JUDGMENT : BHARGAV D. KARIA, J. 1. Heard learned Senior Advocate Mr. Tushar Hemani with learned advocate Ms.Vaibhavi K. Parikh for the petitioner and learned Senior Standing Counsel Mr.Varun Patel for the respondents. 2. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Varun Patel waives service of notice of rule for the respondents. With the consent of learned advocates for the respective parties, the matter is taken up for final hearing, as the issue involved is very short. 3. By these petitions, the petitioner had challenged the impugned notices dated 31 st March, 2021 issued under Section 148 of the Income Tax Act, 1961 (for short “the Act” ) for the Assessment Years 2013-14 and 2014-15 on the ground that the reasons recorded for reopening for both the Assessment Years are vague and incorrect. 4. For sake of convenience, Special Civil Application No.2488 of 2022 is treated as a lead matter for recording of the facts. 4.1 The petitioner - Company entered into various loan transactions with one M/s. Affluence Commodities Pvt. Ltd. during the previous year relevant to Assessment Year 2013-14 and earned interest income of Rs.1,99,000/-. The aggregate amount of transactions between the petitioner and the said Company at the end of the year was Rs. 14,03,19,900/- . 4.2 The petitioner filed return of income for the year under consideration on 26.09.2013 declaring total income of Rs.23,88,130/- . 4.3 The case of the petitioner was selected for scrutiny and notice dated 08.07.2015 was issued under Section 142(1) of the Act including the details of interest paid/ received with rate of interest as per Point No. ‘xxiii’ of the said notice. 4.4 The petitioner by letter dated 16.07.2015, furnished the details as called for and categorically stated that the petitioner has received interest of Rs.1,99,000/- from one party. 4.5 The Assessing Officer passed the Assessment Order dated 29.12.2015 under Section 143(3) of the Act accepting the return of income filed by the petitioner. 4.4 The petitioner by letter dated 16.07.2015, furnished the details as called for and categorically stated that the petitioner has received interest of Rs.1,99,000/- from one party. 4.5 The Assessing Officer passed the Assessment Order dated 29.12.2015 under Section 143(3) of the Act accepting the return of income filed by the petitioner. 4.6 It is case of the petitioner that by notice dated 25.02.2019 issued under Section 133(6) of the Act, the petitioner was called upon to furnish the various details in relation to transactions with Affluence Commodities Pvt. Ltd. which was replied by the letter dated 1 st March, 2019 whereby, the petitioner provided the Annual Accounts, Bank Statement, ledger & confirmation of the said Company including the Assessment Order passed under Section 143(3) of the Act by the Respondent. 4.7 The petitioner thereafter received the impugned notice dated 31.03.2021 under Section 148 of the Act seeking to reopen the case of the petitioner for the year under consideration. 4.8 The petitioner filed return of income in response to the impugned notice with a request to supply the copy of the reasons recorded for reopening which was supplied to the petitioner along with the notice dated 11.11.2021 issued under Section 143(2) read with Section 147 of the Act and reads as under:- “In this case, Information was received from the ACIT, Central Circle-2(3), Ahmedabad vide letter No.ACIT/CC-2(3) Information/ 2016-17 dated 16.02.2017 that the assessee has received fictitious profits in Equity/ Derivaties trading on BSE by trading penny stock Affluence Commodity Private Limited of Rs 14,03,19,900/-. Many evidences were seized from the search premises which prove that the transactions with various entities were used just for the sake of fictitious profits/loss in Equity/ Derivaties trading for/ to the different beneficiaries. Thus, in view of plethora of evidences in the form of seized evidences and also admission of various persons u/s 132(4) of their involvement in providing Bogus accommodation entries/ fictitious profits/ loss in commodities to pass on required benefits to various beneficiaries, it became clear that there was organised systematic business of tax evasion involving beneficiaries and passing through entities for fictitious profits/loss in Equity/Derivaties trading on BSE. On perusal of information so received, it is noticed that the assessee is one of the beneficiaries who has obtained fictitious profits in equity/ derivates trading of Rs 14,03,19,900/- with the help of share brokers etc wherein a search action was carried out by the Investigation Wing of Income Tax Department. 3. On the basis of above mentioned facts and after proper investigation from the materials on record, it is substantiated that during the year under consideration, the assessee has failed in offered income as deemed income amounting to Rs.14,03,19,900/-. Hence, it is found that income of Rs.14,03,19,900/- for the year under consideration has escaped assessment within the meaning of Section 147 of the I.T.Act. 5. Learned Senior Advocate Mr.Tushar Hemani for the petitioner submitted that the respondents could not have assumed the jurisdiction as the petitioner never entered into any transactions in equity/ derivatives of Affluence Commodities Pvt. Ltd. and therefore the reasons recorded are absolutely vague, scanty and non-specific more particularly, the basis of reopening is stated to be trading the petitioner in the penny stock Affluence Commodities Pvt. Ltd. of Rs.14,03,19,900/- which is nothing but, the total of debit and credit side of the account maintained by the petitioner in its books of accounts. It was submitted that the respondent has not been taken even pains to consider the real nature of the transactions entered into by the petitioner with the said Company as the petitioner had entered into the loan transactions of receipt and payment during the year and total of the debit and credit side is Rs.14,03,19,900/-. 