Renewal discretion: undisclosed real profits not divided per partnership deed justify refusal of firm registration renewal.

Renewal of firm registration under the relevant statute is discretionary and requires the application form to be in order and a separate satisfaction that the firm genuinely exists as shown by its partnership instrument; a certification that profits were divided or credited according to partnership shares must refer to the real, not merely declared, profits. Where partners conceal a portion of real profits and do not distribute or credit that portion as per the partnership deed, the certificate is incorrect or incomplete, and such undistributed profits constitute a sufficient factual ground for the tax authority to refuse renewal. The firm's renewal for the year in question was rightly refused on those grounds.

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Issues: Whether a firm was entitled to renewal of registration for the assessment year 1948-49 where a portion of the firm's profits (undisclosed black market profits) was not distributed or credited to all partners in accordance with the instrument of partnership.

Analysis: The statutory framework requires an application in the prescribed form and within the prescribed time for registration or renewal under section 26A and the relevant rules; rule 6A uses the word "may" for renewal, conferring a discretion on the Income-tax Officer to grant or refuse renewal. The satisfaction mandated by the rules that the application is "in order" has been interpreted to relate to correctness of form rather than truth of substance, and a separate satisfaction is required about the existence of a genuine firm constituted as shown in the partnership instrument. The certificate in the application that profits were divided or credited according to the partnership shares must relate to the actual or real profits. If partners dishonestly conceal a portion of the real profits and fail to distribute or credit that portion according to the instrument, the certificate is incorrect or incomplete. An incorrect or incomplete certificate and the fact that undistributed profits were not apportioned among partners are relevant and sufficient grounds for the Income-tax Officer to exercise his discretion against renewal. The Tribunal's factual finding that a portion of the real profits was not divided in accordance with the partnership deed is a relevant factual basis for refusal.

Conclusion: The assessee firm had no right to renewal of registration for the assessment year 1948-49; renewal could be refused on the ground that a portion of the profits had not been distributed or credited in accordance with the instrument of partnership, and the discretion of the Income-tax Officer to refuse renewal on that ground was rightly exercised.

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