The Income Tax Appellate Tribunal has held as invalid an omnibus (non-specific) notice served by the Income-Tax department on Preity Zinta for alleged “concealment of income or furnishing of inaccurate particulars of income”. Since the serving of the notice under section 271(1)(c) is the first step in initiating penalty proceedings, the Bombay bench of the ITAT held that the penalty of Rs. 57 lakh would also stand deleted.
The litigation involved a disallowance of bank interest of Rs. 1.7 crore on a loan taken by Preity for producing Ishkq In Paris. The film started in 2011-12 and was completed in 2013-14. The actress-producer had claimed the interest as a business expenditure in the financial year 2013-14. This was denied by the I-T officer who said that it pertained to an earlier year. The officer then went on to initiate penalty proceedings for furnishing of inaccurate particulars of income.
Preity contested this action by stating that the expenses were not bogus, there was no concealment of income, and details of the project were declared in the I-T return. She had also filed a copy of the term-loan letter received from the bank.
The Commissioner of Income-Tax (Appeals) passed an order in favour of Preity Zinta, but the I-T department preferred an appeal before the ITAT.