Proceeding pursuant to CPLR article 78 to review respondent’s determination, dated April 18, 1974, which, after a hearing, denied petitioner’s application for a restaurant liquor license. Determination annulled, with costs, and respondent is directed to issue the *576restaurant liquor license forthwith. We find the authority’s determination in this case to be arbitrary and capricious. While we do not condone petitioner’s financial misstatements in connection with a prior application, we find that, given his otherwise unblemished record and his exemplary reputation in the community, the authority’s determination that he is "not a fit and proper person to be licensed” is without a rational basis (Matter of 125 Bar Corp. v State Liq. Auth. of State of N. Y., 24 NY2d 174, 178). Moreover, we do not find that petitioner was an undisclosed principal in a prior licensed restaurant on his premises. Rabin, Acting P. J., Latham and Cohalan, JJ., concur; Hopkins and Christ, JJ., dissent and vote to confirm the determination, with the following memorandum: There is substantial evidence to support the finding that petitioner gave false and misleading information to respondent. Accordingly, a rational basis exists for the agency’s exercise of its discretion in refusing to grant the license and its determination should be confirmed (see Matter of Barton Trucking Corp. v O’Connell, 7 NY2d 299).