F. D. v The Board of Inland Revenue

• Jurisdiction: Trinidad & Tobago
• Judge: Barnes, S.C.,P.B. BURKE,V.R. DEAN-MAHARAJ
• Judgment Date: 01 January 1994
• Court: Tax Appeal Board (Trinidad and Tobago)
• Docket Number: Nos. I 304 and I 306 of 1989
• Date: 01 January 1994

Tax Appeal Board

Monica A.C. Barnes; P.B. Burke; V.R. Dean-Maharaj

Nos. I 304 and I 306 of 1989

F. D.

and

The Board of Inland Revenue

Ms. Wendy A. Ali for appellant.

Ms. S. Bachew for respondent.

Revenue law - Income tax — Appellant asked the court to find that the sums of $19,966.15, $8,942.00 and $11,028.97 for the income years 1982, 1983 and 1984 represented gross unreported income from which allowable expenses should be deducted to arrive at “the net unreported income” — Whether the respondent had correctly assessed the appellant's income for 1982, 1983 and 1984 by the addition of $19,966.15, $8,942.00 and $11,028.97 respectively as unreported income for the said income years — Judgment that the appellant had not discharged the necessary onus of proof — Appeal dismissed.

Barnes, S.C.

1 These are appeals against assessments to income tax for the years of income 1982, 1983 and 1984 and were consolidated by Order of the Court on 9th November, 1992.

2 The facts leading up to the disputed assessments are as under, according to the respondent's statement of case, filed on 9th November, 1992 on record:–

• (a) the appellant submitted his income tax returns for the income years 1982, 1983 and 1984, which declared the chargeable income as $18,567.00 for 1982; $27,560.24 for 1983; and $26,252.95 for 1984.

• (b) he had owned and operated a taxi, registration number H 1000 in addition to his regular employment with a construction firm.

• (c) his wages from employment had been brought into tax computation, but not his income from the taxi.

• (d) the respondent carried out an audit examination of the appellant's income tax affairs for the said income years, obtained information from the appellant on his part-time operation of his taxi and arrived at the net income from the taxi and the adjusted chargeable income as under:–

	1982	1983	1984
Net Income	$ 4	$ 4	$ 4
from taxi	16,346.34	4,672.96	14,583.75
Adjusted charge
able Income	31,639.00	34,792.00	40,837.00

3 The respondent informed the appellant of the adjustments to his chargeable income by audit reports dated 6th November, 1985. According to paragraphs 11 and 12 of the statement of case, the appellant by letter dated 28th September, 1988, requested that the assessments be reviewed to consider revised income and expenditure figures which lie had provided. He claimed that the information previously submitted was incorrect and explained that it had been hurriedly done for the main purpose of receiving approval for a plot of land from the National Housing Authority and had been done without the benefit of his bank records, bills and receipts.

4 For purposes of the revision which he requested, the appellant claimed that the net income earned from operating his taxi was actually: 1982 – $2,814.38; 1983 – $1,903.00 and 1984 – $2,887.00; and also submitted information on loans received, rental expenses, household expenses, car expenses and bank deposits and withdrawals for the said income years.

5 According to paragraph 13 of the statement of case, the respondent, on the basis of the information received from the appellant did a “sources and application of funds method of analysis” to determine the appellant's true income for the income years 1982, 1983 and 1984, as under:–

	1982	1983	1984
Source of Funds	$ 4	$ 4	$ 4
Gross Earnings per T.D.4	26,400.00	38,400.00	38,400.00
Loans obtained	12,364.00	18,324.00	7,232.00
Wife's contribution	5,150.00	NIL	NIL
Insurance indemnity	5,311.00	NIL	NIL
Total Income	49,225.00	56,724.00	45,632.00
Application of Funds	1982	1983	1984
P.A.Y.E.	3,576.00	8,340.00	7,739.00
N.I.S.	335.40	335.40	341.85
Life Insurance	1,729.98	2,204.98	NIL
Deed of Covenant	4,000.00	4,000.00	4,000.00
Health Surcharge	NIL	NIL	420.75
Loan and House Expenses	NIL	NIL	31,634.37
Dependant Relatives	400.00	NIL	NIL
Medical	1,140.00	NIL	NIL
Rental Payments	9,600.00	9,600.00	NIL
Other Household
Expenses	20,800.00	24,798.71	NIL
Motor Vehicle expenses
now reported	15,909.77	12,999.00	12,525.00
Loan repayments	11,700.00	3,388.00	NIL
Total Expenses	69,191.15	65,666.09	56,660.97
Excess of Applications over source of funds	19,966.15	8,942.09	11,028.97
Unreported income	19,966.15	8,942.09	11,028.97

6 The respondent's explanatory note in the statement of case pointed out that the appellant's previously declared income from operating his taxi and the revised figures were both excluded from true above statement.

7 On the basis of the results of the computation of the appellant's sources and application of funds for the income years 1982, 1983 and 1984, the conclusion arrived at and the action taken by the respondent are set out at paragraphs 14 to 17 of the statement of case, as under:–

• “14. The respondent concluded from its analysis that aside from income received from P. Ltd. the Appellant had earned income during the said years as follows –

  1982	1983	1984
  $19,966.15	$8,942.00	$11,028.97

• 15. The above figures were arrived at based on the appellant's declared income and expenditure figures. Since the appellant spent the above sum in excess of declared income and no source was given for the said funds the Respondent concluded that the appellant had earned other income in the said amounts.

• 16. The respondent accordingly concluded that the appellant could have earned the income originally declared by him as being from the operation of his taxi and therefore confirmed its assessments on the appellant for the said income years.

• 17. By letter dated 19th July, 1989 the respondent informed the appellant of its refusal to amend the said assessments.”

8 The appellant's grounds of appeal, and the contentions of the respondent are set out at paragraphs 18 and 19 of the statement of case, as under:–

“18. By Notices of Appeal I 304 to I 306 of 1989, the appellant appealed against the respondent's decision on the following grounds–

(A) STATEMENT of ALLEGATION of FACTS

The estimated additional assessments are excessive.

(B) STATEMENT of THE REASONS TO BB ADVANCED IN SUPPORT of APPEAL

(1) The estimates were made without any references to books of accounts, records or other documentation.

(2) The Board of Inland Revenue did not exercise its best judgment in arriving at its estimated additional estimates.

• 19. The respondent will contend that

  • (i) the appellant's income tax...