| 29/8/2008 |
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| Court of Appeal - Decisions in Income Tax Cases |
| Case No: 15 |
Decided on 4 December 1956 |
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Principles Of Natural Justice Are To Be Followed By The Board Of Special Commissioners. Distinction Between Points Of Law And Of Fact.
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In this case the Revenue has raised an estimated assessment which the taxpayer was questioning before the Board of Special Commissioners. The Board refused to reduce the Commissioner's assessment "interalia because the rate of gross profit declared by the taxpayer in his return was manifestly low, and was inferior to that which the Board had sufficient reasons to believe was the ordinary rate of profit during 1949". The Board also referred to a "rate of gross profit which it was known was realized by other taxpayers". The taxpayer appealed to the Court claiming that there had been a violation of the principles of natural justice in that the Board had based its decision on facts which did not emerge during the case but which had been obtained "aliunde" i.e. from elsewhere. The appellant claimed therefore that he had been denied the right of having his say on the matter: an infringement of the principle that the tribunals have to give this chance to everybody: "audi alteram partem". Substantially, the method followed by the Board amounted to its making use of information obtained "ex parte" that is without the knowledge of the parties.
The Revenue brought forward a preliminary plea that the determination of profits was a point of fact, not law, and that hence there was no valid appeal which could be made. This reasoning was rejected by the Court. A point of law need not be expressly contained in a decision under appeal. Certain other laws had this requirement, but not the Income Tax Act. A point of law could also be involved or implied in a decision on a matter of fact. In this case, the point at issue before the Court was whether the Board had infringed a basic principle regarding the process of decision making. This was clearly a point of law.
As regards whether there had been an infringement of the rules of natural justice, the Court agreed that the Board had decided the issue concerning the amount of the profits realized by the taxpayer on the basis of proof which did not emerge during the hearing of the case, and had not been brought to the attention of the taxpayer so as to enable him to express himself thereon. The Board was a judicial tribunal like any other and it had to follow normal court rules. The U.K. courts had put the matter as follows: "They can obtain information in any way they think best, always giving a fair opportunity to those who are parties in the controversy for correcting or contradicting any relevant statement prejudicial to their view". The Court therefore accepted that there had been a violation of the rules of natural justice, and remitted the case back to the Board so that the question of the profits realised by the taxpayer could be judged afresh.
BSC Case No: 32/55
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