Income Tax Dept Proceeds with penalty u/s 272(A) against Dalmia Power despite SC Stay Order: Supreme Court stays Order [Read Order]

The Supreme Court stayed the proceedings under Section 272(A) of the Income Tax Act initiated by the income tax department despite a clear stay of the Madras High Court order.

The Petitioner, Dalmia Power Limited, approached the apex court aggrieved by the income tax order dated 14th November 2025, which initiated the penalty proceedings against them.

Senior Advocate Ajay Vohra and Senior Advocate C. Aryama Sundaram filed an IA with regards to the case stating that “in spite of the stay granted by this Court, the respondent-Authority has issued a notice dated 14.11.2025 for penalty under Section 272(A) of the Income Tax Act 1961.”

Justice Vikram Natha and Justice Sandeep Mehta, in their order, decided that “In view of the fact that we have stayed the order of the High Court, all further proceedings as a consequence of the notice dated 14.11.2025 shall also remain stayed.” Accordingly, the IA was disposed of.

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The background facts of the case are that the income tax department initiated reassessment proceedings against the petitioner. They approached the Madras High Court, where initially the reassessment was quashed by a Single Judge of the Madras High Court, Madurai Bench, through a detailed judgment dated October 30, 2019.

In that, the bench found that the basis for invoking the extended time period under the Income Tax Act was not substantiated by the department. However, the Income Tax Department filed writ appeals against this ruling, which were allowed by the Division Bench in April 2025. And followingly, the Dalmia approached the Supreme Court on this matter.

The Penalty under Section 272(A)/272A is imposed for failure to answer Questions, sign statements, furnish Information, etc.

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