Why Did IndiGo Get Slammed with a Rs 944 Crore Tax Penalty?

Calling the recent penalty action by the Income Tax Authority 'erroneous,' InterGlobe Aviation, the parent company of IndiGo, has stated that the penalty imposed by the Income Tax Department is based on wrong assumptions, as its appeal against a previous tax assessment is still pending and under consideration.

"The order has been passed on the basis of an erroneous understanding that the 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," the exchange filing states on Sunday.

IndiGo highlighted that a penalty of Rs 944.20 crore has been imposed by the Assessment Unit of the Income Tax Department for the assessment year 2021-22 after the authority found discrepancies in the financial records for the fiscal years 2018-21, which resulted in the denial of input tax credit.

Additionally, in a separate decision, the company has also suffered a fine of Rs 2.84 crore by the Chennai Joint Commissioner.

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IndiGo Responses: Erroneous and Frivolous Action

In a released statement, IndiGo called the charges erroneous and frivolous and emphasized that it will challenge the decision within the legal framework.

"The Company strongly believes that the order passed by the 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," the company stated in the exchange filing on Sunday.

No Impact on Company

Although the company is hopeful that these charges will not impact its overall business performance or day-to-day functioning:

"Therefore, the said order does not have any significant impact on the financials, operations, or other activities of the Company," the filing states.