5.1 It was therefore submitted that the respondent has issued the impugned notice in a mechanical manner, without application of mind having no prima facie belief as to escapement of income chargeable to tax as the total of debit side of the account of the said Company in the books of accounts of the petitioner which was already confirmed by the said Company cannot be the escapement of the income. 5.2 It was further submitted that there is no failure on the part of the petitioner to disclose fully and truly all material facts during the course of the regular assessment as the petitioner has furnished all the details including the amount of interest received during the year under consideration and therefore the impugned notice is issued merely on the change of opinion and the same is not sustainable. 5.3 It was further submitted that the reference made in the reasons recorded to the report of the Investigation Wing is also vague inasmuch as there is no live nexus between the information received and the facts of the case of the petitioner and therefore, it is apparent that the impugned notice is issued only on the basis of the borrowed satisfaction which is not tenable in eye of law. 5.4 In support of his submissions, the reliance was placed in the decision of this Court in the case of Paresh Babubhai Bahlani Vs. Income Tax Officer reported in [2024] 463 ITR 103 (Gujarat). 6. On the other-hand, learned Senior Standing Counsel Mr. Varun Patel appearing for the respondent submitted that the petition is filed at premature stage and the petitioner can challenge the addition if any made during the course of the assessment by preferring an appeal to the CIT (Appeal) and thereafter to the Tribunal as per provisions of the Act. 6.1 It was further submitted that the regular assessment carried out in the place of the petitioner is without considering the information available with the respondent -Assessing Officer at the time of issuance of the notice under Section 148 of the Act. 6.2 It was therefore submitted that in such circumstances, no interference is called for while exercising extra ordinary jurisdiction under Article 226 of the Constitution of India more particularly when the information received by the respondent from the Investigating Wing is specific and it is clearly pointed out that the the Assessee has unexplained income of Rs.14,03,19,900/-. 6.3 In support of his submission, the reliance was placed on the following averments made in the affidavit-in-reply filed on behalf of the respondent. “6. I humbly state that the main ingredient required to issue notice u/s 148 of the I.T. Act, 1961 is to form 'reason to believe. 6.3 In support of his submission, the reliance was placed on the following averments made in the affidavit-in-reply filed on behalf of the respondent. “6. I humbly state that the main ingredient required to issue notice u/s 148 of the I.T. Act, 1961 is to form 'reason to believe. At the stage of issue of notice u/s 148, the only question is whether there was relevant material on which reasonable person could have form the requisite belief as to whether an income chargeable to tax has escaped assessment. The expression 'reason to believe' cannot be read to mean that the AO should have finally ascertained the fact by legal evidence or conclusion. Whether material would conclusively prove escapement of income is not the concern at the stage of issue of notice. It only means that the AO forms a belief from the examination of facts, from any information the AO receives. If the AO discovers or finds or satisfies that the taxable income has escaped assessment, it would amount to saying that the AO had 'reason to believe' that such income has escaped assessment. The justification of AO's belief is not to be judged from the standards of proof required for coming to a final decision. A belief though justified for the purpose of initiation of the proceedings u/s 147 may ultimately stand altered after the hearing and while reaching the final conclusion on the basis of the intervening enquiry. At the stage where AO finds a cause or justification to believe that such income has escaped assessment, the AO is not required to base his belief on any final adjudication of the matter. The AO's formation of belief is not a judicial decision but an administrative decision. It does not determine anything at the initial stage, but the AO has a duty to proceed so as to obtain what the tax payer was always bound to pay if the result of official information or AO's own investigation or may come from any source that AO considers reliable. The AO had applied his mind and examined the information received and then recorded his reasons to believe that the income of assessee had escaped assessment for the year under consideration. The AO had applied his mind and examined the information received and then recorded his reasons to believe that the income of assessee had escaped assessment for the year under consideration. Considering the above facts, the AO has reasonable belief that by omission on the part of the assessee to disclose fully and truly all material facts necessary for the assessment, the income of the assessee has escaped assessment. The escapement of income was found and therefore the assessment was correctly reopened by the Jurisdictional Assessing Officer after recording the reasons of the same and by following the prescribed procedure laid down under the Income-tax Act along-with obtaining prior approval from the competent authorities. Hence, it is clear that the AO has applied his mind when re-opening the case and the AO has not borrowed satisfaction and hence the objection raised by the assessee is totally baseless. 