Tribunal quashes IT Commissioner's order under Section 263, allowing Assessing Officer's gross profit estimation.

The Tribunal quashed the Principal Commissioner of Income Tax's order under Section 263, holding that the Assessing Officer's estimation of gross profit was permissible, and the Commissioner's directions constituted an impermissible change of opinion. The appeal was partly allowed, with the Tribunal setting aside the Commissioner's directions for fresh assessment.

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Issues Involved:
1. Treatment of Sundry Accounts Written Off.
2. Addition of Sundry Creditors.
3. Sundry Creditors from an Erstwhile Partnership Firm.
4. Applicability of Section 68 in the Absence of Books of Accounts.

Detailed Analysis:

Issue 1: Treatment of Sundry Accounts Written Off
- The Principal Commissioner of Income Tax (Pr. CIT) considered Rs. 16,164 of sundry accounts written off as separate income, which the assessee contested, arguing it originated from works contract income.
- The Tribunal dismissed this ground as not pressed by the assessee.

Issue 2: Addition of Sundry Creditors
- The Pr. CIT proposed adding Rs. 2,69,16,055 as sundry creditors, questioning the detailed list provided by the assessee.
- The Tribunal noted that the assessee had provided a detailed list of sundry creditors, which related to earlier assessment years. The Assessing Officer (AO) had already completed the assessment by estimating the profit under Section 145(3) of the Income Tax Act due to the absence of books of accounts.
- The Tribunal found that the AO had ample rights for verification but did not utilize them adequately. The Pr. CIT's direction to reassess and verify these creditors was seen as substituting his opinion over the AO's, which was not permissible.
- The Tribunal referred to the case of M/s Gulf Steel & Minerals, where it was held that once gross profit is estimated, no further addition on creditors can be made.

Issue 3: Sundry Creditors from an Erstwhile Partnership Firm
- The assessee argued that sundry creditors amounting to Rs. 89,31,810 were taken over from an erstwhile partnership firm and related to earlier assessment years, with no new liability incurred during the current year.
- The Tribunal observed that the AO had already considered these details and estimated the profit, making the Pr. CIT's recommendation for further verification redundant and unsustainable.

Issue 4: Applicability of Section 68 in the Absence of Books of Accounts
- The Pr. CIT cited the case of Commissioner of Income Tax v. Devi Prasad Vishwanath, asserting that additions under Sections 68, 69, 69A, 69B are possible even when income is estimated under Section 144 due to rejection of books under Section 145(3).
- The Tribunal disagreed, noting that the facts of the cited case differed from the present case, where there was a complete absence of books of accounts. For Section 68 to apply, the presence of books of accounts is required.
- The Tribunal emphasized that the AO had already rejected the books of accounts and estimated the gross profit, making any further direction to accept the books and reassess as per Pr. CIT's instructions an act of changing opinion, which is not allowed.

Conclusion:
- The Tribunal quashed the Pr. CIT's order under Section 263, holding that the AO's estimation of gross profit was a permissible view and that the Pr. CIT's directions amounted to an impermissible change of opinion.
- The appeal was partly allowed, with the Tribunal setting aside the Pr. CIT's directions for fresh assessment.

Order Pronouncement:
- The order was pronounced in the open court on 15/11/2019.

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