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Posted at: Apr 21, 2017, 12:40 AM; last updated: Apr 21, 2017, 12:40 AM (IST)

I-T Dept slaps Rs 30,700-crore penalty on Cairn Energy

Non-payment of tax

  • The company has been penalised for its alleged failure to pay Rs 10,247 crore capital gains tax on time
  • Capital gains was due on Cairn Energy on March 31, 2007, and due date for filing return was December 2007. But the company filed return by March 31, 2014
  • The final order was issued raising a tax demand of Rs 10,247 crore and another Rs 18,800 crore in interest for 10 years

New Delhi, April 20

The Income Tax Department has slapped a fresh notice on British firm Cairn Energy, seeking up to Rs 30,700 crore in penalties for its alleged failure to pay Rs 10,247 crore capital gains tax on time.

Within weeks of tax tribunal ITAT upholding levy of retrospective tax, the Income Tax Department first sent a fresh demand note of Rs 10,247 crore and another show-cause notice asking as to why penalty should not be levied for its failure in paying tax on time and filing of returns.

Senior tax department officials said Cairn Energy has sought 10 more days to reply to the show-cause seeking levy of penalty.

“Capital gains was due on Cairn Energy on March 31, 2007, and due date for filing return was December 2007. But the company filed return by March 31, 2014” after the tax department on January 24, 2014 sent a draft assessment order, an official said.

The assessment, the official said, got completed in January 2016 and a final order was issued raising a tax demand of Rs 10,247 crore and another Rs 18,800 crore in interest for 10 years.

The ITAT, however, in its March 9 order held that while Cairn Energy was liable to pay tax on the 2006 transfer of India assets to newly created Cairn India, prior to its listing, interest cannot be charged as the demand was raised using retrospective tax legislation.

The official said the ITAT had not barred levy of penalties and so the fresh notice is being sent.

The Income Tax Act provides for penalties of 100% to 300% of the tax due, the official said, adding that the notice sent does not mention of the quantum of penalties the tax department is seeking.

“It is a show-cause kind of a notice and further action will follow based on the response the company files,” the official said, adding that the tax department has six months from the passage of ITAT order to impose penalty. A Cairn Energy spokesperson could not be immediately reached for comments. — PTI

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