Long-Term Capital Gains Exemption Under Section 10(38) Denied for Penny Stock Transactions Deemed Predetermined Scheme for Unaccounted Income (38)

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ITAT upheld the disallowance of LTCG exemption claimed under section 10(38), determining the transactions constituted a predetermined scheme to introduce unaccounted income. The Tribunal found the assessee's 400% profit in 13 months from penny stock NCL Research was not genuine, noting the suspicious pattern of dormant scrip suddenly appreciating despite poor financial parameters. The synchronized buying and selling, coupled with investigations by Income Tax authorities and SEBI, established the transactions as sham arrangements. The Tribunal emphasized that documentation like contract notes and banking channel evidence alone cannot establish genuineness when market forces don't justify the price increase. The CIT(A)'s findings regarding price manipulation were affirmed.....