Genuine share transactions supported by records defeated bogus capital gains allegations and related unexplained credit additions.

Long-term capital gain exemption on share sales was accepted where the Tribunal found the transactions genuine on the strength of purchase records, demat statements, contract notes and bank accounts. It noted that the amalgamation of the original company with the successor company had been approved by the High Court and that the revenue had produced no direct adverse material showing price manipulation, accommodation entries or broker involvement. As the share transactions were genuine, the additions as unexplained cash credits and the presumed commission as unexplained expenditure could not stand, and the additions under sections 68 and 69C were deleted.

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Issues: Whether the assessee's claim of exemption on long-term capital gain from sale of shares was bogus and, if not, whether the additions made as unexplained cash credits and unexplained expenditure were sustainable.

Analysis: The Tribunal followed its earlier decision on identical facts and held that the amalgamation of the original company with the successor company had been approved by the High Court, and that the revenue had not brought on record any direct adverse material to implicate the assessee in a scheme of price manipulation or accommodation entries. The sale transactions were supported by purchase records, demat statements, contract notes and bank accounts, and the material relied upon by the revenue did not establish that the assessee or the broker was a beneficiary of the alleged rigging. Since the share transactions were held to be genuine, the basis for treating the sale proceeds as unexplained cash credits and for presuming payment of commission as unexplained expenditure also failed.

Conclusion: The claim of exemption was accepted, and the additions under sections 68 and 69C were deleted.

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