Section 10(38), 45 of Income Tax Act, 1961—In the instant case, assessee has purchased shares and sold them on huge prices of LTCG and claimed as an exempt income u/s 10(38).
The AO on the basis of investigations done by the Revenue and after analyzing these transactions in detail, treated, inter alia, that the purchase and sale of those shares as penny stock, the assessees have manipulated the transactions with the brokers to convert their unaccounted income etc and hence treated the entire sale consideration as an unexplained credit and refused each of the assessee’s exemption claim under section 10(38).

Held that— we deem it fit to remit the issue of exemption in these appeals back to the file of the respective Assessing Officer for re-adjudication on the lines indicated above. Therefore, the Assessing Officer concerned shall require the assessees; to establish who, with whom, how and in what circumstances the impugned transactions were carried out etc., to prove that the impugned transactions are actual, genuine etc. The assessees shall comply to the concerned Assessing Officer’s requirements as per law.[SHRI RAJENDRA KUMAR HIRAWAT VERSUS THE ACIT, NON-CORPORATE CIRCLE – 23 (1) , CHENNAI. AND SMT. NISHA VERSUS THE DCIT, NON-CORPORATE CIRCLE – 9 (1) , CHENNAI.][2019] 17 ITCD Online (20) [ITAT CHENNAI]