AO Cannot Demand Negative Proof for Section 270AA Immunity: Delhi HC

Shantijanak Estates Private Limited Vs ACIT (Delhi High Court)

Negative Evidence- AO Cannot Demand Proof That No Appeal Was Filed: Delhi HC Quashes Rejection of Section 270AA Immunity Application

Summary: In Shantijanak Estates Private Limited v. Assistant Commissioner of Income Tax, Circle 22(2), Delhi & Another, W.P.(C) 12741/2026, judgment dated 17.09.2026, the Delhi High Court set aside an order rejecting the assessee’s application for immunity from penalty under section 270AA. The Court held that an Assessing Officer cannot require an assessee to produce “negative evidence” proving that no appeal has been filed against the assessment order. At the most, the AO can obtain a declaration from the assessee to that effect.

The petitioner-company was engaged in the business of letting out immovable property. For AY 2024-25, it declared a total income of ₹5,43,52,210 under the head “Profits and Gains of Business or Profession.” The assessment was completed under section 143(3) read with section 144B by an order dated 27.03.2026. The Assessing Officer assessed the rental income under the head “Income from House Property” and determined the total income at ₹6,68,07,690.

While passing the assessment order, the AO initiated penalty proceedings under section 270A on the allegation that the assessee had under-reported its income.