Point of Law : Income escaping assessment - Procedure for Assessment - Failure to arrive at conclusion Section 144C proceeding cannot become ruse for initiating proceedings under Section 147/148 of Act absence of new material emerging before AO which gives AO reason to believe that assessee's income chargeable to tax had escaped assessment.

JUDGMENT :

RAJIV SHAKDHER, J:

TABLE OF CONTENTS

Preface.................................................................................................................. 2

Background facts pertaining to W.P. (C) 10939/2018................................................................ 3

Background facts pertaining to W.P. (C) 10940/2018................................................................... 8

Submissions made on behalf of the petitioners ...................................................................... 11

Submissions advanced on behalf of the respondent................................................................. 16

Analysis and Reasons......................................................................................................... 19

Conclusion............................................................................................................. 31

Preface:

1. These writ petitions are directed against separate but identical orders. The orders impugned bear the same date and content. The first writ petition has been filed by ESS Advertising (Mauritius) S.N.C Et Compagnie (Earlier Known as ESPN Star Sports Mauritius S.N.C. Et Compagnie) [hereafter referred to as “ESSA”] while the second writ petition has been filed by ESS Distribution (Mauritius) S.N.C. Et Compagnie [in short “ESSD”]. However, ESSA and ESSD will collectively be referred to as petitioners unless the context requires otherwise.

2. The impugned orders, passed in the instant matters, concern the following:

i. orders containing reasons, dated 20.03.2018, based on which the Assessing Officer [in short “A.O.”] issued a notice under Section 148 of the Income Tax Act, 1961 [in short “Act”] dated 29.03.2018;

(ii). notices dated 29.03.2018, issued under Section 148 of the Act; and

(iii). orders dated 24.09.2018, whereby the objections filed by the petitioners to the impugned reasons were disposed of by the AO.

3. Since the facts in both cases are similar, the above-captioned writ petitions are being disposed of via a common judgment.

3.1. The aforementioned orders concern the assessment year [in short “A.Y.”] 2013-2014.

3.2. Before we set forth the core issues, which arise for consideration, in the above-captioned writ petitions, which are similar, it would be convenient, to outline, in detail, the facts and circumstances obtaining in one of the writ petitions, i.e., W.P. (C) 10939/2018 instituted by ESSA. We may note that counsel for the parties were agreed that the decision in W.P. (C) 10939/2018 would apply mutatis mutandis to the other writ petition as well, i.e., W.P. (C) 10940/2018.

Background facts pertaining to W.P. (C) 10939/2018:

4. ESSA is a partnership firm established under the laws of Mauritius. The two partners in ESSA are ESPN Mauritius Ltd. [now known as Worldwide Wickets, Mauritius]; an entity incorporated in Mauritius and having 99.9% share in the profits of ESSA. While the other partner, i.e., ESPN Network Pte Ltd.; incorporated in Singapore, held a 0.1% share in the profits earned by ESSA. This position also obtained in the AY in issue, i.e., AY 2013-2014. ESSA is engaged in the business of acquiring and allotting advertising time and programme sponsorship [hereafter referred to as “advertising time”] in connection with television programming. ESSA entered into agreements for the sale of advertising time with ESPN Software India Private Limited [now known as Star Sports India Private Limited (in short “SSIPL”)], a company incorporated under the laws of India, which in turn has merged with Star India Private Limited. ESSA has claimed that it entered into the aforementioned agreement with SSIPL on a principal to principal basis and that SSIPL, on its own steam carried on the business of allotting advertisement time slots to various advertisers and advertising agencies in India.

5. On 28.11.2013, ESSA filed its