Section 10(38) of the Income Tax Act

Income-tax Act, 2025: s.11

Section 10(38) falls under section 10 of the Income-tax Act, 1961, which corresponds to section 11 (Incomes not included in total income) of the Income-tax Act, 2025.

Read section 11 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 10(38) is (Central)-1 v. NRA Iron & Steel (P) Ltd. (103 Taxmann.com 48), cited in 696 of the 3,113 judgments on BharatTax that turn on this section.

Leading authorities on Section 10(38)

(Central)-1 v. NRA Iron & Steel (P) Ltd.
103 Taxmann.com 48 · 2019 · Supreme Court
696
citing judgments

When assessing cash credits, share capital, or loans, the assessee bears the onus to prove the identity, creditworthiness, and genuineness of transactions. This burden is not discharged merely by documentary evidence if field inquiries reveal accommodation entries or dealings with paper/shell companies.

PCIT v. Swati Bajaj
139 Taxmann.com 352 · 2022 · High Court
443
citing judgments

Tax authorities are entitled to examine surrounding circumstances and apply the test of human probabilities to determine the genuineness of long-term capital gains arising from the sale of manipulated penny stock, even if prima facie documents appear to support the transaction.

CIT v. Shyam R. Pawar
54 Taxmann.com 108 · 2015 · High Court
279
citing judgments

Transactions involving the purchase and sale of shares cannot be considered bogus where the assessee provides documentary evidence, unless the revenue brings substantial evidence on record to reject such proof. This principle is consistently applied in cases concerning claims of bogus long-term capital gains arising from penny stock transactions.

CIT v. Gopal Purohit
336 ITR 287 · 2011 · High Court
254
citing judgments

The gain from delivery-based share transactions, where shares are consistently treated as investments and valued at cost in the books, is assessable as capital gains and not business income. An assessee's consistent stand on classifying share transactions should generally be followed by the assessing officer in subsequent years.

Sanjay Bimalchand Jain v. PCIT-1, Nagpur
89 Taxmann.com 196 · 2018 · High Court
251
citing judgments

The exemption for long-term capital gains on share transactions is unavailable if the assessee fails to discharge the onus of proving the genuineness of gains arising from dubious share transactions designed to convert unaccounted income into tax-exempt capital gains. Courts will uphold an assessment based on the Revenue's evidence of price rigging or penny stock manipulation if the assessee cannot provide cogent evidence for the abnormal rise in share value.

PCIT v. Krishna Devi
126 Taxmann.com 80 · 2021 · High Court
249
citing judgments

The genuineness of share transactions, particularly those generating long-term capital gains, cannot be rejected solely based on general investigation reports, third-party statements, or a mere increase in share price, when the assessee provides comprehensive documentary evidence, without the Revenue bringing substantial evidence to the contrary.

CIT v. Jamnadevi Agarwal
328 ITR 656 · 2010 · High Court
230
citing judgments

When faced with allegations of bogus long-term capital gains from penny stocks, the Assessing Officer must discharge the onus of proving that the assessee's transactions were not genuine. The assessee can rely on the principle of preponderance of probability, and the Revenue must present substantial evidence to establish that the transactions were a colourable device or that the assessee was an entry operator.

Jai Steel (India) v. ACIT
259 CTR 281 · 2013 · High Court
224
citing judgments

Under Section 153A, for completed assessments (under Section 143(1) or 143(3)) where no incriminating material is found during a search under Section 132, the Assessing Officer cannot make additions to the income already assessed. Additions are only permissible if based on undisclosed income or assets discovered during the search.

P.V. Doshi v. CIT
113 ITR 22 · 1978 · High Court
179
citing judgments

The lack of jurisdiction to initiate reassessment proceedings under Section 147/148 cannot be waived and can be challenged at a later stage, even if not raised initially. An invalid reassessment due to such jurisdictional defects cannot sustain subsequent penalty proceedings.

CIT v. J.H. Gotla
156 ITR 323 · 1985 · Supreme Court
176
citing judgments

The Supreme Court holds that for income tax purposes, the term 'income' includes 'loss,' allowing for the set-off of a spouse's or minor child's business losses when their income is clubbed with the assessee. This decision emphasizes interpreting tax statutes, especially benevolent provisions, by considering the legislative scheme over a strict literal construction.

Judgments on Section 10(38)

