The merger of orders occurs only in respect of the issues adjudicated upon by the appellate authority, and not in respect of the entire order.

( 1 ) THIS reference arises in respect of the assessment year 1961-62. The facts found are that Singho Mica Mining Co. Ltd. , the assessee, filed its return for the said assessment year on the 28th June, 1962, on which assessment was made on the 4th March, 1966. Subsequently, it was found that the assessee bad not complied with the provisions of Section 18a (3) of the Indian Income-tax Act, 1922, and failed to file its estimate but in the original assessment the Income-tax Officer did not charge any interest under Section 18a (8) of the Indian Income-tax Act, 1922. The Commissioner considered that this omission to charge interest has resulted in prejudice to the interest of the revenue and after hearing the assessee passed an order under, Section 263 of the Income-tax Act, 1961, directing the Income-tax Officer to compute and recover such interest. Interest was levied accordingly.

( 2 ) IN the meantime, the assessee had preferred an appeal from the original order of assessment before the Appellate Assistant Commissioner which was disposed of by the latter by his order dated the 12th August, 1968.

( 3 ) THE assessee preferred an appeal before the Tribunal from the order of the Commissioner. It was contended before the Tribunal that the assessment order dated the 4th March, 1966, had merged with the order of the Appellate Assistant Commissioner in appeal and consequently Section 263 of the Income-tax Act, 1961, could not apply.

( 4 ) IT was also contended that the Income-tax Officer should be deemed to have exercised the discretionary power vested in him under rule 48 (1) of the Income-tax Rules, 1922, and to have waived interest under the said Section 18a (8 ).

( 5 ) IT was further contended that with effect from the 1st April, 1962, the Income-tax Act of 1922 had been repealed by the new Act of 1961 and as such Section 18a (8) of the earlier Act had ceased to exist from that date and the Commissioner's order directing the levy of interest under that section could not be sustained.

( 6 ) THE department contended before the Tribunal that the appeal from the assessment was on points entirely unconnected with the question of levy of interestand that merger, if any, was only in respect of the points adjudicated upon in the appeal and not in respect of the entire order.

( 7 ) IT was also contended that Section 18a (8) of the earlier Act was the appropriate section under which interest was leviable and as in any event if the power to levy interest existed the same could be made under the appropriate section of the new Act.

( 8 ) LASTLY, it was contended that there was nothing in the records suggesting that the Income-tax Officer had in fact exercised his discretion to waive the interest and ex facie there was no waiver.

( 9 ) THE Tribunal held that merely because there has been an appeal it would be incorrect to hold that the order of the Income-tax Officer had merged with that of the Appellate Assistant Commissioner in its entirety. Merger was only in respect of those issues which had been adjudicated upon by the appellate authority. The admitted position was that the levy or non-levy of the interest was not in issue in the appeal and, therefore, this issue could be validly revised by the Commissioner under Section 263 of the Income-tax Act, 1961.

( 10 ) ON the authority of the Supreme Court in the case of Singh Engineering Works Private Ltd. , the Tribunal held that interest in this case was leviable and to be considered as having been levied under Section 217 of the Income-tax Act, 1961, and not under Section 18a (8) of the Indian Income-tax Act, 1922. Mislabelling or mentioning a wrong section did not vitiate the order as the requisite power was otherwise vested and exercise thereof was referable to a jurisdiction, which conferred validity upon it.

( 11 ) THE Tribunal did not accept that the Income-tax Officer would be deemed to have waived interest and found that there was no material to establish