Genuine share transaction evidence supported long-term capital gain exemption, as suspicion alone could not sustain the addition.

Documentary evidence of share transactions supported acceptance of the long-term capital gain claim and the related exemption under section 10(38), because the assessee produced contract notes, bank statements, demat records, and ledgers showing routing through registered brokers and banking channels. The Tribunal noted that the Assessing Officer had not discredited these materials with specific evidence, had not proved price manipulation or any penny stock accommodation scheme, and had relied mainly on suspicion and general information. It also followed co-ordinate Bench and jurisdictional decisions supporting genuine share transactions where a clear documentary trail exists. The addition for alleged bogus capital gain and commission was deleted and the exemption claim was accepted.

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Issues: Whether the addition made on account of alleged bogus long-term capital gain and alleged commission payment from sale of shares of Tuni Textile Ltd. and the related denial of exemption under section 10(38) was justified.

Analysis: The assessee produced contract notes, bank statements, demat and transaction records, sale and purchase ledgers, and supporting material to show that the share transactions were routed through registered brokers and banking channels. The Tribunal noted that the Assessing Officer did not discredit these documents with any specific material, did not bring independent evidence to show price manipulation or involvement of the assessee or broker in any penny stock accommodation scheme, and had proceeded largely on suspicion and general information. It further noted that the issue was already covered by the co-ordinate Bench in relation to the same scrip, and that the judicial approach in jurisdictional decisions supported acceptance of genuine share transactions where documentary evidence and banking trail were established.

Conclusion: The addition was deleted and the exemption claim was accepted; the issue was decided in favour of the assessee.

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