Charlton v The Commissioner of Income Tax
No. 3 of 1988
Enos Grant for appellant
William Alder for respondent
Jurisdiction - Notice of assessment — appellant elected to challenge the Court's jurisdiction on the basis that the notice of assessment had violated some of the principles enunciated in the Lincoln case — Finding of the Court that the assessments were a nullity and that all subsequent proceedings based on it were similarly tainted.
The assessments in this appeal were made prior to the decision of the Court of Appeal in – R.M. Miscellaneous Appeal No. 2/86 dated on the 5 th February, 1988, in which it was held that a notice of assessment to income tax must state, in substance and effect, the basis upon which the assessment was made; in other words, that the taxpayer is entitled to know the source of income upon which the tax is being levied, and failure to so inform him, vitiates the assessment.
As a consequence of the foregoing, a rather unusual situation arose in the hearing of this appeal, in that counsel for the appellant, having filed the appeal, and thereby inferentially accepting the jurisdiction of this Court, nevertheless, on the case being called up this morning, elected to challenge the Court's jurisdiction on the basis that the notice of assessment herein violated some of the principles enunciated in the case.
The matter was discussed and counsel agreed that the jurisdictional point would have to be dealt with first before considering the merits of the appeal proper; since obviously, if there was no jurisdiction, that would be an end of the matter. I now turn to the consideration of that question and that question alone.
For the appellant, Mr. Grant citing case, submitted:
(a) that the notices of assessment were bad in law because they failed to comply with the statutory requirements i.e. that they failed to inform the appellant in substance and effect of the basis upon which the assessments were made.
(b) that in any event, the assessments were equally invalid because they were made without any opportunity being given to the appellant to render a return.
In response, Mr. Alder submitted as regards:
(a) that the assessment notices had complied with the statute and did contain in substance and effect, the basis upon which the assessments were made. He referred to the assessment notices exhibited, and in particular to a notation in ink thereon under the heading “adjustments” where the following words had been inserted:
“income recomputed as per capital statement.”
As regards (b), it was submitted:
that the reference to a “capital statement” obviously related to the fact that a return had previously been made by the appellant and to which his accountants had appended a “capital statement”; before the assessments were issued. Therefore, looking at one in conjunction with the other, it was clear that:
(a) the taxpayer was aware of the basis upon which the assessments had been made, and
(b) he had in fact submitted returns prior to the assessment.
Apart, however, from this, there is in my bundle, an affidavit filed on behalf of the respondent by Mr. Aubrey Donaldson Evans, chief investigator in the income tax department, the officer who investigated this matter and examined and dealt with the file of the appellant Lynson Charlton. I have read that affidavit and it seems to me that (whatever may be the criticisms of the notice of assessment) a clear inference can be drawn from the affidavit that the appellant had, in fact, been aware of the basis upon which the assessments were made.
For that reason, the question in this case is not merely whether the respondent had failed to comply with the statutory requirements relating to the notice of assessment, but whether such a failure was any longer relevant if the taxpayer did in fact know the basis upon which the assessments were made. In short, are the requirements of the statute mandatory and does a failure to state particulars, regardless of any subjective knowledge in the taxpayer, ipso facto, render the notice invalid? I shall return to this question later.
Firstly, however, I must deal with the second leg of Mr. Grant's submission, namely, that the assessments were also invalid because they were made without any opportunity having been afforded the taxpayer to render a return. I think this point must fail, because I accept Mr. Alder's submission that the appellant had already made returns prior to the issue of the assessment and there could, therefore, be no question of any such assessment having been made without affording him an opportunity to do so.
I return now to the question raised by the first limb of Mr. Grant's submission. In reply thereto, Mr. Alder had submitted that the note on...
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