Partnership registration under income tax law requires relevant evidence of genuineness; unsupported refusal cannot stand.

A firm seeking registration under section 26A of the Indian Income-tax Act, 1922 was held entitled to registration because the partnership was supported by a written deed, registration with the Registrar of Firms, banking arrangements, and business conduct through disclosed agents. The High Court found no material circumstances justifying an inference that the partnership was sham or non-genuine, and held that the Tribunal had relied on isolated answers and contextualised facts rather than relevant evidence. The refusal of registration was therefore not sustainable because the finding lacked proper evidentiary support and was unreasonable on the record.

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Issues: Whether the assessee-firm was entitled to registration under section 26A of the Indian Income-tax Act, 1922, and whether the refusal by the Tribunal was supported by relevant evidence.

Analysis: The application for registration was supported by a written partnership deed, registration of the firm with the Registrar of Firms, banking arrangements, and conduct of business through disclosed agents. The record did not disclose material circumstances from which a reasonable inference of a sham or non-genuine partnership could properly be drawn. The Tribunal's conclusion rested on isolated answers, supposed ignorance of banking details, and other circumstances taken out of context, rather than on acceptable evidence. The question referred was wide enough to permit scrutiny of whether the Tribunal's finding was reasonable and based on relevant considerations.

Conclusion: The assessee-firm was entitled to registration under section 26A, and the Tribunal's refusal was not sustainable.

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