Section 401 — Bar against direct demand on assessee

Old Act equivalent: Section 205 of IT Act 1961 Sub-part: B.—Deduction and collection at source

Statutory Text

Where tax is deductible at the source under this Chapter, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income.

This section is a single provision without sub-sections.

None.

None.

None.

Applies to: Any assessee from whose income TDS has been deducted under this Chapter.
Conditions: Tax must be deductible at source under this Chapter.
Exceptions: Protection extends only to the extent tax has been actually deducted from that income. If tax was deductible but not deducted, this bar does not apply to protect the assessee.

s392 — TDS on salary; bar applies to the employee-assessee to the extent salary TDS has been deducted.
s393 — TDS on non-salary payments; bar applies to payee-assessee to the extent TDS has been deducted.
s398 — assessee-in-default provisions override this bar for the deductor who fails to deduct or remit, not for the payee-assessee.

None noted from the extracted pages.

This is a protective provision for the payee-assessee — prevents the department from demanding the same tax twice (once from the deductor and again from the assessee).
The bar operates only “to the extent to which tax has been deducted” — if the deductor short-deducts or fails to deduct entirely, the assessee remains liable for the shortfall.
Important distinction: this section protects the recipient of income (assessee), not the person responsible for deduction (deductor). The deductor’s default is governed by section 398.
In practice, disputes arise when TDS is deducted but not deposited to the government — the assessee is still protected under this section as long as deduction was made from the income, even if the deductor defaults on deposit.
This provision is frequently invoked in appeals where demand is raised on the assessee despite TDS being reflected in Form 26AS / AIS.