Genuineness of firm controls cancellation of registration; minor attaining majority alone does not justify cancellation.

Cancellation of continuance of registration under section 186(1) of the Income-tax Act was confined to cases where the firm was not genuine during the relevant previous year. A minor admitted to the benefits of partnership attaining majority did not, by itself, make the firm non-genuine or justify cancellation, and the absence of a fresh partnership deed on that ground alone was insufficient. A possible change in constitution did not destroy the firm's genuineness, so the cancellation of registration was held unjustified.

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Issues: Whether the cancellation of continuance of registration of a firm was valid under section 186(1) of the Income-tax Act, 1961, when one of the minors admitted to the benefits of partnership attained majority during the previous year and no fresh deed of partnership was executed.

Analysis: The decisive consideration was whether there was any absence of a genuine firm during the relevant previous year. The mere fact that a minor admitted to the benefits of partnership became a major did not, by itself, render the firm non-genuine or justify cancellation of registration. The court noted that the statutory power under section 186(1) was confined to cases where the certificate had been obtained without there being a genuine firm in existence. A possible change in constitution, even if assumed, did not destroy the firm's genuineness, and the failure to execute a fresh partnership deed could not, on that ground alone, support cancellation.

Conclusion: The cancellation of continuance of registration under section 186(1) was not justified and the assessee succeeded on the issue.

Ratio Decidendi: Registration of a firm can be cancelled under section 186(1) only where the firm was not genuine during the relevant period; a mere change in constitution arising from a minor attaining majority, without loss of genuineness, is insufficient.

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