Ss (3) of section 148Astates that the Assessing Officer shall, on the basis of material available on record and taking into account the reply of the assessee furnished under sub-section (2), if any, pass an order with the prior approval of the specified authority determining whether or not it is a fit case to issue notice under section 148. This is similar to clause (d) of previous section 148A.
This sub-section has no mention of any requirement to recording of reasons in the order.
In the case citation [2025] 174 taxmann.com 732 (Himachal Pradesh) viz a viz source of investment in property question the AO after detailed discussion went on to order that ‘at the preliminary stage, the contention of the assessee is not acceptable and the same requires a detailed examination’.
Reading clause (d) of section 148A which is similar to the present section 148 A (3) the High Court directed that it is incumbent upon the AO to decide that so and so much amount of income has escaped assessment and record reasons for the same in his order u/s 148A(d)/148A (3).
The Court held that the AO needs to realise that notice under section 148 does have serious civil or evil consequences and cannot be passed so lightly and reasons for the same have to be recorded in the order itself.
Failure to give reasons amounts to denial of justice. Reasons are live links between the minds of the decision-taker to the controversy in question and the decision or conclusion arrived at. Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the ‘inscrutable face of the sphinx’, it can, by its silence, render it virtually impossible for the Courts to perform the appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system.
The matter is remanded back to the AO to decide the same afresh in accordance with law. IT is said that if the AO still comes to the conclusion that notice under section 148 is necessary, then he shall record detailed reasons for arriving at such conclusion.