Allowing the petition the Court held that the recorded reasons except for using the expression “failure on the part of the assessee to disclose fully and truly all material facts”, did not specify what was the nature of default or failure on the part of the assessee. The reasons also did not explain or specify what was the rationale connection between the reasons to believe and the material on record. It was evident on a perusal of the scrutiny questionnaires issued by the Assessing Officer and the information furnished in response thereto by the assessee that there had been no failure on the part of the assessee in furnishing the information. On the other hand, there was non-application of mind on such material on the part of the Assessing Officer to make an appropriate determination in accordance with law. The Assessing Officer in paragraph 2 of the recorded reasons quoted that “external development charges is covered by the provisions of section 194 of the Act. The assessee had failed to deduct tax at source on the payments made to the Haryana Urban Development Authority”. There was no explanation or rationale for this observation made by the Assessing Officer. It was not clear how the payment of external development charges being in the nature of statutory fees, could be subject to withholding tax under section 194 of the Act, a provision that was applicable to dividends. The nature of dividend payment was intrinsically different from external development charges and, therefore, the apparent reason for reopening was erroneous, irrational and fallacious. The notice did not state that the external development charges collected by the Haryana Urban Development Authority had not been subjected to tax as income in the hands of the Haryana Urban Development Authority. This also showed non-application of mind. The Revenue in its counter affidavit sought to elaborate on these reasons by contending that the external development charges payment was akin to rent. However, firstly, such an understanding was not borne out from the recorded reasons and, secondly, the Department could not by way of a counter affidavit supplement the recorded reasons by introducing such legal submissions. The source of the power, as sought to be argued, was not discernible. The notice was not valid. (AY. 2012-13 2013-14 )