ITAT deletes Income Tax Penalty against Bollywood Actress Preity Zinta [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has deleted a penalty order imposed against the actress Preity Zinta. The department has imposed the penalty since the actress failed to explain the incurring of interest expenses on the loan taken for the movie “Ishque in Paris”, a project, which was commenced during F.Y. 2011-12 and concluded in F.Y 2013-14.

In the penalty order, the Assessing Officer incorporated the same submission of assessee, stating that the interest charges and interest payment falling in A.Y. 2011-12 to 2013-14 for the movie “Ishque in Paris” are part of entire project of movie.

AO has levied the penalty because the interest expenditure of Rs. 1,72,70,635/- has been held as pertaining to earlier years i.e. F.Y. 2011-12 and 2012-13 and thus claim of assessee for interest of Rs. 1,72,70,635/- is held are incorrect and inadmissible. The interest expenditure claimed of Rs. 5,15,808/- has been allowed as was pertaining to relevant A.Y. 2014-15.

While disposing the appeal in favour of the assessee, the Tribunal bench comprising ITAT President PP Bhatt and Accountant Member Shamim Yahya held that “examining the present case on the anvil of aforesaid case law, we find that the notice in this also is an omnibus show-cause notice as it does not strike off/delete the inappropriate/irrelevant/not applicable portion. Such a generic notice betrays a non-application of mind. Hence, the penalty levied pursuant to such a notice is not legally sustainable in law. Hence following the aforesaid precedent from the Full Bench of the Hon’ble Jurisdictional High Court we hold that the Assessing Officer was bereft of valid jurisdiction as the notice issued to assessee is unsustainable in law. Hence, the penalty levied under section 271(1)(c) of the Act is liable to be deleted. We direct as such.”

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