It has been held in the above case that Reasons to believe cannot be a rubber stamping of the opinion already formed by someone else.
The officer who is supposed to write down his reasons to believe has to independently apply his mind. Further, and more importantly, it cannot be a mechanical reproduction of the words in the statute. When an authority judicially reviewing such a decision peruses such reasons to believe, it must be apparent to the reviewing authority that the officer penning the reasons has applied his mind to the materials available on record and has, on that basis, arrived at his reasons to believe. The process of thinking of the officer must be discernible. The reasons have to be made explicit. It is only the reasons that can enable the reviewing authority to discern how the officer formed his reasons to believe. As explained in Oriental Insurance Company v. Commissioner of Income Tax  378 ITR 421 (Delhi), ―the prima facie formation of belief should be rational, coherent and not ex facie incorrect and contrary to what is on record. A rubberstamp reason can never take the character of ‘reasons to believe‘, as explained by the Supreme Court in Union of India v. Mohan Lal Kapoor (1973) 2 SCC 836. In Dilip N Shroff v. CIT (2007) 6 SCC 329, the Supreme Court decried the practice of issuing notices in a standard proforma manner without material particulars and without deleting inappropriate words or paragraphs.
Under PMLA there are two reasons to believe. One recorded by the officer passing the order under Section 5(1) PMLA and the other recorded by the ADJUDICATING AUTHORITY under Section 8(1) PMLA. Both these reasons to believe should be made available to the person to whom notice is issued by the ADJUDICATING AUTHORITY under Section 8(1) PMLA.
It has been held that the failure to disclose, right at the beginning, the aforementioned reasons to believe to the noticee under Section 8(1) PMLA would not be a mere irregularity but an illegality. A violation thereof would vitiate the entire proceedings and cause the order of provisional attachment to be rendered illegal.
Although at the stage of issuance of notice under Section 8(1) PMLA all the relevant material on record which constituted the basis for reasons to believe may not be made available, if the noticee demands to see those materials on record, the ADJUDICATING AUTHORITY is bound to make available all those materials on record to them. It is most likely that without such access to such material on record, the noticee will be unable to file an effective reply. Therefore, there cannot be any denial of access to the noticee of the materials on record. If there is any sensitive material, it can probably be redacted before issuing copies thereof, after noting the reasons for such redaction in writing in the file. But even such redacted material will have to be nevertheless shown to the noticee.
Vijay Pal Dalmia, Advocate
Supreme Court of India & Delhi High Court