Genuineness of partnership for tax registration can be tested on totality of facts, despite prior assessment of the firm.

Registration of a firm depended on proof of a real partnership under a proper deed, and the taxing authority could examine the totality of circumstances to test genuineness. Where the surrounding facts showed that another concern controlled the business and finance while the alleged partners played no substantive role beyond occasional signatures, the arrangement could be treated as simulated and registration refused. Prior assessment of the firm did not prevent inquiry into genuineness in registration proceedings, because assessment and registration were separate proceedings. On that basis, the firm was not established as a genuine partnership for registration purposes.

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Issues: Whether the assessee-firm was a genuine partnership entitled to registration under section 26A of the Indian Income-tax Act, 1922, and whether prior assessment of the firm precluded inquiry into its genuineness in registration proceedings.

Analysis: The conditions for registration required the Income-tax Officer to be satisfied that there was a genuine partnership evidenced by a proper partnership deed. The facts relied upon by the revenue, viewed cumulatively, showed that the business was managed and financed by another concern, while the alleged partners took no real part in the business except occasional signing of letters and cheques. The court held that isolated facts might not be decisive, but their combined effect could establish that the partnership was only a simulated arrangement. It further held that registration proceedings, though connected with assessment, are separate proceedings, and an assessment of the firm does not bar inquiry into whether the firm is in fact genuine.

Conclusion: The assessee-firm was not shown to be a genuine partnership for the purpose of registration, and the question was answered against the assessee and in favour of the revenue.

Ratio Decidendi: For registration of a firm, the taxing authority may examine the real genuineness of the partnership on the totality of circumstances, and an assessment of the firm does not conclusively establish its factual existence in registration proceedings.

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