Preity Zinta, a Bollywood actor, became embroiled in a lengthy tax controversy after filing her 2016 income tax return as a non-resident and reporting an income of Rs 46 lakh. The tax authorities eventually discovered significant credit and debit transactions in one of her bank accounts using its own monitoring system.
Because these transactions looked to be significantly higher than her claimed income, the tax officer reopened her case under Section 147, which allows for reassessment of suspected concealed income.
On March 31, 2022, the income tax officer issued a draft assessment order proposing a revision of her total income to Rs 11.3 crore. Preity challenged this before the Dispute Resolution Panel (DRP), but on December 31, 2022, the DRP upheld the tax department`s amendments.
All about the case
During the investigation, it was discovered that Preity had made transactions totalling Rs 13.10 crore—a credit of Rs 13 crore and a comparable debit—in a new savings account she opened with Corporation Bank on January 25, 2016.
Following the withdrawal, the account had only Rs 10,300 remaining.
The tax authorities believed that the source of the Rs 13 crore credit was unknown, and under Section 68, considered Rs 10 crore as an unexplained cash credit, resulting in the demand.
How did Preity Zinta fight back
Preity filed an appeal before ITAT Mumbai, claiming that the reassessment was not properly warranted. A Coordinate Bench of ITAT examined the matter and determined that the Assessing Officer and DRP failed to adequately investigate the legitimacy of reopening the case.
The tribunal rejected the previous rulings and ordered the tax authorities to properly review the reassessment method and reconsider the merits.
On November 17, 2025, Preity Zinta ultimately won her case. Advocates Dharan Gandhi and Vinita Nara represented her.
ITAT Mumbai said that in the ultimate analysis, it is evident that the assessee (Preity G Zinta) had borrowed money from Ace Link, i.e., a partnership entity and returned loan of Ace Light Hospitality Ventures Pvt. Ltd.
ITAT Mumbai held that the Assessee (Preity G Zinta) has not gotten any profit from these transactions and these transactions have resulted in just transferring obligation of assessee from the firm Ace Light Hospitality Ventures Pvt. Ltd. to another organization called Ace Links, which is a partnership. We also observe that neither the assessor nor the ld. The Assessing Officer has questioned the facts surrounding the bank account activity.
