For Section 270AA immunity, Assessing Officers cannot demand negative evidence of non-filing of appeal.

The petitioner, engaged in letting out immovable property, filed its return for AY 2024–25 declaring income of ₹5,43,52,210 under “Profits and Gains of Business and Profession.”

In assessment proceedings under Sections 143(3) read with 144B of the Income Tax Act, 1961, the income was assessed under the head “Income from House Property” at ₹6,68,07,690, and penalty proceedings under Section 270A were initiated for alleged under-reporting of income.

The petitioner paid the demand of ₹37,99,340 on 22 April 2026, before the due date of 26 April 2026, and filed Form No. 68 under Section 270AA(2) on 27 April 2026 seeking immunity from penalty.

After issuing notices, the Assessing Officer rejected the immunity application on 30 July 2026, recording, inter alia, that no reply had been filed, although the petitioner had submitted a reply on 29 July 2026 and the Department had viewed it on 30 July 2026.

The petitioner challenged the rejection before the Delhi High Court.

1. Whether the Assessing Officer was justified in rejecting the petitioner’s application under Section 270AA by recording that no reply had been filed, despite the petitioner having submitted a reply which was available on record.

2. Whether the Assessing Officer could require the petitioner to furnish documentary proof of the negative fact that no appeal had been filed against the assessment order.

3. Whether the rejection order dated 30 July 2026 was liable to be set aside for failure to consider the petitioner’s reply and the material on record.

The Court applied Section 270AA of the Income Tax Act, 1961, which enables an assessee satisfying the statutory conditions—including payment of tax and interest, non-filing of an appeal, and timely application in the prescribed form—to seek immunity from penalty proceedings under Section 270A.

Section 270A governs penalty for under-reporting or misreporting of income.

The Court further held that an assessee cannot ordinarily be required to produce “negative evidence” proving that no appeal has been filed; the Assessing Officer may instead obtain an appropriate declaration from the assessee, including an undertaking concerning withdrawal or deemed withdrawal of any appeal.

An administrative or quasi-judicial authority must consider the reply and relevant material before passing an objective and reasoned order.

The Court found that the petitioner had filed its reply dated 29 July 2026 and that the reply had been viewed by the respondent on 30 July 2026, yet the impugned order incorrectly recorded that no reply had been filed.

Consequently, the Assessing Officer had failed to consider material directly relevant to the Section 270AA application.

The Court also held that the demand for documentary proof of non-filing of an appeal was misconceived because the petitioner was being asked to establish a negative fact; Form No. 68 itself already contained the relevant declaration.

Since the rejection was based on an erroneous factual premise and the petitioner’s statutory application had not been objectively considered, the order could not be sustained.

The Assessing Officer was directed not to insist on negative evidence of non-filing of an appeal and could instead obtain an appropriate declaration from the assessee.

A fresh order was required to be passed on or before 15 October 2026; until the Section 270AA application was decided, the Faceless Assessing Officer was restrained from proceeding further with the penalty notice under Section 270A.