IndiGo Challenges ₹944 Crore Tax Penalty, Calls I-T Department’s Order ‘Baseless and Incorrect’

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IndiGo, India’s largest airline, has vowed to challenge the ₹944.20 crore tax penalty imposed by the Income Tax Department, calling the order “erroneous and frivolous.” The airline’s parent company, InterGlobe Aviation, received the penalty order on Saturday, prompting IndiGo to announce its intent to seek legal remedies.

IndiGo’s Response to the Tax Order

In a regulatory filing, IndiGo clarified that the penalty pertains to the 2021-22 assessment year. The airline argued that the Income Tax Authority’s assessment was based on an incorrect assumption that its appeal before the Commissioner of Income Tax (Appeals) (CIT(A)) had been dismissed. However, IndiGo asserted that the appeal is still active and awaiting adjudication.

“The order has been passed on the basis of an erroneous understanding that the appeal filed by the company before CIT(A) against the assessment order under Section 143(3) has been dismissed, whereas the same is still alive and pending adjudication,” IndiGo stated.

Legal Challenge and Financial Impact

The airline reaffirmed its stance on Sunday evening, emphasizing that the tax order is not in accordance with the law. It also assured stakeholders that the penalty would not significantly impact its financials, operations, or other activities.

“The company will contest the same and shall take appropriate legal remedies against the order,” IndiGo’s statement read.

Tax Disputes in the Aviation Industry

The aviation sector frequently faces taxation and compliance challenges, leading to scrutiny by tax authorities. Experts note that such disputes are common, with companies often challenging tax assessments through appellate processes.

According to financial analysts cited by The Times of India, while the ₹944 crore penalty is substantial, IndiGo’s strong financial position should help cushion any immediate strain.

“IndiGo is in a solid financial position, and while this is a large amount, the company’s decision to contest the order is a standard response in such cases,” a senior tax consultant told The TOI.

Sources By Agencies