Harsha Devani, J.

1. Rule. Mr. Pranav Desai, learned Senior Standing Counsel waives service of notice of rule on behalf of the respondent.

2. Having regard to the nature of the controversy involved in the present case and with the consent of the learned counsel for the respective parties, the matter was taken up for final hearing today.

3. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice dated 02.03.2015 issued by the respondent under section 148 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), seeking to reopen the assessment of the petitioner for assessment year 2011-12.

4. The petitioner, a Private Limited Company, was incorporated on 15.01.2010. For assessment year 2011-12, the petitioner submitted its return of income on 19.09.2011 showing total loss of Rs. 77,51,810/- and a book profit of Rs. 35,96,518/-. The case was processed under section 143(1) of the Act. Thereafter, the petitioner received a notice dated 02.03.2015 issued under section 148 of the Act from the respondent. In response to the same, the petitioner requested for a copy of the reasons recorded for issuing the notice under section 148 of the Act, which came to be furnished to the petitioner. In response to the reasons recorded for reopening the assessment, the petitioner filed its objections by a letter dated 14.09.2015, which came to be rejected by the respondent by an order dated 05.10.2015.

5. Mr. Manish Shah, learned advocate for the petitioner invited the attention of the court to the reasons recorded for reopening the assessment to submit that on the reasons recorded, the Assessing Officer could not have formed the belief that income chargeable to tax has escaped assessment. It was submitted that there is no new tangible material on record and even in a case covered under section143(1) of the Act, the Assessing Officer should have fresh tangible material on hand for forming the belief as regards escapement of income. It was submitted that the petitioner company had commenced commercial production on 27.12.2010 and hence, it was practically impossible to earn such an undisclosed income within a period of three months. According to the learned counsel, except suspicion, there was no tangible material before the Assessing Officer at the time of recording the reasons to support his belief that the income chargeable to tax has escaped assessment. It was submitted that in the present case, the petitioner has been assessed at book profit of Rs. 35,96,518/- under section 115JB of the Act, and that in the normal computation of income the petitioner has shown a total loss of Rs. 77,51,810/-. Therefore, even if the total amount of Rs. 81,18,000/- which is alleged to have escaped assessment is added, there would still be no additional tax liability on the part of the petitioner and that the petitioner would still be taxed on the book profit. Under the circumstances, the question of any income having escaped assessment would not arise.

5.1 In support of his submissions, the learned counsel placed reliance upon the decision of this court in the case of PKM Advisory Services P. Ltd. v. Income Tax Officer, (2011) 339 ITR 585 (Guj.), wherein, the court had recorded that when the tax payable as per the reasons recorded is less than the tax paid by the petitioner under the assessment framed under section 143(3) of the Act, the question of any income having escaped assessment does not arise. The court recorded that the order recording reasons itself indicates that in fact no income has escaped assessment and as such, there is no basis for the formation of belief that income has escaped assessment. Reliance was also placed upon the decision of this court in the case of India Gelatine and Chemicals Ltd. v. Assistant Commissioner of Income Tax (No. 1), (2014) 364 ITR 649 (Guj.), wherein, the court had recorded that even if the addition proposed by the Assessing Officer is sustained, it would m