In a regulatory filing, IndiGo stated that the Income Tax Authority’s assessment unit had imposed the penalty for the 2021-22 assessment year.

“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,” the airline clarified.

‘Not in accordance with law’

The company emphasised that it will challenge the order and pursue appropriate legal remedies. “The order does not have any significant impact on financials, operations, or other activities of the company,” the airline stated.

In a statement issued on Sunday evening, IndiGo reiterated its stance, asserting that the order is not in line with the law and is incorrect.

“The company will contest the same and shall take appropriate legal remedies against the order,” the statement said.

As India’s largest airline by market share, IndiGo has played a crucial role in the aviation sector. However, airlines frequently face taxation and compliance challenges, leading to scrutiny.

Experts note that tax disputes are a recurring issue in the industry, with companies often challenging assessments through appellate processes.

Financial analysts, according to The Times of India, suggest that while the penalty amount is substantial, IndiGo’s strong financial position should help mitigate 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 was quoted as saying by The TOI.