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2022 (8) TMI 1307 - AT - Income TaxRevision u/s 263 by CIT - Doctrine of merger - As per CIT AO has not applied higher rate of tax u/s 115BBE of the Act on income assessed by the AO as unexplained but declared by assessees as agricultural income - HELD THAT:- Admitted facts are that the assessee’s income declared from agricultural activities as assessed by AO as unexplained income. Admittedly this addition of agricultural income as unexplained income is a matter is being contested before CIT(A) - We noted that this issue has been dealt by Hon’ble Madras High Court in the case of Smt. Renuka Philip [2018 (12) TMI 129 - MADRAS HIGH COURT] wherein had dealt with exactly identical situation where the addition was subject matter of appeal before CIT(A) was held to be covered by the concept of doctrine of merger in view of the provisions of clause (c) of Explanation (1) to section 263. Addition of agricultural income by the AO as unexplained income is contested before the CIT(A) by the assessee and once this being contested before CIT(A), in view of the provisions of clause (c) of Explanation (1) to section 263 of the Act, the doctrine of merger will apply and the PCIT cannot take any cognizance of the matter while adjudicating u/s. 263 CIT(A)’s powers are co-terminus with those of the AO and he can do what the AO could do and can also direct the later to do what the later failed to do on that very issue. In the present case, the CIT(A) can also rectify charging of higher rate of tax during appeal proceedings, in case the provisions of the Act so provides and income of the assessee declared as agricultural income is upheld to be assessed as unexplained income. Accordingly, we are of the view that the revision order passed by PCIT u/s.263 is bad in law and without jurisdiction. Hence, we quash the revision order passed by PCIT and allow the appeal of the assessee.
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