CIT vs. Pooja Agarwal (Rajasthan High Court)

Bogus Capital Gains from Penny Stocks: If the transaction is supported by documents like contract notes, demat statements etc and is routed through the stock exchange and if the payments are by account-payee cheques and there is no evidence that the cash has gone back to the assessee’s account, it has to be treated as a genuine transaction and cannot be assessed as unexplained credit

When the relevant documents are available the fact of transactions entered into cannot be denied simply on the ground that in his statement the appellant denied having made any transactions in shares. The payments and receipts are made through a/c payee cheques and the transactions are routed through Kolkata Stock Exchange. There is no evidence that the cash has gone back in appellants’s account. Prima facie the transaction which are supported by documents appear to be genuine transactions.

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