Assessee claimed LTCG exemption under section 10(38) on the sale of shares of the company Kappac Pharma Ltd (KPL).  Assessing Officer held that shares were acquired in physical form through an off-market transaction and payment for the purchase of shares was made in cash. He further took note of investigation reports which had flagged transactions in Kappac Pharma Ltd as being part of an orchestrated accommodation entry racket to convert unaccounted money into tax-exempt capital gains. He thus held  that the transaction was a colourable device and accordingly held LTCG to be unexplained cash credit and brought it to tax under section 115BBE. CIT(A) affirmed the order of the Assessing Officer. On appeal the Tribunal held that the share certificate was dated much prior to the claimed date of purchase and shares were transferred in the name of the assessee after a lapse of more than six months. Further, assessee had no prior or subsequent history of trading or investment in shares, and this transaction in Kappac Pharma Ltd appeared to be the sole transaction of its kind, both in terms of nature and volume. Further, assessee’s receipts consisted mainly of tuition fees in cash, and cash withdrawals of Rs. 5,000 per month, thereby not exhibiting any kind of liquidity or surplus that would plausibly explain a one-time cash investment of Rs. 1 lakh in a little-known company. On facts, transaction in question did not inspire confidence as a genuine investment, and bore the hallmark of an accommodation entry scheme devised to generate tax-exempt long-term capital gain. Tribunal also held that  since suspicious time gaps, mode of acquisition (cash), lack of prior or subsequent trading activity, scrip’s tainted profile, and implausible price appreciation, all cumulatively establish that the transaction failed the test of human probability, addition made was  upheld.(AY. 2015-16)