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Issues:
1. Addition of Rs. 3,000 related to manufacturing of jelly. 2. Credit entries of Rs. 13,855 and Rs. 24,748 in the exercise book. Analysis: Issue 1: Addition of Rs. 3,000 related to manufacturing of jelly The appeal concerned the addition of Rs. 3,000 by the Income Tax Officer (ITO) to the firm's income for allegedly engaging in manufacturing petroleum jelly. The ITO based this addition on a diary entry showing an advance to a supplier. The ITO concluded that the firm was involved in the jelly business due to this entry and the supplier's connection to a related party. The CIT (A) upheld the addition. However, the Appellate Tribunal found that the ITO's reasoning was flawed. The Tribunal noted that the supplier, not the firm, was engaged in the jelly business. The Tribunal emphasized that a single entry in the diary was insufficient to establish the firm's ownership of the jelly business. Consequently, the Tribunal ruled in favor of the assessee, deleting the Rs. 3,000 addition from the assessment. Issue 2: Credit entries of Rs. 13,855 and Rs. 24,748 in the exercise book Regarding the credit entries found in an exercise book, the ITO questioned the source of Rs. 13,855 and Rs. 24,748 credited to individuals. The assessee explained that the amounts were related to disclosed income and business transactions. The ITO rejected the explanations, leading to additions in the assessment, which were upheld by the CIT (A). However, the Appellate Tribunal disagreed with the lower authorities. It accepted the explanation for the Rs. 13,855 credit, attributing it to the individual's share in the disclosed income. For the Rs. 24,748 credit, the Tribunal found sufficient evidence to support the transactions and the individual's capacity to advance the amount. The Tribunal emphasized the burden of proof on the assessee, which was successfully discharged in this case. As a result, both the Rs. 13,855 and Rs. 24,748 additions were deleted from the assessment, and the appeal was allowed.
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