Continuation of firm registration upheld where one partner's undisclosed receipts did not change the firm's constitution.

A partnership firm remained entitled to continuation of registration under section 184(7) of the Income-tax Act, 1961 because the deed identified the partners and their profit shares, and profits were required to be apportioned accordingly. Alleged undisclosed donations and unrecorded investments by one partner did not, without proof of complicity by the other partners or proof that profits were shared contrary to the deed, amount to a change in the firm's constitution. The erring partner could face action, but the firm's registration could not be denied on that basis.

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Issues: Whether the firm was entitled to continuation of registration under section 184(7) of the Income-tax Act, 1961 where one partner had allegedly received undisclosed donations and made unrecorded investments, and whether such conduct altered the constitution of the firm.

Analysis: The partnership deed disclosed the names of the partners and their respective shares, and the profits of the business were required to be apportioned according to those shares. Mere non-disclosure by one partner of amounts received or misappropriated, without proof of complicity by the other partners or evidence that the profits were shared in a manner different from the deed, did not amount to a change in the constitution of the firm. Such conduct could justify action against the erring partner, but it could not by itself deprive the firm of continued registration.

Conclusion: The firm remained entitled to continuation of registration under section 184(7) of the Income-tax Act, 1961, and the question was answered in favour of the assessee.

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