TMI Blog2006 (3) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... l Representative fairly accepted the same. Therefore, ground No. (i) is rejected. 5. Ground Nos. (ii) to (vi) deal with disallowance made under s. 43B of the Act. The amount of Rs. 32,122 being the employer's contributions to PF was disallowed by the AO as the same was not deposited before the due date, therefore (sic-though) the payment was made within the due dates in accordance with second proviso to s. 43B of the Act. The learned CIT(A) also deleted the disallowance of Rs. 28,224 being the amount of employee's contribution to PF for the same reasons. 6. The learned Departmental Representative relied on the order of the AO. 7. The learned counsel, on the other hand, relied on the order of learned CIT(A). 8. We have considered the submissions of both sides, material on record and orders of authorities below. Admittedly, the cheques have been realized within 15 days from the due date of payment both in respect of employer's (contribution) towards PF as well as employees' contribution to PF. It is a settled position that if the payments have been realized within the period of 15 days where cheques have been deposited before the due date, the disallowance under s. 43B cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement of Mr. Naresh B. Vora without bringing any material on record to establish the fact of realization of higher sale price by the assessee than the recorded sale price. It was also contended that an opportunity of cross-examination was also denied which was a gross violation of principles of natural justice. It was further brought to the notice of learned CIT(A) that the AO without any basis held that a profit margin could be in the region of 5 to 15 per cent depending upon the prevalent marketing conditions at that point of time. The assessee further relied on various judicial decisions that an order made in violation of natural justice was not a proper order. The learned CIT(A) after considering the submissions of the assessee deleted the addition and recorded his findings as under: "Looking to the above facts and arguments of the case and decisions as relied upon by the learned Authorised Representative of the appellant, I am of the clear-cut view that the addition of Rs. 4,18,251 has been made by the AO in violation of principles of natural justice and the addition is full of arbitrary action of the AO and his surmises and conjectures. It was the legal obligation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the considered opinion that the learned CIT(A) rightly deleted the addition. Thus, this ground of the Revenue is rejected. 14. In the result, the appeal filed by the Revenue is partly allowed. 15. Now we shall take up Revenue's appeal in ITA No. 856/Mum/2003 for asst. yr. 1999-2000. 16. Ground No. (i) deals with the deletion of addition of Rs. 20,22,002 on account of unutilised Modvat credit which was included in the value of closing stock by the AO. Similar issue arose in the preceding assessment year wherein following the order of the Hon'ble Supreme Court in the case of CIT vs. Indo-Nippon Chemicals Co. Ltd. the deletion of addition has been confirmed by us in ITA No. 7373/Mum/2002 for asst. yr. 1999-2000. 17. The learned Departmental Representative contended that during the year under consideration s. 145A enacted by the Finance (No. 2) Act, 1998 had come into force, therefore, the issue was required to be considered in the light of provisions of s. 145A of the Act. The learned Departmental Representative further contended that the adjustments as per the provisions of s. 145A were to be made only in respect of valuation of closing stock because the opening stock as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of preparing the return of income. These adjustments are as follows: (i) Any tax, duty, cess or fee actually paid or incurred or inputs should be added to the cost of inputs (raw materials, stores, etc.) if not already added in the books of account. (ii) Any tax, duty, cess or fee actually paid or incurred on sale of goods should be added to the sales, if not already added in the books of account. (iii) Any tax, duty, cess or fee actually paid or incurred on the inventory (finished goods work-in-progress, raw materials, etc.) should be added to the inventories, if not already added while valuing the inventory in the accounts." Admittedly, the assessee has recorded purchase, sales and inventories on net basis in the books of account, hence effect of Modvat as per the provisions of s. 145A of the IT Act, 1961 has to be given. The only question is whether the value of opening stock would also be notionally adjusted. In any event the assessee is entitled to claim the deduction of excise duty on the manufactured goods at the time of sale subject to the provisions of s. 43B of the Act. Therefore, the amount of unutilised Modvat credit referable to opening stock would b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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