Doctrine of merger does not bar section 263 revision when the disputed tax issue was never raised in appeal.

Where the specific issue relating to the applicability of section 37(3A) was not raised before the appellate authority and was not considered by it, the assessment order did not merge with the appellate order on that point. On that factual basis, the doctrine of merger did not bar the Commissioner's revisional jurisdiction under section 263 of the Income-tax Act, 1961, and revision remained available on the unagitated issue. The answers were therefore against the assessee and in favour of the Revenue.

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Issues: Whether the Commissioner could invoke section 263 of the Income-tax Act, 1961 where the point on which revision was made had not been agitated before the appellate authority and, consequently, whether the doctrine of merger barred revisional jurisdiction.

Analysis: The questions were founded on the factual position that the specific point relating to the applicability of section 37(3A) had neither been raised before nor considered by the appellate authority. On those facts, the order of assessment could not be said to have merged in the appellate order on that issue, and the revisional power under section 263 remained available.

Conclusion: The Commissioner's jurisdiction under section 263 was not excluded, and the answers were against the assessee and in favour of the Revenue.

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