TMI Blog2022 (8) TMI 1307X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the appeals, holding the original assessment framed as erroneous and prejudicial to the Revenue for the reason that the Assessing Officer 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. The facts and circumstances are exactly identical in both the cases and even the grounds are also identically worded and hence will take the facts from ITA No. 340/Chny/2022 and will decide the issue. 3. The assessee has raised the following grounds of appeal: 1.1 The order of the Principal Commissioner of Income Tax is contrary to law, facts and circumstances of the case. 1.2 The PCIT went wrong in not at all considering the reply filed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal in his show-cause notice. 4. Brief facts are that the Income Tax Department conducted search u/s. 132 of the Act in M/s. Dhanalakshmi Srinivasan Charitable and Educational Trust on 15.02.2018. During the search on this group, the assessee was also covered being Vice Chairman of the group along with his wife also present assessee before us. During the course of search u/s. 132 of the Act several incriminating materials were found and seized from the residence of one of the employee of the group Shri. K. Muralidharan. Accordingly, assessee s case was selected for scrutiny by issuing notice u/s. 143(2) of the Act and subsequently information was called u/s. 142(1) of the Act regarding the claim of agricultural income. The assessee clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness Ward-XV(2) [2019] 409 ITR 567 (Madras) and also the decision of Hon ble Allahabad High Court in the case of CIT vs Vam Resorts Hotels (P) Ltd [2019] 418 ITR 723 (All). 6. On the other hand, Ld. CIT(DR) heavily relied on the revision order and stated that the Assessing Officer while framing assessment u/s 143(3) of the Act has not examined the issue of applicability of rate of tax as prescribed u/s. 115BBE of the Act and assessee declared agricultural income but assessed by the AO as unexplained income is always subject to higher rate of tax in view of the provisions of section 115BBE of the Act and therefore, the revision order passed by PCIT is within the four corners of law as the assessment order is erroneous as well as prej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the order passed by the Assessing Officer under Section 54F of the Act. The said finding rendered by the Commissioner is wholly unsustainable, since the assessee went on appeal against the re-assessment order dated 31.12.2009 stating that his claim for deduction under Section 54 http://www.judis.nic.in of the Act should be accepted. 23. Therefore, in the process of considering as to what relief the assessee is entitled to, the Assessing Officer held that the assessee is entitled to claim deduction under Section 54F of the Act and assigned certain reasons for that. Therefore, the larger issue was pending before the Commissioner of Appeals, and in such circumstances, the Commissioner could not exercise power under Section 263 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs would become a fait accompli. 25. Thus, for the above reasons we are fully satisfied that the assumption of jurisdiction by the Commissioner under Section 263 of the Act was wholly without jurisdiction as the twin tests have not been satisfied and consequently, the order dated 14.03.2012 as confirmed by the Tribunal by order dated 13.07.2012 calls for interference. 8. Even this issue has been decided by Hon ble Allahabad High Court in the case of Vem Resorts Hotels (P) Ltd (supra) and particularly in Para 25 Hon ble Allahabad High Court observed as under: 25. As, Clause (c) of Explanation 1 to Section 263 of the Act provides that when an appeal is pending before the Commissioner, the exercise of jurisdiction under Section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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