Genuine partnership evidence governs registration; mere suspicion and lack of capital contribution cannot defeat recognition.

Registration of a partnership firm under section 26A could not be refused on mere suspicion or inconclusive circumstances. The Court held that absence of capital contribution by some partners and non-disclosure of the firm's constitution to bankers were, by themselves, insufficient to prove that the partnership deed was unreal or sham. Refusal of registration required relevant material showing that the partnership was not genuine, and unsupported assumptions could not replace proof. On the facts discussed, the deed was treated as a genuine partnership and registration was upheld in favour of the assessee.

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Issues: Whether the firm constituted under the partnership deed dated 26 April 1955 was entitled to registration under section 26A of the Income-tax Act.

Analysis: The assessment authorities had refused registration on the view that the deed was not genuine and that the newly introduced partners were not real partners. The decisive question was whether there was any relevant material to support that finding. Mere absence of capital contribution by some partners and non-intimation of the change in constitution to banks were held to be insufficient circumstances to justify rejection of registration. A partnership cannot be treated as unreal or sham merely because some partners contributed no capital or because the firm was not disclosed to bankers; suspicion cannot take the place of proof.

Conclusion: The deed represented a genuine partnership and the firm was entitled to registration under section 26A. The question was answered in favour of the assessee.

Ratio Decidendi: Refusal of registration of a firm under section 26A cannot rest on mere suspicion or inconclusive circumstances; there must be relevant material showing that the partnership is not genuine.

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