TMI Blog2023 (3) TMI 1415X X X X Extracts X X X X X X X X Extracts X X X X ..... tax was not paid in relation to the year under consideration. All the reasons which hold good in the eye of and with the AO must be made known to the assessee. Assessee has right to refute the reasons for reassessment by filling objections. Unless the AO appropriately delineates and communicates the reasons for reassessment, right of the assessee to file objections would remain an eye-wash. Whether the reassessment powers are adverted to on objective basis, whether the element of assessment of income is noticed from the facts and whether formation of opinion by the AO is based on some relevant facts or not, could be judged provided the reasons are properly recorded and the details are given with regard to reopening of assessment that the reasons to believe with the AO must be reflected in recording of such reasons to be communicated to the assessee. The cryptic way of recording of reasons like found in the instant case, would render the exercise of powers vitiated. With such vague reasons the respondent could be said to have failed to demonstrate that there was any escapement of income chargeable to tax. He could demonstrate such element, if he gives reasons for the same. Notice i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act seeking to reopen the assessment in respect of the year under consideration. Reply was filed by the petitioner on 26.4.2021. By letter dated 17.8.2019 and 9.11.2021, request was made to the income tax authorities to furnish the information and documents including the reasons for reopening. The respondent supplied the reasons recorded for reopening. 3.4 The reasons indicated that reopening of the assessment was proposed on the broad ground that the petitioner had credited profit and loss of Rs. 74,62,860/- and that as per the information received, the petitioner was engaged in reversal trade resulting in non-genuine business loss or gains. It was the allegation that from the data made available under project Falcon, the petitioner had credited profit/loss of Rs. 74,62,860/-. 3.5 The following were recorded by the Assessing Officer styling as reasons seeking to reopen the assessment, From the data made available under Project Falcon, it is seen that the assessee had created a profit/loss of Rs. 74,62,860/-. Both, buy and sell trades have been executed on the Bombay Stock Exchange. 4. The main plank of submission on behalf of the petitioner was inter alia that the reasons re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and selling of trades have been are executed at the Bombay Stock Exchange . This statement is a non-detailed and completely escapist. It does not give any fact regarding the transactions or other attendant facts except saying that assessee had engaged in the trading at the Bombay Stock Exchange to create profit or loss. Though styled as reasons, the ground of reopening is unreasoned. 6. The necessity to incorporate reasons in the administrative, quasi judicial or judicial orders are repeatedly emphasised by the supreme court. In Assistant Commissioner, Commercial Tax Department, Works Contract and Leasing, Kota vs. Shukla and Brothers [(2010) 4 SCC 785] , it was stated that the requirement of providing reasons can never be disposed with, The increasing institution of cases in all Courts in India and its resultant burden upon the Courts has invited attention of all concerned in the justice administration system. Despite heavy quantum of cases in Courts, in our view, it would neither be permissible nor possible to state as a principle of law, that while exercising power of judicial review on administrative action and more particularly judgment of courts in appeal before the higher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivate Limited (supra) , a. In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. b. A quasi-judicial authority must record reasons in support of its conclusions. c. Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. d. Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. e. Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations. f. Reasons have virtually become as indispensable a component of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. g. Reasons facilitate the process of judicial review by superior Courts. h. The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the life blood of judicial decision m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjectivity. The absence of reasons renders an order indefensible/unsustainable particularly when the order is subject to further challenge before a higher forum. Recording of reasons is principle of natural justice and every judicial order must be supported by reasons recorded in writing. It ensures transparency and fairness in decision making. The person who is adversely affected must know why his application has been rejected. (para 27) 6.6 On the basis of the propositions laid down in different decisions by the supreme court above referred and others, the following legal principles on the point in issue may be enlisted, (i) Reasons are of paramount importance. Reasons are heartbeat of every conclusion. It introduces clarity in any order. Without the reasons, the order is lifeless. (ii) The concept of reasoned judgment has become an indispensable part of basic rule of law and, in fact, is a mandatory requirement of procedural law. (iii) It is only clarity of thoughts that leads to proper reasoning, which becomes a foundation of a just and fair decision. (iv) Insistence for recording of reasons is intended to subserve the wider principle that justice must not only be done but it m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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