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 per cent to 300 per cent 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.
The penalties are being sought under Section 271 (1)(c) of the Income Tax Act for failing to pay tax on capital gains made.
A Cairn Energy spokesperson could not be immediately reached for comments.
The company had earlier this month in a notice to shareholders acknowledged that it had received an amended tax demand on March 31, 2017 that also talked about late payment of interest to be charged from February 2016 -- 30 days following the date of the final assessment order.
The final assessment order did not include any penalties which may also be applied to the final assessment (potentially up to 300 per cent of any tax finally agreed), it had said.
Following the January 2014 draft assessment order, the tax department had restrained the company from selling the residual 9.8 per cent stake it holds in Cairn India.
Cairn Energy had in 2011 sold Cairn India to Vedanta.
The company had in the shareholder notice stated that it strongly contests the final assessment order and that the enforcement of any tax liability deemed due by the tax department will be limited to India assets, which had a value of about $750 million as of December 31, 2016.
These assets comprised principally Cairn's residual shareholding in Cairn India.
Cairn also said that it had on March 11, 2015 filed a Notice of Dispute under The UK-India Investment Treaty in order to protect its legal position and shareholder interests.
News Source - Business Standard