HC stays operation of income tax order against Vodafone

The Delhi High Court on Wednesday allowed penalty proceedings by the income tax department to continue against telecom major Vodafone Mobile Services Ltd, but stayed the operation of the final order till the next hearing scheduled in July.

The direction was passed by a vacation bench comprising of Justices V Kameswar Rao and I S Mehta to protect Vodafone's interest as recovery under the proceedings could be initiated at any time after the completion of the proceedings, which is expected on Thursday.

The court was hearing Vodafone's plea seeking stay of effect of penalty proceedings initiated under notices by the I-T department on 29 December and 9 June.

The notices were regarding alleged concealment / furnishing of inaccurate particulars of income by the company for the assessment year 2011-12. Penalty proceedings against the telecom company were initiated by the IT department on 29 December and were required to be completed within a period of six months.

During the hearing, Vodafone told the court that in apprehension of the final penalty order, it could raise a demand of Rs1,500 crore, which would be required to be paid within a period of 30 days. However, the 30-day period was not fixed and recovery proceedings could be initiated as early as within a week.

In this regard, the court was also informed that a division bench of the high court had on 23 December, 2015 directed the department to not give effect to the assessment order, despite which the proceedings were initiated.

The matter will be taken up next on 7 July.