6.4 It was therefore, submitted that the Assessing Officer has only recorded the satisfaction regarding the escapement of income and further investigations/inquiries subject to the assessment proceedings and the contentions of the petitioner regarding the merits of the case is therefore premature at this stage as the Assessing Officer was satisfied and therefore has recorded the satisfaction for reopening of the assessment. 7. Having heard the learned advocates appearing for the respective parties and considering the material placed on record, it appears that the respondent-Assessing Officer while recording the reasons has failed to take into consideration the report of the Investigation Wing in true perspective. It also appears that the respondent-Assessing Officer while recording the reasons for reopening has not even considered that the amount mentioned in the reasons of Rs.14,03,19,900/- regarding the Assessment Year 2013- 14 is nothing but total of debit and credit side of the account of M/s. Affluence Commodities Pvt. Ltd. from the books of accounts of the petitioner. Similarly for Assessment Year 2014-15 also the reasons recorded reflects the total of the debit and credit side of the account of the said Company from the books of accounts of the petitioner meaning thereby that the respondent-Assessing Officer without application of mind and contrary to any information in his possession has issued the impugned notices in a mechanical manner. 7.1 This Court in case of Paresh Babubhai Bahalani (Supra) has referred to and relied upon the decision in the case of Bharatkumar Nihalchand Shah Vs. 7.1 This Court in case of Paresh Babubhai Bahalani (Supra) has referred to and relied upon the decision in the case of Bharatkumar Nihalchand Shah Vs. ITO [Special Civil Application No. 5353 of 2022 dated 7.3.2023] wherein, it is held that non-specific and general reasons without establishing the rational nexus between transaction and the escapement of income are not valid for assumption of jurisdiction to reopen the assessment. 7.2 This Court in case of Bharatkumar Nihalchand Shah (Supra) has held as under :- "5. Without going into any aspect on the merits of reopening, the ground of assailment by the petitioner-assessee that the reasons are cryptic and that they did not furnish details, on the basis of which the petitioner could defend his case, merited acceptance. Looking at the reasons again, what is only stated by the Assessing Officer is that, "From the data made available under Project Falcon, it is seen that the assessee has created a profit/loss of Rs. 74,62,860/-". Both buying 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 undefined 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 Court, providing of reasons can never be dispensed with. The doctrine of audi alteram partem has three basic essentials. The doctrine of audi alteram partem has three basic essentials. Firstly, a person against whom an order is required to be passed or whose rights are likely to be affected adversely must be granted an opportunity of being heard.Secondly, the concerned authority should provide a fair and transparent procedure and lastly, the authority concerned must apply undefined its mind and dispose of the matter by a reasoned or speaking order. This has been uniformly applied by courts in India and abroad." (para10) 6.1 In S. N. Mukherjee vs. Union of India [ (1990) 4 SCC 594 ], the insistence of and importance of recording reasons for decision by the administrative authorities and Tribunals was justified by observing that, "administrative process will best be vindicated by clarity in its exercise". It was stated in Assistant Commissioner, Commercial Tax Department, Works Contract and Leasing, Kota (supra) that in exercise of powers of judicial review, the concept of reasoned order has been equally enforced by the courts in India. Absence of reasons by the administrative authorities and the Tribunals, would render the order liable to judicial chastisement. The reasons are necessary to enable the appellate or higher courts to exercise their jurisdiction appropriately. 6.2 It was then observed in Assistant Commissioner, Commercial Tax Department, Works Contract and Leasing, Kota (supra), "....It is the reasoning alone, that can enable a higher or an appellate court to appreciate the controversy in issue in its correct perspective and to hold whether the reasoning recorded by the Court whose order is impugned, is sustainable in law and whether it has adopted the correct legal approach. To sub-serve the purpose of justice delivery system, therefore, it is essential that the Courts should record reasons for its conclusions..." (para 12) 6.3 Recording of reasons in order is essential feature of dispensation of justice. In Kranti Associates Private Limited and Another vs. Masood Ahmed Khan and Others [ (2010) 9 SCC 496 ], the supreme court stated that order passed by the quasi judicial authority or even administrative authority affecting the rights of the parties must speak and that is must not be like the "inscrutable face of a sphinx". In Kranti Associates Private Limited and Another vs. Masood Ahmed Khan and Others [ (2010) 9 SCC 496 ], the supreme court stated that order passed by the quasi judicial authority or even administrative authority affecting the rights of the parties must speak and that is must not be like the "inscrutable face of a sphinx". 