Continuation of firm registration depends on genuineness and unchanged partnership shares, not proof of undisclosed profit distribution.

Continuation of registration of a firm under section 184(7) cannot be cancelled under section 186 merely because profits from undisclosed business were not shown as distributed among partners. Form No. 12 requires only a declaration that there has been no change in the constitution of the firm or in the partners' shares; it does not require certification of profit apportionment. The revenue precedent based on the 1922 Act was inapplicable because that scheme required a different form of certification. In the absence of a finding that the firm was not genuine, or that the constitution or profit-sharing shares had changed, cancellation was not justified.

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Issues: Whether the continuation of registration of a firm under section 184(7) of the Income-tax Act, 1961 could be cancelled under section 186 merely because profits from undisclosed business were not shown to have been distributed among the partners, absent a finding that the firm was not genuine.

Analysis: The lower authorities had not recorded a definite finding that the firm was not genuine. For continuation of registration under section 184(7), the declaration in Form No. 12 is confined to there being no change in the constitution of the firm or in the shares of the partners; it does not require a declaration that profits have been apportioned in accordance with the partnership deed. The position was contrasted with renewal under the 1922 Act, where the relevant form required certification of division of profits. The precedent relied on by the revenue was held inapplicable because it arose under the 1922 Act and turned on a different statutory scheme. In the absence of evidence that the undisclosed profits were shared in a manner contrary to the deed, cancellation could not be sustained.

Conclusion: Cancellation of registration under section 186 was not justified, and continuation of registration was required to be allowed.

Ratio Decidendi: Under section 184(7) of the Income-tax Act, 1961, continuation of registration cannot be denied or cancelled solely on the ground that undisclosed profits were not shown to have been distributed, unless there is a substantive finding that the firm was not genuine or that the constitution or profit-sharing shares had changed.

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