JUDGMENT Asthana, C.J. - Heard the learned counsel for the Revenue.
2. The question whether on the facts and in the circumstances of the case the Tribunal was justified in holding that the assessee was entitled to registration under section 185 of the Income-tax Act, 1961 for the assessment year 1966-67, which has been referred, must be answered in favour of the assessee and against the Revenue. The Income-tax Officer had refused registration on two grounds viz. (1) he held that the application for registration was filed beyond limitation and (2) that no proper accounts were kept hence it was not possible to find out whether the profit and loss were divided amongest the partners in accordance with the terms of the partnership. A deed of partnership was also filed but the Income-tax Officer held that partnership was not genuine. On appeal by the Firm the Income-tax Appellate Commissioner upheld the order of the Income-tax Officer and dismissed the appeal. The Firm then filed an appeal before the Income-tax Appellate Tribunal. In appeal the claim made on behalf of the Firm that the profits were divided amongest the partners in the profit sharing ratio, as given in the partnership deed, was not disputed. The only ground, therefore, before the Appellate Tribunal, on the basis of which the Revenue urged that the registration was justifiably refused, was that no proper accounts were kept. It appears that the questions of limitation was neither passed before the Appellate Commissioner nor before the Appellate Tribunal on behalf of the Revenue. The Appellate Tribunal relying on the cases of Commissioner of Income-tax vs. Mohan Lal Chagganlal (1963) 50 I.T.R. 477 and V. K. Kurian and K. P. George vs. Commissioner of Income-tax (1967) 63 I.T.R. page 675 held that merge absence of keeping of accounts could not be in law a ground for refusal of registration if otherwise its is found that the Firm was a genuine one and partner were dividing profits and losses in accordance with the terms of partnership. In fact we think the question referred to is more a question of fact rather than of law. Even so, we answer Income-tax in favour of the assessee. As no body has appeared to oppose this reference, there would be no order for costs.