I-T dept imposes Rs 944 cr penalty on IndiGo; airline to contest order

The Income Tax Department has issued an order against Interglobe Aviation Ltd, the parent company of IndiGo Airlines, imposing a penalty of Rs 944.20 crore. The company said the tax order is “erroneous and frivolous” and it will contest the order and take appropriate legal action, the company said in a filing on stock exchanges on Sunday. The order, which has been issued for assessment year 2021-22 (financial year 2020-21), was received by the company on Saturday.

“The Income Tax Authority has passed an order imposing a penalty of Rs 944.20 crore for the Assessment Year 2021-22. The order has been passed on the basis of an erroneous understanding that appeal filed by the Company before the Commissioner of Income Tax (Appeals) against the assessment order under Section 143(3) has been dismissed, whereas the same is still alive and pending adjudication,” the company said.

Assessment under Section 143(3) of the Income-tax Act is a detailed assessment, often termed as scrutiny assessment. As per the Income Tax Department’s FAQs, a detailed scrutiny of the return of income is carried out under this section to confirm the correctness and genuineness of various claims, deductions, etc., made by the taxpayer in the return of income.

IndiGo said it “strongly believes” that the order passed by Income Tax Authority is “not in accordance with law” and is “erroneous and frivolous”. “Accordingly, the Company will contest the same and shall take appropriate legal remedies against the aforesaid order,” it said, adding that it does not have any significant impact on financials, operations or other activities of the company.