Genuine share transaction evidence defeats bogus LTCG and unexplained credit additions where no specific adverse material exists.

Share-sale proceeds were accepted as genuine long-term capital gains because the assessee produced allotment records, demat statements, contract notes, broker ledger and banking evidence, and the shares were sold through a registered broker on the stock exchange with securities transaction tax paid. General investigation material and the theory of human probabilities were insufficient, as there was no specific evidence linking the assessee to price manipulation, accommodation entries, or any defect in the documents. The Revenue also failed to prove any actual unexplained expenditure to support the section 69C addition. The additions under sections 68 and 69C were therefore held unsustainable, and the exemption claim was upheld.

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Issues: Whether the sale proceeds from shares of GCM Securities Ltd. could be treated as bogus long-term capital gains and taxed as unexplained cash credit, with consequential disallowance of alleged unexplained expenditure, despite the assessee producing share allotment documents, demat statements, contract notes, broker ledger and banking evidence.

Analysis: The assessee supported the purchase and sale of shares with contemporaneous documentary material showing allotment, demat credit and debit, sale through a registered broker on the stock exchange, payment of securities transaction tax, and receipt of consideration through banking channels. The additions were founded mainly on general investigation material, surrounding circumstances and the theory of human probabilities, without any specific material linking the assessee to price manipulation, accommodation entries or any defect in the documentary evidence. The absence of tangible evidence and the lack of any proved expenditure to sustain the section 69C addition meant that the Revenue had not discharged the burden of showing that the apparent transaction was not real.

Conclusion: The long-term capital gain was rightly accepted as genuine, the exemption claim was upheld, and the additions under sections 68 and 69C were unsustainable.

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