ITAT Exempts Penny Stock Transactions u/s 10(38) Due to STT Compliance, Denies AO’s Bogus Transaction Allegations

The Income Tax Appellate Tribunal (ITAT) ruled in favor of a taxpayer in a penny stock transaction case under Section 1038, exempting the gains from tax. The Assessing Officer (AO) had alleged the transaction was bogus, claiming that penny stock investments were made to evade taxes. However, since the Securities Transaction Tax (STT) was duly paid, ITAT found no evidence to support the AO's allegations. The ruling reinforces the legal protection provided to genuine transactions covered under STT compliance.