Genuine share transactions supported by records cannot be rejected on suspicion alone, and unexplained-credit additions fail.

Contemporaneous documentary evidence of share purchase and sale, including demat records, contract notes, bank entries and confirmations obtained under section 133(6), discharged the assessee's burden of proving genuineness of the transactions. The exemption on long-term capital gains could not be denied merely on an investigation report or on a preponderance-of-probabilities approach when the revenue produced no independent, clinching rebuttal. On the same footing, the addition as unexplained credit under section 68 was unsustainable because the assessee's evidence remained materially unrebutted.

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Issues: Whether the assessee was entitled to exemption on long-term capital gains arising from sale of shares and whether the corresponding addition as unexplained credit under section 68 could be sustained.

Analysis: The assessee produced contemporaneous documentary material showing purchase and sale of shares, demat records, contract notes, bank credits, and confirmation obtained through notice under section 133(6) of the Income-tax Act, 1961. The authorities below denied relief mainly on the basis of an Investigation Wing report and on the principle of preponderance of probabilities, without bringing any independent clinching material on record or conducting meaningful enquiry to dislodge the assessee's evidence. The assessment therefore rested on suspicion rather than proof, while the evidentiary material filed by the assessee remained unrebutted in a material sense.

Conclusion: The assessee had discharged the onus of proving genuineness of the share transactions, and the claim of exemption under section 10(38) could not be denied merely on the basis of the investigation report or general probability reasoning. The addition under section 68 was unsustainable.

Final Conclusion: The appeal succeeded on the substantive issue of exemption and unexplained-credit addition, and the assessee obtained relief on the merits of the disputed long-term capital gain claim.

Ratio Decidendi: Where an assessee substantiates share transactions with contemporaneous documentary evidence, demat and banking records, and confirmations, the claim cannot be rejected solely on suspicion, an investigation report, or preponderance of probabilities without independent rebuttal by the revenue.

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