Documented share transactions on stock exchange channels cannot be branded bogus on suspicion alone without specific rebuttal evidence.

Documentary evidence of share purchase and sale through demat accounts and a SEBI-registered broker on a recognised stock exchange was treated as sufficient to support the long-term capital gain claim. General allegations of price rigging, abnormal price movement, or investigation reports were held insufficient without independent inquiry or specific cogent material linking the assessee to manipulation or an accommodation entry. On that basis, the addition treating the gain as bogus was deleted, and the related disallowance of alleged commission expenditure also failed.

---

---

Issues: Whether the long-term capital gain claimed from sale of shares of ACI Infocom Ltd. was bogus and liable to addition under section 68 of the Income-tax Act, 1961, along with disallowance of alleged commission expenditure under section 69C of the Income-tax Act, 1961.

Analysis: The assessee's purchase and sale of shares were supported by documentary evidence, including demat account records and sale through a SEBI-registered broker on a recognised stock exchange. The same scrip and similar facts had already been considered by coordinate benches, which held such gains to be genuine and eligible for exemption under section 10(38) of the Income-tax Act, 1961. The assessment was based on alleged modus operandi and suspicion, without independent inquiry or cogent material linking the assessee to any manipulation or accommodation entry. Mere abnormal price movement or general investigation reports were held insufficient to dislodge the documentary evidence produced by the assessee.

Conclusion: The addition treating the long-term capital gain as bogus was not justified, and the related commission addition under section 69C of the Income-tax Act, 1961 also failed. The additions were deleted and the appeal was allowed.

Ratio Decidendi: A documented share transaction executed through demat and stock exchange channels cannot be treated as bogus merely on suspicion or general allegations of price rigging unless the Revenue brings on record specific, cogent material disproving the assessee's evidence.

---