Doctrine of merger is limited to issues actually decided in appeal; unadjudicated assessment errors may be rectified.

The doctrine of merger applies only to matters actually considered and decided in appeal, so parts of an assessment not adjudicated in appeal remain open to correction by the assessing authority. Where the omission to levy super-tax was an apparent mistake on the record and was not the subject of the appellate order, the Income-tax Officer could rectify it under section 154 of the Income-tax Act, 1922. The fact that the assessment had been appealed did not bar rectification of that untouched omission. The Tribunal was therefore wrong to treat the reassessment orders as wholly merged in the appellate orders, and the reference was answered in favour of the Revenue.

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Issues: Whether the Income-tax Officer had jurisdiction to rectify the reassessment orders under section 154 of the Income-tax Act, 1922, where the assessment orders had been appealed against and the omission to levy super-tax was not a matter decided in appeal.

Analysis: The assessments were governed by the Income-tax Act, 1922, and the omission to levy super-tax was an apparent mistake admitted by the assessee. The doctrine of merger is not of universal application; it operates only to the extent of matters actually considered and decided in appeal. That part of the assessment which was not the subject-matter of the appellate order remains the order of the Income-tax Officer and may be corrected under section 154 if the mistake is apparent from the record. Section 154(1A) was treated as declaratory of the existing legal position, and the fact that the assessment order had been appealed from did not bar rectification of an unadjudicated omission.

Conclusion: The Income-tax Officer had jurisdiction to rectify the omission to levy super-tax, and the Tribunal was wrong in holding that the reassessment orders had wholly merged in the appellate orders.

Final Conclusion: The reference was answered against the assessee and in favour of the Revenue on the scope of merger and the power of rectification under section 154.

Ratio Decidendi: The doctrine of merger applies only to issues actually considered and decided in appeal, leaving untouched matters not so adjudicated, and an apparent mistake in such untouched matters may be rectified by the assessing authority under section 154.

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