Theorem 5.7. (First Sylow Theorem) Let $G$ be a group of order $p^nm$, with $n\geq 1$, $p$ prime, and $(p,m)=1$. Then $G$ contains a subgroup of order $p^i$ for each $1\leq i\leq n$ and every subgroup of $G$ of order $p^i$ ($i\lt n$) is normal in some subgroup of order $p^{i+1}$.
Proof: Since $p\mid |G|$, $G$ contains an element $a$, and therefore, a subgroup $\langle a\rangle$ of order $p$ by Cauchy's Theorem. Proceeding by induction assume $H$ is a subgroup of $G$ of order $p^i(1\leq i\lt n)$. Then $p\mid [G:H]$ and by Lemma 5.5 and Corollary 5.6 $H$ is normal in $N_G(H)$, $H\neq N_G(H)$ and $1\lt |N_G(H)/H|= [N_G(H):H]\equiv [G:H]\equiv 0 \pmod p$. Hence $p\mid |N_G(H)/H|$ and $N_G(H)/H$ contains a subgroup of order $p$ as above. By Corollary 1.5.12 this group is of the form $H_1/H$ where $H_1$ is a subgroup of $N_G(H)$ containing $H$. Since $H$ is normal in $N_G(H)$, $H$ is necessarily normal in $H_1$. Finally $|H_1| = |H||H_1/H| = p^ip = p^{i+1}$.
Question: I don’t see where Author used $(p,m)=1$ hypothesis in the proof. At least it is not been used explicitly.
There are two important parts to Sylow's First Theorem:
The fact that $\gcd(p,m)=1$ is not used in establishing these results. It is used in "limiting" their reach. In a sense, item 1 can be read as saying
It's just that the "only if" clause follows from Lagrange's Theorem, so the important part of Sylow's First Theorem in this item is the "if" clause.
Likewise, item $2$ is trading on the fact that $p^{i+1}$ must also divide $|G|$ (otherwise there is no subgroup of order $p^{i+1}$ at all, let alone one that contains $H$). You could likewise rephrase it as an "if and only if":
The "only if" clause again holds by Lagrange's Theorem; the $i=0$ case holds by Cauchy's Theorem and that the trivial subgroup is always normal. So the meat of this result is the "if" clause, which requires $p^{i+1}$ to be a divisor of $|G|$.
So the fact that $p^n$ is the largest powers of $p$ that divides $p^nm$ is being used in the way the important part of the statement, the part that was not already known through Lagrange's Theorem, is made: restricting $i$ to $i\leq n$ in the first part, and to $i\lt n$ in the second part.