6.4 The principles for recording reasons came to be summarised by supreme court in Kranti Associates Private 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 undefined 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 making justifying the principle that reason is the soul of justice. i. Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the justice delivery system. j. Insistence on reason is a requirement for both judicial accountability and transparency. k. If a Judge or a quasi-judicial authority is not candid enough about his/her decision making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism. l. Reasons in support of decisions must be cogent, clear and succinct. k. If a Judge or a quasi-judicial authority is not candid enough about his/her decision making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism. l. Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or `rubber- stamp reasons' is not to be equated with a valid decision making process. m. It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision making not only makes the judges and decision makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor (1987) 100 Harward Law Review 731-737). n. Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See (1994) 19 EHRR 553, at 562 para 29 and Anya vs. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions. o. In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "Due Process." ( para 47) 6.5 In Sant Lal Gupta and Others vs. Modern Cooperative Group Housing Society Limited and Others [ (2010) 13 SCC 336 ], the supreme court stated importance of reasons referring to other decisions on the point thus, "The reason is the heartbeat of every conclusion. It introduces clarity in an order and without the same, the order becomes lifeless. Reasons substitute subjectivity with objectivity. 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. Reasons substitute subjectivity with objectivity. 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." (par a 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 must also seen to have been done. The reasons are requirement for ensuring judicial accountability. (v) Reasons reflect candidness on part of 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. (vi) Reasons in support of decisions must be cogent, clear and succinct. A pretense 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. 7. In light of the above discussion highlighting the indispensability of reasons in the order passed by any authority administrative, quasi judicial or judicial, when it comes to exercise of powers under sections 147 and 148 of the Income Tax Act, 1961, there has to be a greater thrust for necessity of recording reasons. The entire exercise of reopening hinges on the reasons recorded by the Assessing Officer. It is the 'reasons' which weigh with him. The entire exercise of reopening hinges on the reasons recorded by the Assessing Officer. It is the 'reasons' which weigh with him. 7.1 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. 7.2 All the reasons which hold good in the eye of and with the Assessing Officer must be made known to the assessee. Assessee has right to refute undefined the reasons for reassessment by filling objections. Unless the Assessing Officer appropriately delineates and communicates the reasons for reassement, right of the assessee to file objections would remain an eye-wash. 7.3 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 Assessing Officer 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 Assessing Officer must be reflected in recording of such reasons to be communicated to the assessee. 7.4 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." 8. Applying the above decision to the facts of the case and on perusal of the reasons recorded by the respondent, it is clear that no information is revealed with regard to the nature or date of transaction between the petitioner and M/s. Affluence Commodities Pvt. Ltd., and the respondent -Assessing Officer has further proceeded to record that the petitioner has failed to offer the income as deemed income amounting to Rs.14,03,19,900/- which is nothing but total of debit and credit side of the account from the books of account maintained by the petitioner of the said company. It is therefore, evident that the reasons recorded by the respondent are on the borrowed satisfaction without forming an independent opinion and therefore, the assumption of the jurisdiction to reopen the reassessment under Section 147 of the Act is bad in law. 9. In view of the foregoing reasons, the entire exercise of reopening carried out by the respondent-Assessing Officer without disclosing the relevant facts to the Assessee is a futile exercise in absence of any independent satisfaction reflected in the reasons recorded on the basis of the information received by the Assessing Officer. 10. Therefore, impugned notices issued under Section 148 of the Act for both the Assessment Years are accordingly quashed and set aside on the aforesaid grounds. Rule is made absolute to the aforesaid extent. No order as to costs.