Share-sale transactions backed by documents cannot be treated as unexplained income without evidence of fabrication or cash trail.

Share-sale proceeds were held not to constitute unexplained income where the assessee produced demat statements, bank statements, contract notes, broker ledger accounts and return disclosures showing transactions through recognised stock exchange and banking channels. In the absence of any discrepancy, falsity, fabrication, price-rigging evidence, accommodation entries or cash trail, a general investigation report and abnormal price movement were found insufficient to displace the documentary trail. The addition under section 69A was therefore unsustainable, and the share-sale profit was to be assessed as claimed by the assessee, including treatment as short-term capital gain under section 111A and allowance of exemption under section 10(38), as applicable.

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Issues: Whether the sale proceeds from share transactions could be treated as unexplained income under section 69A of the Income-tax Act, 1961, and whether the resultant gains could be denied treatment as short-term capital gain under section 111A or exemption under section 10(38), as applicable.

Analysis: The assessee furnished demat statements, bank statements, contract notes, broker ledger accounts, and return disclosures to support the purchase and sale of shares. The documentary trail showed transactions routed through recognised stock exchange and banking channels. No discrepancy, falsity, or fabrication was pointed out in the evidence, and no material was brought on record to show the assessee's involvement in price rigging, accommodation entries, or any cash trail. The addition rested mainly on a general investigation report and abnormal price movement, which by itself was held insufficient to dislodge the assessee's evidentiary support. Following the settled line of authorities relied upon in the order, the same reasoning was applied to the connected appeal involving the same share script and identical controversy.

Conclusion: The addition under section 69A was unsustainable, and the share-sale profit was directed to be assessed in the manner claimed by the assessee, including treatment as short-term capital gain under section 111A and allowance of the exemption claim under section 10(38), as applicable.

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