Court quashes illegal order, restrains reassessment. Reasons must be recorded for validity.

The court allowed the writ petition, declaring the impugned order illegal and quashing it. Respondent No. 3 was restrained from proceeding with the reassessment until the reasons recorded under section 148(2) were provided to the petitioner. The court emphasized the mandatory nature of recording reasons for reassessment proceedings and held that the absence of such reasons rendered the proceedings null and void.

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Issues Involved:
1. Quashing of the impugned order (annexure P-10).
2. Restraining respondent No. 3 from proceeding with the assessment until reasons recorded u/s 148(2) are supplied.
3. Legality of reassessment proceedings initiated without recording reasons u/s 148(2).

Summary of Judgment:

Issue 1: Quashing of the Impugned Order (Annexure P-10)
The petitioner challenged the initiation of reassessment proceedings on the grounds that the notice u/s 148 was issued without recording reasons as mandated by subsection (2) of section 148. The Tribunal had directed the Commissioner of Income-tax (Appeals) to verify if reasons were recorded before issuing the notice. However, instead of complying, the Commissioner remitted the case back to the Assessing Officer, who then procured a letter from the former Assessing Officer stating that reasons were recorded but not available on file. The court held that this action was beyond the parameters laid down by the Tribunal and declared the order annexure P-10 illegal and quashed it.

Issue 2: Restraining Respondent No. 3 from Proceeding with the Assessment
The petitioner requested the court to restrain respondent No. 3 from proceeding with the reassessment until the reasons recorded u/s 148(2) were supplied. The court found that the Tribunal's order, which required verification of recorded reasons, had become final and binding. The court held that the Assessing Officer's failure to provide the recorded reasons invalidated the reassessment proceedings. Consequently, respondent No. 3 was restrained from proceeding further until the reasons were supplied to the petitioner.

Issue 3: Legality of Reassessment Proceedings Initiated Without Recording Reasons u/s 148(2)
The court emphasized that the requirement to record reasons u/s 148(2) is mandatory and must be communicated to the assessee. The absence of such reasons in the record meant that the reassessment proceedings were initiated without jurisdiction. The court cited precedents to support the necessity of recording and communicating reasons, stating that without them, the assessee could not effectively contest the notice. Therefore, the reassessment proceedings were declared null and void.

Conclusion:
The writ petition was allowed, and the court declared the order annexure P-10 illegal and quashed it. Respondent No. 3 was restrained from proceeding with the reassessment until the reasons recorded u/s 148(2) were supplied to the petitioner.

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