Documentary proof of share transactions defeats section 68 addition where the Revenue cannot rebut the records with cogent material.

Primary documentary evidence of share purchase and sale, including contract notes, demat records, bank statements and broker ledgers, was sufficient to discharge the assessee's initial onus under section 68. The Revenue's reliance on abnormal price movement and trading pattern was not enough because it did not rebut the documents with cogent material or show manipulation, rigging or falsity in the transactions. As the shares were held for more than one year and sale consideration was received through banking channels, the addition treating the share-sale receipts and long-term capital gains as unexplained cash credit was unsustainable and was deleted.

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Issues: Whether the sale proceeds and long-term capital gains from the assessee's share transactions could be treated as unexplained cash credit under section 68 of the Income-tax Act, 1961 and brought to tax under section 155BBE despite production of purchase, demat, banking and broker records.

Analysis: The assessee produced the purchase documents, share certificate, delivery records, demat statement, broker ledger, contract notes, bank statement and related material to establish the purchase and sale of shares through banking channels and on the stock exchange. The authorities below doubted the claim mainly on the basis of abnormal price movement and trading pattern in the scrip, but did not controvert the documentary evidence filed by the assessee or bring material to show manipulation, rigging or any other falsity in the transaction. The record showed that the shares were held for more than one year, sold through a registered broker, and consideration was received through banking channels. In these circumstances, the assessee discharged the initial onus under section 68.

Conclusion: The addition treating the share-sale receipts as unexplained cash credit was unsustainable and had to be deleted; the issue was decided in favour of the assessee.

Ratio Decidendi: Where an assessee substantiates share purchase and sale transactions with primary documentary evidence and the Revenue fails to rebut those documents with cogent material, the transaction cannot be rejected merely because the scrip showed abnormal price movement or suspicious market pattern.

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