Court says Assessing Officer cannot demand “negative evidence” to prove no appeal was filed and must consider the assessee’s reply before rejecting immunity from penalty proceedings.
The Delhi High Court has set aside an order of the Assessing Officer rejecting a company’s application for immunity from penalty proceedings under Section 270AA of the Income Tax Act, 1961, holding that the officer had ignored the taxpayer’s reply and wrongly insisted on proof of a negative fact — that no appeal had been filed against the assessment order.
The petition was filed by Shantijanak Estates Private Limited, which challenged the assessment-related penalty proceedings initiated after its income for assessment year 2024-25 was revised in an order passed under Section 143(3) read with Section 144B. The Assessing Officer had treated the case as one of under-reporting of income and initiated penalty proceedings under Section 270A.
According to the court record, the company paid the entire outstanding demand of Rs. 37,99,340 before the due date and then filed Form 68 seeking immunity under Section 270AA(2). However, the Assessing Officer later issued a notice asking why the immunity request should not be rejected, stating that the assessee had not established payment of tax and interest and had not produced documentary proof that no appeal had been filed against the assessment order.
The petitioner responded to that notice the very next day, but the Assessing Officer passed the impugned order the same day, stating that no reply had been filed. The High Court found this approach unsustainable, noting that the reply was in fact on record and that the officer had failed to consider it.
A key part of the judgment deals with the requirement of proving that no appeal has been preferred. The court observed that an assessee cannot be asked to furnish “negative evidence” to establish that no appeal has been filed. At most, the Assessing Officer may obtain a declaration from the taxpayer that no appeal has been filed and that if any appeal has been filed, it will be withdrawn or deemed withdrawn. The court also noted that Form 68 already contained such a declaration, making the notice demanding further proof “an empty formality.”
Holding that the impugned order had been passed without considering the petitioner’s reply and without objective examination of the material on record, the court set it aside and directed the Assessing Officer to pass a fresh order in accordance with law.
Until the immunity application is decided afresh, the court also restrained the Faceless Assessing Officer from proceeding further with the penalty notice issued under Section 270A.
Bottom Line :
Income Tax Act - Immunity from penalty proceedings under Section 270AA - Assessing Officer cannot insist upon negative evidence from assessee to prove that no appeal has been filed - declaration in Form 68 is sufficient - order rejecting immunity application without considering assessee's reply is liable to be set aside.
Statutory provision(s): Section 270AA, Section 270AA(2), Section 270A, Section 143(3), Section 144B, Income Tax Act, 1961
