2005 (2) TMI 88

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.... The present reference relates to the assessment year 1982-83. Briefly stated the facts giving rise to the present reference are as follows: The respondent is a partnership firm which had been granted registration under the Act in the preceding year. For the assessment year in question it had filed a declaration in terms of section 184(7) of the Act seeking continuation of the registration of the firm. The Assessing Officer had declined to grant registration on the ground that the profits were not divided amongst the partners in accordance with the partnership deed. It may be mentioned here that certain cash credits amounting to Rs. 52,000 was surrendered by the respondent at the time of assessment. The profit and loss account showed ....

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....nder section 184(7) is not allowed. This could not be done because the Income-tax Officer is nobody to allow or not to allow continuation of registration under section 184(7). Once a declaration has been filed under section 184(7) and the firm was registered for an earlier year, the registration will have effect for every subsequent year for which declaration is filed. Therefore, on its very face the order passed by the Assessing Officer was untenable in law. Further on the merits, the mere fact that the assessee had certain income, which he did not disclose, does not mean that the profits of the firm have not been divided amongst the partners in the agreed profit-sharing ratio. Reliance was placed by the Assessing Officer on the case of Kh....

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.... Assessing Officer had no material to hold that the assessee-firm was not a genuine firm. For the above reasons the appeal is allowed and the order passed by the Assessing Officer purporting to decline continuation of registration is hereby annulled." We have heard Sri A.N. Mahajan, learned standing counsel for the Revenue. Learned standing counsel submitted that as the amount of cash credit had been surrendered by the respondent itself in the course of the assessment proceedings it was incumbent upon the firm to distribute the said amount by treating it as profit amongst the various partners in terms of their shares specified in the partnership deed and as they have failed to do so the respondent was not entitled for continuation of ....