default so that the recovery machinery can be used.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Date by which the intimation under section 407(8) must reach the Assessing Officer | On or before the date the unpaid instalment becomes due | Failure to do so is itself a deemed default in respect of that instalment | 409(b) |
If an order under section 407 has been served on you and you disagree with the figure, the safe course is to send the section 407(8) intimation before the instalment falls due and pay on your own estimate under section 407(9) — doing neither, or doing one without the other, puts you in default. Default is measured instalment by instalment, so a single missed instalment is enough for the consequences to attach in respect of it. The section defines the status only; the consequences of being an assessee in default come from elsewhere in this Chapter.
The Assessing Officer passes an order under section 407(1) requiring a firm to pay advance tax, and an instalment falls due on a date specified in section 408. The firm, believing its current income will be far lower, pays nothing — but it also fails to send the Assessing Officer the intimation under section 407(8) on or before that due date, and pays nothing on the basis of its own estimate under section 407(9). Each of clauses (a), (b) and (c) is failed, and the firm is a deemed assessee in default in respect of that instalment, so the recovery machinery opens. Sending the intimation alone would not have saved it either: clause (c) still requires payment of advance tax on the assessee's own estimate.
You meet it only after an order of the Assessing Officer under section 407 requiring advance tax — in the demand and recovery that follow a missed instalment, and in the intimation under section 407(8) you were expected to have sent by that instalment's due date. A shortfall in advance tax you computed for yourself is not this section's concern.
A person shall be deemed to be an assessee in default, if such person— (a) does not pay on the date specified in section 408, any instalment of the advance tax that he is required to pay by an order of the Assessing Officer under section 407(1) and (4)
See the full 1961 to 2025 concordance.