Income-tax registration cannot be refused merely because transport permits stand in another's name where no statutory prohibition exists.

Refusal to renew registration under section 26A of the Income-tax Act, 1922, is not justified merely because the assessee-firm operates lorries whose permits remain in the names of the original owners. The controlling principle is that, unless a statute expressly or by necessary implication prohibits the arrangement, the mere fact that permits stand in another's name does not make the business unlawful for income-tax registration purposes. The article follows the Supreme Court's view that such benami or similar arrangements are not barred simply because legal title to the permits is not in the operator's name. On that reasoning, renewal of registration was held to be unjustifiably refused.

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Issues: Whether refusal of renewal of registration under section 26A of the Income-tax Act, 1922, was justified when the assessee-firm operated lorries whose permits stood in the names of the original owners.

Analysis: The firm owned and plied the lorries, but the permits had not been transferred and continued in the names of the original owners. The Revenue treated this as an unlawful activity on the footing that operation without permits validly standing in the firm's name contravened the Motor Vehicles Act. The governing principle applied was that, unless the statute expressly or by necessary implication prohibits the arrangement, the mere fact that permits stand in another's name does not render the business illegal so as to deny income-tax registration. The reasoning was controlled by the Supreme Court's view that benami arrangements are not barred merely because the permits are taken in one name while the real ownership or operation is in another.

Conclusion: Refusal of renewal of registration was not justified. The question was answered in favour of the assessees.

Ratio Decidendi: Registration under section 26A cannot be refused merely because the business is carried on with permits standing in another's name, where the statute does not expressly or impliedly prohibit such an arrangement.

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