Section 68 addition deleted for fully recorded share trades with banking trail, demat entries and reflected business results.

Section 68 was held inapplicable where fully recorded share transactions were part of a regular trading business, routed through banking channels and a demat account, squared up quickly, and already reflected in business results. On those undisputed facts, the Tribunal found no element of unexplained cash credit and deleted the addition on the merits.

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Issues: Whether the addition made under section 68 of the Income-tax Act, 1961, in respect of small, fully recorded share transactions could be sustained.

Analysis: The assessee was found to be a regular stock trader with extensive trading activity and substantial turnover. The disputed script transactions formed only a negligible part of the overall business volume, were routed through banking channels and a demat account, and were squared up within a short period. The profit and loss arising from those transactions were already reflected in the business results. On these undisputed facts, the Tribunal held that the element of unexplained cash credit was absent and that section 68 was wrongly invoked.

Conclusion: The addition under section 68 was deleted and the assessee succeeded on the merits of the substantive dispute.

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