| 21/5/2012 |
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| Court of Appeal - Decisions in Income Tax Cases |
| Case No: 156 |
Decided: 16 October, 1991 |
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CORRECT PROCEDURE FOR THE RAISING OF BEST OF JUDGMENT OR EX OFFICIO ASSESSMENTS
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A landmark decision on the powers granted to the Revenue to raise best of judgement assessments.
A best of judgement assessment was raised on the taxpayer without his trade books being even examined. This situation persisted right up to the hearing before the Board of Special Commissioners, with the Revenue giving no clue as to why or how the assessments had been raised. The Board, quoting one of its older cases, declared that the Revenue were entitled to do so, and concluded that the taxpayer had failed to prove that the assessment was excessive.
On appeal to the Court, the taxpayer maintained that the Revenue had acted ultra vires the powers granted by the law for the raising of best of judgement assessments. The Revenue, on the other hand, contended that the Board had only decided a point of fact. The taxpayer also pleaded that the Board had decided the case on a precedent basis, which was alien to the local legal system and practice.
The Court of Appeal rejected both the Revenue's plea to the effect that only a point of fact was involved, and the taxpayer's plea that the Board had decided on a precedent basis.
On the real merits of the case, the Court held that the Revenue could not raise best of judgement, or ex officio, assessments unless the relative provisions of the law were strictly followed. The detailed procedure laid down in the Income Tax Act for this purpose had to be followed. This had clearly not been done in the present case. The Revenue could not simply ignore what the law laid down, proceeding as if it gave powers but did not impose obligations which had to be respected. The Board's decision was therefore over-ruled and the relative assessment declared null and void.
BSC Case No: 28/87
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