Cash transfer (after share sale)

You have to issue a/c payee or DD because its huge amount you can not issue self cheque. You did not mention also from whome amount X buys Shares on behalf of their friend Y.

Sorry about the confusion.

X had to pay Y some money earlier. Y asked X to invest them in specific shares instead.

X is specifically concerned about whether it is correct / legal to pay this fairly large amount by e-transfer or bearer's cheque (and how they would be able to explain it, although that is secondary - they want to ensure that their transactions are clear and transparent).

This is not allowed.

X will be definitely  treated as the smarter tax-payer by the authorities and m

ade liable to pay tax on the profits.

Further , in case X has not received the amount for purchase of shares, through cheque, 

the amount can be trated X's  undisclosed income.

In the absence of any proof regarding payment and receipt of any sum from Y, Y will deny the fact that transactions have been made in his account or on his behalf.  

What will be the situation of X - " Clueless"

Thank you very much for your clarifications!

I had thought on the same lines but nothing like hearing it from the experts.