Murray (Dennis) v Commissioner of Taxpayer Appeals (Income Tax)

JurisdictionJamaica
Judge ANDERSON J.
Judgment Date25 May 2007
Judgment citation (vLex)[2007] 5 JJC 2501
CourtRevenue Court (Jamaica)
Date25 May 2007
IN THE REVENUE COURT
IN RE THE INCOME TAX ACT
BETWEEN
DENNIS MURRAY
APPELLANT
AND
THE COMMISSIONER OF TAXPAYER APPEALS (INCOME TAX)
RESPONDENT

REVENUE LAW - Validity of additional and estimated assessments - Validity of imposition of surcharge

ANDERSON J
1

This is an appeal by Dennis Murray, (the Appellant) against the decision of the Commissioner of Taxpayer appeals made on the 27 th April 2005, whereby it was ordered that the assessments made on the appellant by the Commissioner Taxpayer Audit & Assessment Income Tax, ("The Commissioner" or Commissioner TAAD") in the amounts of the additional tax for the years of assessment 1997 to 2001 be confirmed in the following sums:

Year of Assessment

Tax

1997

625,000.00

1998

750,000.00

1999

953,274.13

2000

1,659,826.00

2001

2,017,338.00

2

The Grounds of Appeal relied upon by the Appellant are as follows:

A. That the Notices of Assessment are a nullity for the following reasons:

  • a. That the Commissioner did not serve any notice requiring the Appellant to deliver returns and/or statements of any profits or gains or any accounts or any documents whatsoever in respect of the Appellant's income and/or assets for any of the relevant years of assessment prior to raising the assessments

  • b. The said notices of assessment were made without any prior notification to the Appellant and/or without giving the Appellant any opportunity to make any representations and/or submissions as regards the Appellant's income in respect of the said years of assessment.

  • c. That the said assessments do not comply with the Income Tax Act in that they do not disclose the basis as required by the Act.

  • d. The said assessments are ultra vires the powers of the Commissioner under the Income Tax Act.

3

The Commissioner of Taxpayer Appeals ("the Respondent") in response to the Notice of Appeal filed a Statement of Case setting out the bases upon which the assessment had been made and confirmed, and asking this court to dismiss the appeal and confirm those assessments. In his Statement of Case, the Respondent set out the principal facts upon which he purported to rely in making the assessment. Those facts are as follows:

  • (a) The Appellant is the Managing Director of Murray's Wrecking Service and Auto Parts Limited. He also operates Mandeville Cesspool Service as a sole trader and receives rental income.

  • (b) The relevant history of the matter begins when the Appellant filed income tax for the period 1996 to 1999.

  • (c) The Commissioner TAAD raised additional assessments on the Appellant for years of assessment 1996 to 1999 which contained adjustments increasing the Appellant's chargeable income in the following amount:

    Year

    Tax

    1996

    $3,731,045.62

    1997

    $ 937,500.00

    1998

    $1,125,000.00

    1999

    $2,017,338.00

  • (d) The said adjustments to the chargeable income resulted from the Commissioner TAAD treating the consideration of $10,000,000.00 used by the parish of Manchester as being income obtained from an unreported source.

  • (c) A Form 13 dated the 8 th of October 2000 was served on the Appellant requiring him to make and deliver returns of his income to the Commissioner TAAD for the years of assessment 2000 and 2001.

  • (f) The Appellant failed to file returns for the years of assessment 2000 and 2001. Pursuant to section 72 of the Income Tax Act the Commissioner of TAAD made estimated assessments for the years 2000 and 2001 totalling $3,667,164.00 inclusive of penalty.

  • (g) By letter dated January 10, 2003 the Appellant objected to the Notice of Assessment for years 1996 to 1999 on the basis that:

    • • The estimated assessments under section 72 are excessive and do not agree with the client's accounting records, or income tax returns already submitted.

    • • The assessments provide no details regarding income stated to exist from sources which were not disclosed by the client. The Appellant strongly denied the existence of any such additional income.

    • • The accountant/Tax adviser asked that the Appellant be presented with the information regarding these additional sources of income so that the related grounds of objection could be stated more extensively.

      • The surcharge applied is therefore not relevant.

  • (h) The representatives of the TAAD met with the Appellant's accountant on January 28, 2003 with a view to setting the objection. At the said meeting it was agreed that a Capital Statement would be submitted to the TAAD within a reasonable time.

  • (i) The Appellant on March 31, 2003 by telephone promised to deliver the said Capital Statement to TAAD before the 7 th day of April 2003.

  • (j) By letter dated August 25, 2003 the Commissioner of TAAD again requested from the Appellant the said capital statement to be produced by September 10, 2003, in order to substantiate his objection, failing which the objection would cease to have effect.

