Firm registration may be refused where the partnership is not genuine and concealed profits are not shared among partners.

Registration of a firm under the income-tax law is available only where the partnership shown by the instrument is real and the terms are actually carried out. On the facts found, the firm was not genuine, the accounts showed suppression of sales and income, different sets of accounts were maintained, and concealed profits were not distributed among the partners. On that basis, registration was refused and the assessee's claim failed. The finding of non-genuineness was treated as a factual determination, and the Tribunal's view that the firm was not entitled to registration was upheld.

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Issues: Whether the refusal of registration of the assessee-firm was justified on the ground that the firm was not genuine and that concealed profits were not distributed among the partners.

Analysis: The Tribunal found that the partnership was not a genuine firm and that the accounts maintained by the assessee disclosed deliberate suppression of sales and income, maintenance of different sets of accounts, and non-distribution of concealed profits among the partners. The governing principle applied was that registration under the income-tax law is available only where the firm shown by the instrument of partnership is real and the partnership terms are actually acted upon. Where undisclosed profits are earned but are not distributed among the partners, the Income-tax Officer may refuse registration, and the finding of non-genuineness is a factual one.

Conclusion: The refusal of registration was upheld and the assessee's application was rejected; the answer is against the assessee and in favour of the Revenue.

Final Conclusion: The Court declined to call for a reference because the Tribunal's view that the firm was not genuine and was not entitled to registration stood supported by the governing law.

Ratio Decidendi: Registration of a firm may be refused where the firm is found, on facts, to be not genuine and the concealed profits are not shown to have been distributed in accordance with the partnership arrangement.

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