M/S. SARUPCHAND HUKAMCHAND & CO. vs UNION OF INDIA AND OTHERS

The Supreme Court held that under Section 23(5)(b) of the Indian Income-tax Act, 1922, an unregistered firm can only be treated as registered if there is a profit. The Appellate Assistant Commissioner's reversal of the Income-tax Officer's finding of profit to a loss automatically nullifies the latter's jurisdiction to treat the firm as registered. Consequently, the original assessment by the Income-tax Officer must be annulled, restoring the case to its original position without allowing the carry forward of losses as if the firm were registered under Section 24(2)(d).