JUDGMENT
1. On an application filed under Section 256(1) of the Income-tax Act, 1961, the Tribunal has referred the following question for the opinion of this court :
“Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that on filing of the revised return distribution of enhanced profits is required for continuance of partnership firm as registered under Section 184(7) of the Income-tax Act, 1961 ?”
2. The assessee has claimed the status of a registered firm for which a declaration under Section 184(7) was filed along with the original return of income. In the original return, the income declared was Rs. 21,060. Subsequently, the assessee has filed the revised return on November 28, 1979, and in the revised return, it has declared the income of Rs. 40,625. The admitted fact is that no books of account are maintained by the assessee. The Assessing Officer has refused to grant registration to the firm of the assessee on the ground that there being no books of account and there being no evidence as to whether the enhanced profits were distributed amongst the partners in accordance with the declaration filed under Section 184(7) of the Act, the assessee is not entitled to continue the registration of the firm.
3. In appeal, the Appellate Assistant Commissioner has allowed the appeal holding that once the partners have certified for distribution of the profits amongst them, registration should be granted.
4. In appeal before the Tribunal, the Tribunal came to the conclusion, that there is no distribution of enhanced profits in accordance with the declaration under Section 184(7) of the Act and therefore restored the view taken by the Assessing Officer.
5. Heard learned counsel for the parties. Mr. Kasliwal, learned counsel for the assessee, submits that the assessee was a registered firm in the preceding year and this year only continuation of the registration is required for the firm. As per Sub-section (7) of Section 184, if the assessee shows that there is no change in the constitution of the firm, the shares of the partners and the assessee-firm
furnishes the returns before the expiry of time allowed and also declaration in the prescribed form verified in the prescribed manner, the registration should be allowed to continue.
6. Mr. Kasliwal further submits that registration once granted can be cancelled only under Sections 186(1) and 186(2).
7. Mr. Mathur, learned counsel for the Department, submits that when the original return has been filed, declaration under Section 184(7) has been furnished along with the original return. In the original return, the income shown was Rs. 21,060 and in the revised return, the income shown was Rs. 40,625. When the declaration of income shown was only Rs. 21,060, no further declaration was furnished though the income was shown as Rs. 40,625. Therefore, the firm is not genuine and no case for continuation of the registration is made out.
8. The Tribunal is a fact-finding body. The finding of the Tribunal is that along with the original return, the assessee has filed the declaration and in the declaration, the income of the firm was shown as Rs. 21,060. Thereafter, a revised return was filed. There in the revised return the income has been shown as Rs. 40,625 but no further declaration has been filed. The declaration has remained the same as was filed along with the original return. When in the original return the declaration was shown as Rs. 21,060 and in the revised return, the income was shown as Rs. 40,625, what is the correct state of affairs of the firm is not known and the genuineness of firm is in doubt.
9. Merely, if some member has certified that the income and the profits are distributed as per the partnership deed that is not enough, once the finding is there that the assessee has failed to prove that the partners have acted as per the terms of the partnership deed, the firm is not genuine and when the firm is not genuine, there is no question of continuation of registration. It is also pertinent to note that in earlier years the books of the firm were not rejected, this year the assessee has not maintained the books of account. Therefore, we find no infirmity in the order of the Tribunal.
10. In the result, we answer the question in the affirmative, i.e., in favour of the Revenue and against the assessee.
11. The reference so made stands disposed of accordingly.