Bogus Capital Gains and Accommodation Entries: Unraveling the Penny Stock Scam and Tax Evasion

Burden of Proof under section sixty eight: genuineness of share transactions must be established or treated as accommodation entries.

The dispute concerned alleged bogus long term capital gains from penny stock trading characterised as an accommodation entry; revenue contested genuineness, identity and creditworthiness of parties while assessees relied on expert and market information. Applying the doctrine of preponderance of probabilities, the court reiterated that the initial burden to prove identity and genuineness lies with the assessee, criticised inadequate enquiries by authorities, rejected expert and media reliance as a substitute for due diligence, and described the accommodation entry modus operandi leading to findings that the transactions were not satisfactorily proved.