Income Tax | ITAT Mumbai Deletes ₹10.84 Cr Addition Against Preity Zinta; Holds Loans Were Genuine, Not Unexplained Cash Credits

The Income Tax Appellate Tribunal (ITAT) Mumbai has set aside a ₹10.84 crore addition made under Section 68 of the Income Tax Act in the case of actress Preity G. Zinta, holding that the Assessing Officer failed to appreciate the documentary evidence establishing identity, creditworthiness and genuineness of the loan transactions routed through entities of the Danish Merchant Group. A Bench of Saktijit Dey (Vice President) and Girish Agrawal (Accountant Member), while hearing the appeal of Preity G. Zinta against an addition under Section 68, observed that the Assessing Officer failed to consider the documents proving the genuineness of loan transactions routed through entities of the Danish Merchant Group. Section 68 of the Act deals with unexplained cash credits found in the books of account of an assessee. It creates a statutory presumption against the assessee when a sum is found credited but remains unexplained. In the case in hand, the assessee had borrowed money from Ace Link, i.e., a partnership firm and repaid loan of Ace Light Hospitality Ventures Pvt. Ltd. The Assessee has not derived any benefit from these transactions and these transactions have resulted in merely transferring liability of assessee from the entity Ace Light Hospitality Ventures Pvt. Ltd. to another entity Ace Links which is a partnership firm. The Tribunal noted that the lending entities responded to Section 133(6) notices, filed confirmations, ITRs, and bank statements, and the AO himself acknowledged these facts. The so-called “circular transactions” were found to be nothing more than a restructuring of the lender's internal routing, triggered by compliance concerns under the Companies Act. Holding that the assessee derived no unexplained benefit, the ITAT stated that the Addition of ₹10.84 crore under Section 68 stands deleted. The Bench observed that the fund movements represented genuine loan repayments and only a shift of liability between lender group entities, duly supported by evidence, hence Section 68 could not be invoked. In view of the above, the appeal of the assessee was allowed, with the Tribunal treating other jurisdictional grounds as academic. Case Title: Preity G. Zinta vs. Income Tax Officer Case No: ITA No. 4199/MUM/2025 Appearance for Assessee: Shri Dharan Gandhi and Ms. Vinita Nara Appearance for Revenue: Shri Krishna Kuar, Sr. DR Click Here To Read/Download Order

Income Tax | ITAT Mumbai Deletes ₹10.84 Cr Addition Against Preity Zinta; Holds Loans Were Genuine, Not Unexplained Cash Credits

Rajnandini Dutta

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