V.C. Daga, J.@mdashThe present petition is directed against the notice dated 23rd November 1982 (Exh. ''H'') received by the petitioner on 27th
November 1982 purported to be issued u/s 16(1) of the Gift Tax Act, 1958 (""Act"" for short) alleging therein that the first respondent 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
of the Act. By the said notice the first respondent called upon the petitioner company to file its return under the said Act. The petitioner company
replied the aforesaid notice through its Chartered Accountant by letter dated 24th December 1982 setting out relevant facts and challenging the
same on various factors and legal grounds. The petitioner company did not receive any reply from the first respondent. The petitioner therefore
assumed that the first respondent had accepted the contention of the petitioner and agreed either to withdraw the impugned notice dated 23rd
November 1982 or not to take any further steps in the proceedings pursuant thereto.
2. On 20th February 1987, the petitioner company was served with the notice dated 20th February 1987 by the first respondent calling upon the
petitioner company to appear in the proceedings initiated on the impugned notice dated 23rd November 1982. The petitioner objected to the said
proceedings and continuance thereof. The petitioner aggrieved by the aforesaid notice invoked extra ordinary writ jurisdiction of this Court under
Article 226 of the Constitution of India and contended that notice dated 20th February 1987 and the proceedings initiated by the Gift Tax Officer
were bad and illegal and there was no justification in continuance of the said proceedings by the first respondent.
3. At the stage of admission, rule was issued in the aforesaid petition and petitioners were protected by interim relief in terms of prayer Clause (d)
vide order dated 19th March 1987.
4. Right from the year 1987 till the date of hearing of this petition i.e. for more than 14 years, no steps were taken by the respondents to file their
return and/or affidavit in reply so as to place the reasons for issuing the impugned notice. The learned counsel for the petitioner reiterated the
submissions and grounds of challenge incorporated in the petition and contended that the Gift Tax Officer had no material before him for reasons to
believe that the gift made by the petitioner company in the assessment year 1976-77 had escaped the assessment within meaning of Section 16 of
the Act.
5. The petitioner contended that the notice was issued for making enquiry. However, in spite of lapse of 14 years no material is placed on record.
The learned counsel appearing for the petitioner, therefore, relying upon the judgment of the Supreme Court in the case of Madhya Pradesh
Industries Ltd. Vs. Income Tax Officer, Special Investigation Circle ''B'', Nagpur, submitted that as there is no counter affidavit filed, this Court has
to accept the allegations made in the petition and to quash the notice which is challenged in this petition. The learned counsel also relied upon the
judgments of the Division Bench of this Court in the case of Devji Ravji Patel Vs. Balasubramaniam and others, and in the case of Sable Waghire
Trust v. S.R. Achyuta Rao, (1999) 241 ITR 688.
6. The present petition was* admitted on 19th March 1987. It came up for hearing before this Court on 20th December 2001. Thereafter again
the matter was placed before this Court on 16th January 2002. When the matter was called out for hearing, the respondents sought time to file
reply. Accordingly one week time was granted with direction to the respondents to file return/affidavit in reply along with all the documents on
which they are relying and were further directed to deliver advance copy thereof to the petitioner. The matter was adjourned for one week. Again
the same was placed on board of this Court on 26th January 2002. Thus, it would be clear that, though the matter came up on board after more
than 14 years, still adequate opportunity was given to the respondents to disclose reasons in support of their notice under challenge. No affidavit
has been filed in support of the notice issued u/s 16 of the Act. The petitioner in this petition has challenged the existence of reasons for issuing the
impugned notice. The law is well settled that if the existence of facts is challenged by the assessee before the Court on oath, it is for the authority,
who has issued the said notice, to satisfy the Court about the existence of conditions precedent by filing an affidavit and producing relevant
documents. If, on consideration of such material, the Court is satisfied that the conditions precedent did exist at the time the notice was issued, the
challenge may be turned down by the Court. In absence of any material placed by the authority to disprove the challenge of the assessee to the
existence of the conditions precedent, the writ petition cannot be dismissed. In the present case, in spite of grant of repeated adjournments, no
attempt was made by the respondents to file return or affidavit in reply. No steps were taken to produce the reasons warranting issuance of the
notice u/s 16 of the Act.
7. The learned counsel appearing for the petitioner submitted that in view of absence of any material placed by the revenue, this petition should be
allowed and the impugned notice should be quashed and set aside. Our attention is also drawn to the judgment of this Court Devji Ravji Patel v.
Balasubramaniam (supra) followed in the case of Sable Waghire Trust v. S.R. Achyuta Rao (supra), wherein the notice issued u/s 148 of the
Income Tax Act was quashed in the identical facts and circumstances of the case involving identical challenge. In the instant case, no material is
placed before us to justify the impugned action. Faced with the aforesaid situation we are left with no option but to quash and set aside the
impugned notice.
Accordingly, petition is allowed. The impugned notice dated 23rd November 1982 issued u/s 16 of the Act is quashed and set aside. Rule is made
absolute in terms of prayer Clause (a) with no order as to costs.
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