Continuation of partnership registration fails where the underlying sub-partnership is held not genuine and unregistered.

Continuation of registration under section 184(7) of the Income-tax Act depends on an existing validly registered firm. Where the sub-partnership had already been found not genuine and not entitled to registration for the earlier assessment year, that finding removed the for treating the firm as continuingly registered in the next year. The changed legal position meant the earlier grant of continuation could not survive, and the assessee-firm was held not entitled to continuation of registration for assessment year 1971-72.

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Issues: Whether the assessee-firm was entitled to continuation of registration for the assessment year 1971-72 under section 184(7) of the Income-tax Act, 1961, after the sub-partnership had already been found not genuine and not entitled to registration for the earlier assessment year.

Analysis: The earlier decision for the assessment year 1970-71 had conclusively held that the sub-partnership between the parties was not genuine and was not entitled to registration. On that footing, there could be no registered partnership continuing into the next assessment year, because continuation of registration presupposes the existence of a validly registered firm. The changed legal position therefore displaced the basis on which continuation had originally been granted.

Conclusion: The assessee was not entitled to continuation of registration for the assessment year 1971-72, and the question was answered in the negative in favour of the Revenue.

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