Long Term Capital Gains upheld where exchange, demat and banking records proved transactions; unexplained-credit additions deleted.

Long Term Capital Gains treatment was contested against additions classified as unexplained credits; the tribunal applied the principle that unimpeached primary documentary evidence of purchase and sale through exchange, demat and banking channels shifts the burden to revenue to produce cogent material disproving genuineness, and held that market volatility, third party investigation reports and suspicions alone do not suffice; on that basis and by reference to coordinate bench precedents on identical scrip and broker facts, the addition as unexplained credit and consequential commission addition were deleted and the gains accepted as genuine.

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Issues: (i) Whether the long term capital gains claimed under section 10(38) of the Income-tax Act, 1961 arising from sale of shares of Rutron International Ltd. are genuine and whether the additions made by the Assessing Officer under section 68 of the Income-tax Act, 1961 should be sustained.

Analysis: The assessee's position is supported by documentary evidence including share application and allotment records, contract notes, demat statements, broker ledger, bank statements showing payments and receipts, and STT payment details. The transactions were executed through recognized stock exchange mechanisms and sale proceeds were reflected in bank accounts. The Revenue relied on discrepancies in dates, third party investigation reports, statements under section 131, suspension of trading by SEBI, non availability of purchasers at addresses for notices under section 133(6), and large price fluctuation of the scrip. Absent direct, cogent material linking the assessee to price manipulation, accommodation entries or diversion of unaccounted money, mere suspicion, generalized investigation reports, or market price volatility do not displace documentary proof. Where primary documentary evidence of purchase and sale through exchange, demat and banking channels remains uncontroverted, the burden shifts to the revenue to produce tangible material to disprove the genuineness of the transactions. Coordinate bench precedents on identical scrip and broker facts support deletion of additions in absence of incriminating material.

Conclusion: The long term capital gains claimed under section 10(38) of the Income-tax Act, 1961 are held genuine; the addition made under section 68 of the Income-tax Act, 1961 and consequential commission addition are deleted. The assessee's grounds are allowed.

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