Try creating a table with a default value of "Y" instead of inserting values after that.
alter table tb1 add col1 varchar(1) not null DEFAULT ('Y')
You will need GObetween two rows to create the table according to the documentation GO:
SQL Server utilities interpret GO as a signal that they should send the current batch of Transact-SQL statements to an instance of SQL Server.
GO .
EDIT
EXEC :
EXEC ('alter table tb1 add col1 varchar(1) null')
EXEC ('update tb1 set col1 = ''Y''')