UTTAR PRADESH FINANCIAL CORPORATION Vs. JOINT COMMISSIONER INCOME TAX SPECIAL RANGE COMMISSIONER INCOME TAX

JUDGEMENT

(1.) By means of UK present writ petition filed under Article 220 of the Constitution of India, the petitioner, U.P. Financial Corporation, seeks the following reliefs:

(2.) Briefly stated, the facts giving rise to the present petition are as follows:- The petitioner, U.P. Financial Corporation (hereinafter referred to as "the Corporation"), has been created under the State Financial Corporations Act, 1951. It is an undertaking of the Government of Uttar Pradesh. Its various activities, including financial, supervisory and administrative, are directly controlled by the State Government. According to the petitioner, the Managing Director is appointed by the State Government, who happens to be a senior officer of the I.A.S. cadre. According to the petitioner, it has been established for the purposes of disbursing loans to various industrial units in the State in order to promote and help industrial activities and the loan is disbursed after following the requisite procedure. Its account is duly audited by a Chartered Accountant appointed by the Corporation. It has been submitting its return of income under the provisions of the Income Tax Act, 1961 ((hereinafter referred to as "the Act"). According to the petitioner, in respect of the accounting year 1996, the auditors of the Corporation submitted an interim report pointing out certain deficiencies. However, they submitted a final report stating therein that the alleged deficiencies have been removed/rectified. During the course of the assessment proceedings for the assessment year 1996-97, the Joint Commissioner of Income Tax, Special Range, Kanpur, respondent No. 1, who is the Assessing Authority of the petitioner, issued a show cause notice calling upon the petitioner to furnish explanation/details in respect of as many as 11 heads. The petitioner, vide its reply dated 10.2,1999, submitted that it would take several months for compilation to furnish the requisite information regarding the first three queries. So far as the fourth query is concerned, the petitioner submitted that the entertainment expenses included other expenses of the staff welfare, late sitting, and other items which are business expenditure and are allowable. The petitioner also submitted its replies to other queries. As both the notice and the reply run into several pages, instead of reproducing it here, we consider it appropriate for convenience to attach it along with the judgment as Appendices I and II, respectively. According to the petitioner, the respondent No. 1 passed an order on 19.3.1999 appointing M/s Kapoor Tandon and Company of Kanpur, as an accountant for the purpose of conducting a special audit under Section 142(2A) of the Act. Pursuant to the aforesaid order, the auditor, namely M/s Kapoor Tandon and Company, had directed the petitioner to submit certain informations. The order dated 19.3.1999 is under challenge in the present writ petition.

(3.) As the counter affidavit and rejoinder affidavit have been exchanged between the parties, with the consent of the learned counsel for the parties, the writ petition is being heard finally and disposed of at the admission stage itself in accordance with the provisions of the Rules of the Court.