NEW DELHI: InterGlobe Aviation, the parent company of IndiGo, has been issued a penalty of Rs 944.20 crore by the Income Tax Department for the assessment year 2021-22. The airline, however, has rejected the order, calling it “erroneous and frivolous,” and has vowed to challenge it through legal means.
IndiGo to challenge tax order
The penalty order was received on Saturday, August 24, and IndiGo disclosed the development in a regulatory filing on Sunday. According to the airline, the Income Tax Authority’s assessment unit passed the order under Section 143(3) of the Income Tax Act, which deals with scrutiny assessments. However, IndiGo maintains that the order is based on a misunderstanding.
“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) (CIT(A)) against the assessment order under Section 143(3) has been dismissed, whereas the same is still alive and pending adjudication,” IndiGo stated in its filing.
Legal action in the pipeline
IndiGo has reiterated that it will contest the order and pursue all available legal remedies. “The company strongly believes that the order passed by the Income Tax Authority is not in accordance with law and is erroneous and frivolous. The company will contest the same and shall take appropriate legal remedies against the order,” the airline said in an official statement issued on Sunday evening.
No immediate impact on operations
Despite the significant penalty amount, IndiGo assured stakeholders that the order does not pose an immediate threat to its business. “The order does not have any significant impact on financials, operations, or other activities of the company,” the airline stated.
Background and industry implications
IndiGo, India’s largest airline by market share, has been a dominant force in the aviation sector. However, taxation and compliance issues have often put airlines under scrutiny. Experts believe that such tax disputes are not uncommon in the industry, and companies frequently challenge these assessments through appellate mechanisms.
Financial analysts suggest that while the penalty is sizable, IndiGo’s strong balance sheet should cushion any immediate financial 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,” said a senior tax consultant.