Dy CIT 11 (3)(1), Mumbai vs. Varesh Securities Pvt Ltd., Mumbai

In the result, appeals filed by the revenue are hereby dismissed

ITA 262/MUM/2020[2012-13]Status: DisposedITAT Mumbai05 Oct 2021AY 2012-13

Bench: Shri Amarjit Singh, Jm & Shri Manoj Kumar Aggarwal, Am (Hearing Through Video Conferencing Mode) आयकर अपील सं/ I.T.A. No. 262/Mum/2020 (निर्धारण वर्ा / Assessment Year: 2012-13) & आयकर अपील सं/ I.T.A. No. 263/Mum/2020 (निर्धारण वर्ा / Assessment Years: 2010-11) Dcit-11(3)(1) बिधम/ Varesh Securities Pvt. Ltd. Room No.427, Aayakar 101, Laxmi Plaza, Laxmi Vs. Bhavan, M. K. Road, Marine Industrial Estate, New Link Lines, Mumbai-400020. Road, Andheri (W), Mumbai-400053. स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaacg1667L (अपीलाथी /Appellant) (प्रत्यथी / Respondent) .. Revenue By: Ms. Usha Gaikwad (Sr. Ar) Assessee By: Shri Sashi Tulsiyan सुनवाई की तारीख / Date Of Hearing: 12/07/2021 घोषणा की तारीख /Date Of Pronouncement: 05/10/2021 आदेश / O R D E R Per Amarjit Singh, Jm: The Above Mentioned Appeals Have Been Filed By The Revenue Against The Order Dated 25.10.2019 Passed By The Commissioner Of Income Tax (Appeals)-18, Mumbai [Hereinafter Referred To As The “Cit(A)”] Relevant To The A.Ys.2010-11 & 2012-13. Ita. Nos.262 & 263/Mum/2020 A.Ys. 2012-13 & 2010-11

For Appellant: Shri Sashi TulsiyanFor Respondent: Ms. Usha Gaikwad (Sr. AR)
Section 10(38)Section 115JSection 143(2)Section 148Section 68

Shri. Sanyam Sultania, Mumbai vs. ITO 31 (3)(3), Mumbai

In the result, assessee’s appeal is allowed for statistical purpose

ITA 6863/MUM/2019[2011-12]Status: DisposedITAT Mumbai28 Sept 2021AY 2011-12

Bench: Shri Shamim Yahya (Am) & Shri Pavan Kumar Gadale (Jm) I.T.A. No. 6863/Mum/2019 (Assessment Year 2011-12) Sanyam Sultania Vs. Ito-31(3)(3) 401, 4Th Floor Bkc, Bandra(E) Prabhu Vijay, Plot No.B-17 Mumbai-400 051 V.M.Road, Kapole Chsl Juhu, Mumbai-400 049 Pan : Cqjps0577D (Appellant) (Respondent) Shri R.C.Jain Assessee By Department By Shri Vijay Kumar Menon Date Of Hearing 15.07.2021 Date Of Pronouncement 28 .09.2021 O R D E R Per Shamim Yahya (Am) :- This Appeal By The Assessee Is Directed Against The Order Of Learned Cit(A)-39 Dated 28.03.2019 & Pertains To Assessment Year 2011-12. 2. The Grounds Of Appeal Read As Under : 1. In The Facts & Circumstances Of The Case & In Law, The Learned Commissioner Of Income Tax (A) Erred In Levying Penalty U/S 271(1)(C) Of Rs.. 238462/- On Exempt Ltcg Confirmed As Unexplained Money U/S 69A & That Too Without Mentioning In The Notice U/S 274 R.W.S. 271(1)(C) Whether The Appellant Furnished Inaccurate Particulars/Concealed Income Which Is Bad In Jaw As Per The Catena Of Judgments Cited From Time To Time. 2. In The Facts & Circumstances Of The Case & In Law, The Learned Commissioner Of Income Tax (A) Erred In Levying Penalty U/S 271(1)(C) Even Though Appeal In Respect Of The Quantum Appeal Was Not Yet Heard.

Section 10(38)Section 251(2)Section 271(1)Section 271(1)(c)Section 274Section 69A

The Deputy Commissioner of Income Tax, Circle-3(1), Visakhapatnam vs. Devi Tatiparti, Visakhapatnam

In the result appeal of the revenue as well as the cross objections of the assessee are dismissed

ITA 41/VIZ/2021[2017-18]Status: DisposedITAT Visakhapatnam24 Sept 2021AY 2017-18

Bench: Shri N.K.Choudhry, Hon’Ble & Shri D.S. Sunder Singh, Hon’Bleआयकर अपील सं./I.T.A.No.41/Viz/2021 (निर्धारण वर्ा/Assessment Year:2017-18) Dy.Commissioner Of Income Tax Vs. Smt.Devi Tatiparti Circle-3(1) D.No.10-27-7/19 Visakhapatnam Sri Satya Sai Enclave Waltair Uplands Visakhapatnam [Pan : Acipt9989K] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) Cross Objection No.37/Viz/2021 (Arising Out Of I.T.A. No.41/Viz/2021 Smt.Devi Tatiparti Vs. Dy.Commissioner Of Income Tax D.No.10-27-7/19 Circle-3(1) Sri Satya Sai Enclave Visakhapatnam Waltair Uplands, Visakhapatnam [Pan : Acipt9989K] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant By : Shri V.Srinivasa Rao, Ar प्रत्यधथी की ओर से / Respondent By : Shri G.V.N.Hari, Dr सुिवधई की तधरीख / Date Of Hearing : 09.09.2021 घोर्णध की तधरीख/Date Of Pronouncement : 24.09.2021 आदेश /O R D E R Per Bench: This Appeal Is Filed By The Revenue Against The Order Of The Commissioner Of Income Tax (Appeals) [Cit(A)]-1, Visakhapatnam In Ita

For Appellant: Shri V.Srinivasa Rao, ARFor Respondent: Shri G.V.N.Hari, DR
Section 250Section 69A