Documentary evidence defeats unexplained cash credit claim on share-sale gains absent specific proof of accommodation entry scheme.

Share-sale proceeds supported by purchase documents, demat records, bank statements and contract notes could not be treated as unexplained cash credit merely because the scrip was alleged to be a penny stock or the price had risen abnormally. The ITAT held that, where the assessee furnished contemporaneous primary evidence and the Revenue produced no specific material linking the assessee or broker to price rigging, accommodation entries or any cash trail, the addition under section 68 could not rest on suspicion, investigation reports or generalized human-probability reasoning. The disputed addition was deleted and the exemption claim on the long-term capital gain was accepted.

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Issues: Whether addition under section 68 on account of sale proceeds of shares claimed as exempt long-term capital gain under section 10(38) was sustainable where the assessee produced purchase documents, demat records, bank statements and contract notes, and there was no direct material showing the assessee's involvement in price rigging or accommodation entries.

Analysis: The assessee had disclosed the share transactions and furnished primary evidence in support of purchase and sale of the shares, including demat statements, contract notes and banking records. The addition was founded mainly on investigation-wing information, the alleged penny-stock character of the scrip, abnormal appreciation in price and the application of human probabilities. No discrepancy in the documentary evidence was shown and no material was brought on record to connect the assessee or his broker with any rigging, collusion or cash trail. In the absence of adverse evidence specifically implicating the assessee, the claim could not be rejected merely on suspicion or generalised investigation material.

Conclusion: The addition under section 68 was not sustainable and was deleted; the exemption claim in respect of the share-sale gains was accepted.

Final Conclusion: The assessee succeeded on the merits of the share-transaction addition, and the appellate relief was granted by deleting the disputed addition.

Ratio Decidendi: A share-sale gain supported by contemporaneous documentary evidence and routed through regular market and banking channels cannot be taxed as an unexplained cash credit merely on general suspicion, investigation reports or abnormal price rise unless the Revenue brings specific, cogent material linking the assessee to the alleged accommodation-entry or price-rigging scheme.

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