Suspicion vs. Substantiation in Penny Stock Gains

In a detailed ruling, the ITAT Indore addressed the contentious issue of penny stock capital gains claimed as exempt under Section 10(38). 

While the Assessing Officer treated the gains as bogus based on surrounding circumstances and investigation reports, the Tribunal found that key factual inconsistencies, particularly relating to timing of share acquisition and mode of payment, remained inadequately examined. 

Instead of affirming or deleting the addition, the ITAT adopted a judicious approach by remanding the matter back to the Assessing Officer for fresh verification. 

The ruling reinforces that suspicion, however strong, must be backed by verified facts, and equally, that the assessee must conclusively establish the genuineness of transactions.