Prior satisfaction as a condition precedent invalidated notice under the Gift-tax Act where approval was not recorded.

Notice under section 16(1B)(b) of the Gift-tax Act was invalid because the Deputy Commissioner did not record the statutory satisfaction after examining the Assessing Officer's reasons. For proceedings started more than four years after the end of the assessment year, that prior approval was a condition precedent, and no earlier order had been made under section 15(3) or section 15(1). The absence of the prescribed satisfaction meant the initiation of proceedings was contrary to the statutory scheme, so the notice and all proceedings founded on it were held invalid and the Tribunal's decision for the assessee was upheld.

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Issues: Whether notice issued under section 16(1B)(b) of the Gift-tax Act was valid when the Deputy Commissioner had not recorded satisfaction on the reasons recorded by the Assessing Officer, and no order had earlier been made under section 15(3) or section 15(1) of the Act.

Analysis: Proceedings initiated more than four years after the end of the relevant assessment year could be commenced only if the statutory precondition in section 16(1B)(b) was met. That provision required the Deputy Commissioner to examine the reasons recorded by the Assessing Officer and form the opinion that the case was fit for issue of notice. The records showed no such satisfaction by the Deputy Commissioner, and the Assessing Officer acted on his own view. The absence of the prescribed approval rendered the initiation of proceedings contrary to the statutory scheme.

Conclusion: The notice and the proceedings founded upon it were invalid, and the decision of the Tribunal was upheld in favour of the assessee.

Ratio Decidendi: Where a statute makes prior satisfaction of a superior authority a condition precedent for issuance of notice, proceedings initiated without that satisfaction are without legal authority.

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