  • (k) The Appellant by letter dated September 9, 2003 requested an extension of time until September 24, 2003 within which to submit the Capital Statement. The Appellant failed to submit the said Capital Statement within the time specified and again by letter dated September 29, 2003 requested a further extension of time from the TAAD until October 10, 2003 within which to submit the said Capital Statement.

  • (l) By letter dated September 30, 2003 the Commissioner of TAAD confirmed the assessments and informed the Appellant that she was unable to grant the further extension of time requested as sufficient time had been given since the objection.

  • (m) The Appellant by letter dated October 31, 2003 appealed to the Respondent, the decision of the Commissioner of TAAD and enclosed the said Capital Statement.

  • (n) A hearing was held on March 16, 2004 at the Taxpayer Appeals Department, where additional information was then requested from the Appellant to support some balances in the Capital Statement to be presented on or before May 17, 2004.

  • (o) A meeting was held with the Appellant's representative on April 22, 2005 where certain arithmetic as well as constructional errors contained in the Capital Statement were pointed out by the Respondent's representative.

  • (p) The Appellant by letter dated April 22, 2005 responded to the issues raised at the meeting and provided a revised Capital Statement to the Respondent.

  • (q) This revised Capital Statement still contained arithmetic and constructional errors and when corrected showed the Appellant owing more taxes than that for which he was assessed by the Commissioner of TAAD./

  • (r) By letter dated April 26, 2004 the representative of Respondent informed the Appellant of the Department's position in light of the revised Capital Statement and the information presented.

  • (s) On the 27 th of April 2005 the Respondent issued his Notice of Decision, vacating the additional assessment for 1996, while confirming the additional assessment for years 1997 to 1999 and the estimated assessments for 2000 and 2001. The penalties for 1997 to 1999 were however removed.

4

The Respondent further set out reasons on the basis of which it was submitted the assessment should be confirmed by this court and the appeal dismissed.

5

Reasons

  • (a) The Appellant failed to deliver to the Commissioner of TAAD true and correct returns of his income from every source whatsoever for the years of assessment 1996 to 1999. The Commissioner acted correctly in making an additional assessment in respect of the said period of assessment.

  • (b) The Commissioner's assessment for years 2000 to 2001 was properly made to the best of her judgment in accordance with section 72 (3) of the Income Tax Act.

  • (c) Pursuant to section 70 (6) of the Income Tax, the non-delivery of a notice requiring the Appellant to deliver returns and or statements of any profits or gains or any accounts or any documents whatsoever in respect of the Appellant's income and or assets for any year of assessment before an assessment is made upon that person does not invalidate the assessment. Despite this fact the Commissioner of TAAD served a notice upon the Appellant requiring him to file his returns for the years of assessment 2000 to 2001

  • (d) The Notice of Assessment served upon the Appellant by the Commissioner disclosed a sufficient basis on which the assessment was made.

  • (e) In exercise of her powers under section 75 (5)(a)(ii) of the Act, the Commissioner of TAAD requested that the Appellant produce documentary proof in the form a capital statement to substantiate his objection. The Appellant failed to appreciate that the onus of proof rests with him and did not provide the capital statement requested. Consequently, the Commissioner correctly confirmed the assessments.

  • (f) The Respondent gave the Appellant adequate opportunity to be heard and to provide documentary proof of his claim. The Appellant however failed to discharge this burden and the Respondent correctly confirmed the decision of the Commissioner of TAAD for years of assessment of assessment 1997 to 2001.

6

Let me deal at the outset with facts which are in issue. Although there are some minor differences in the facts as recounted by the Appellant and the Respondent herein, there is substantial agreement between the parties. In so far as there are differences, they appear to turn upon the following:

  • a) Whether at a meeting held on January 28, 2003 between representatives of TAAD and the Appellant's accountants, the Respondent had asked for and the Appellant had agreed to supply, a capital statement.

  • b) Whether a capital statement was submitted on time in accordance with a request or agreement, or at all.

  • c) Whether the Appellant had been served with any notice requiring the Appellant to deliver returns before the raising of the...

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2 cases
  • Llandovery Investments Ltd v Commissioner of Taxpayer Appeals
    • Jamaica
    • Court of Appeal (Jamaica)
    • 30 March 2012
    ... ... Appellant and The Commissioner of Taxpayer Appeals (Income Tax) Respondent [2012] JMCA Civ 19 ... this opinion should be preferred to the view of Dukharan JA in Dennis Murray v The Commissioner of Taxpayer Appeals SCCA No 70/2007, delivered ... ...
  • Llandovery Investments Ltd v Commissioner of Taxpayer Appeals [Revenue Court]
    • Jamaica
    • Revenue Court (Jamaica)
    • 14 July 2010
    ...to the previous provision which required the Commissioner to give "particulars". Dukharan J.A. in Dennis Murray v Commissioner of Taxpayer Appeals (Income Tax) SCCA # 70 Of 2007, agreed with counsel for the Revenue in that case, that the requirement to "state the basis" was less stringent t......

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