Section 263 revisional jurisdiction survives for issues not decided in appeal despite the doctrine of merger.

The Commissioner of Income-tax's revisional jurisdiction under section 263 of the Income-tax Act continues over issues forming part of the assessment order that were not considered and decided in the appeal. The retrospective amendment to the Explanation to section 263 expands that power, and the doctrine of merger does not prevent revision beyond matters actually adjudicated on appeal. Accordingly, where an assessment order has been appealed against, the Commissioner may validly revise the untouched issues in that order despite the pending appellate proceedings or the limited scope of appellate decision.

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Issues: Whether the Commissioner of Income-tax could assume jurisdiction under section 263 of the Income-tax Act, 1961 in respect of matters not considered and decided in the appeal.

Analysis: The revisionary power under section 263, as modified by the Explanation and its retrospective amendment, was held to extend to issues forming part of the assessment order but not considered and decided in appeal. The doctrine of merger did not curtail that jurisdiction beyond the matters actually adjudicated in appeal.

Conclusion: The question was answered in the negative, and the Commissioner could validly exercise jurisdiction under section 263 over matters not decided in the appeal.

Ratio Decidendi: Where an assessment order has been appealed against, the Commissioner's revisional jurisdiction under section 263 continues in respect of matters not considered and decided in that appeal, notwithstanding the doctrine of merger.

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