Law:

Section:

Section 16 of the Gift-tax Act, 1958 - Gift escaping assessment - Assessment year 1976-77 - Notice under section 16 was issued to petitioner-company - Petitioner challenged and replied to notice but GTO did not respond and as such, petitioner- company assumed that its contention was accepted - However, proceedings were initiated on 20-2-1987 which were challenged by way of writ as bad and illegal by petitioner-company - Whether in absence of any material placed by authority to disprove challenge of assessee to existence of conditions precedent, writ petition could not be dismissed - Held, yes - Whether since in spite of grant of repeated adjournments, no attempt was made by revenue to file affidavit in reply and no steps were taken to produce reasons warranting issuance of notice under section 16, impugned notice was to be quashed and set aside - Held, yes FACTS A notice was issued to the petitioner on 23-11-1982 under section 16(1) alleging that the GTO had reason to believe that the gifts made by the petitioner-company in the assessment year 1976-77 had escaped assessment within the meaning of section 16. The petitioner-company replied by setting out relevant facts and challenging the same. The GTO did not respond and as such, the petitioner assumed that the respondent had accepted its contention. But proceedings were initiated and a notice was served on 20-2-1987 to the petitioner-company to appear in the proceedings. The aggrieved petitioner invoked extraordinary writ jurisdiction under article 226 of the Constitution of India and contended that the proceedings were bad and illegal and so they should not be continued. From the year 1987 till the date of hearing, i.e.,for more than 14 years, no steps were taken by the respondent to file affidavit in reply with reasons for issuing the impugned notice. HELD Though the matter came up before the Court after more than 14 years, still adequate opportunity was given to the revenue to disclose reasons in support of its notice under challenge. No affidavit had been filed in support of the notice issued under section 16. The petitioner had challenged the existence of reasons for issuing the impugned notice. The law is…

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