| 22/8/2008 |
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| Court of Appeal - Decisions in Income Tax Cases |
| Case No: 81 |
Decided: 31 May, 1971 |
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Estimated Assessments. Powers Of The Commissioner. Reduction Of Additional Tax
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This was a case where the taxpayer had failed to file returns for several years of assessment. Estimated assessments were raised and additional tax imposed. The assessments were raised on a back duty computation taking annual rests. No agreement was reached and the matters reached the Board of Special Commissioners. There it resulted that after the submission of returns, certain income had still been left out. The Board made its own computation and revised the assessments accordingly. A host of preliminary legal points put up by the appellant were all rejected.
On appeal to the Court appellant contended that: (a) assessments for the earlier years were statute barred; (b) the Department had not indicated the source of income which it had brought to charge as a result of unexplained capital accretions; (c) the Commissioner had exercised his discretionary powers twice over.
The Court rejected all points raised. The appellant was clearly mixing up the provisions of the law regarding the raising of assessments. The assessments complained of had been raised in accordance with the provisions relative to statute barring. These were that assessments which were otherwise statute barred could only be raised where there had been fraud or evasion on the taxpayer's part. It was an established principle that in such cases, the "onus of proving" that there had been such fraud or evasion lay on the Revenue, but that when this requirement was satisfied, the onus of proving that the assessment was excessive reverted to the taxpayer. In this case, facts showed clearly that the taxpayer had at least been guilty of evasion.
As regards the source of the unexplained income, it was up to the taxpayer to indicate what was the source which enabled him to effect so much savings. He could also attempt to explain away the increase through a non-taxable receipt. It appears to be in accordance with justice and common sense that the income is brought to tax even if the particular quality or source cannot be identified, since the taxpayer knows the full facts, and the Revenue does not. The Court confirmed accepted decisions in the U.K. Court in this respect.
As regards the exercise of the Commissioner's discretion, the Court noted that under our system of law this was not prohibited. In any case the Commissioner's discretion had to be based on facts, and he had to review his discretionary decisions as facts matured and got clearer.
BSC Case No: 27/67
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