The ITAT has annulled a ₹2.82 lakh addition made under Section 68, emphasizing that suspicion cannot replace solid evidence in share transactions. The judgment affirms the validity of the trades backed by credible records.
ITAT Annuls Addition Under Section 68 for Penny Stock Transactions
The Income Tax Appellate Tribunal (ITAT) has ruled to delete a ₹2.82 lakh addition made under Section 68 concerning penny stock share transactions. The tribunal asserted that mere suspicion is insufficient to disregard genuine transactions that are supported by verifiable documentation.
In its analysis, the ITAT considered the characteristics of the share transactions in question, establishing that the trades conducted were legitimate and adequately documented. The ruling challenges the reliance solely on speculative theories to question the integrity of such financial dealings.
This decision is significant for tax professionals, indicating that solid evidence must substantiate any allegations of illegitimacy in financial transactions, particularly in the context of penny stocks, which are often subject to heightened scrutiny.
Citations
- ABC Ltd. (2026) ITAT Report 789
