Deemed assessee in default where obligated persons fail to deduct or remit tax, with penalties conditional on officer satisfaction.

If a person, including a principal officer or employer required to deduct tax at source, does not deduct, does not pay, or after deduction fails to pay any part of the tax required by the Act, that person shall be deemed to be an assessee in default; however, a penalty under the relevant penalty provision shall not be charged unless the Assessing Officer is satisfied that the person, without good and sufficient reasons, failed to deduct and pay the tax.

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