The Hon’ble High Court held that when the concluded assessment is to be revisited with by the Assessing Officer, recording of reasons for exercise of such powers has to be viewed as vested rights for the assessee. While exercising powers under the Act to reopen the assessment, the Assessing Officer would harbour reasons to believe that on particular set of facts, the income had escaped assessment and tax was not paid in relation to the year under consideration. All the reasons which hold good in the eye of and with the Assessing Officer must be made known to the assessee. The assessee has the right to refute the reasons for reassessment by filing objections. Unless the Assessing Officer appropriately delineates and communicates the reasons for reassessment, right of the assessee to file objections would remain an eyewash.

The Court after analysing various Supreme Court decisions, enlisted following legal principles

1. 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.
2. 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.

1. iv) Insistence for recording of reasons is intended to subserve the wider principle that justice must not only be done but it must also seen to have been done. The reasons are requirement for ensuring judicial accountability.
2. v) Reasons reflect candidness on the part of the decision maker. The decision-making process becomes transparent by virtue of reasons. In absence, it is impossible to know whether the person deciding the issue is faithful to the doctrine of precedent or to the principles of incrementalism.
3. vi) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or “rubber-stamp reasons” cannot be equated with a valid decision-making process.

vii)  Reasons also facilitate the process of judicial review by superior courts.

In the facts of the case, the Court held that 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 Assessing officer could be said to have failed to demonstrate that there was any escapement of income chargeable to tax. Thus, notice and order disposing the objection is quashed. (AY. 2015-16)