Harris v Board of Inland Revenue
| Jurisdiction | Trinidad & Tobago |
| Judge | Barnes, J.,Burke, J.,Dean-Maharaj, J. |
| Judgment Date | 01 January 1993 |
| Court | Tax Appeal Board (Trinidad and Tobago) |
| Docket Number | Nos. I 51 — I 56 of 1988 |
| Date | 01 January 1993 |
Tax Appeal Board
Barnes, J.; Burke, J.; Dean-Maharaj, J.
Nos. I 51 — I 56 of 1988
Mk. V. Prashad and Mr. B. Roopnarine for appellant.
Mrs. E. Bridgeman-Volney and Miss G. Wolffe for respondent.
Revenue law - Income tax — Assessment of alleged unreported income — Appellant failed to discharge onus of proving that the additional assessments were excessive or wrong — Appeal dismissed.
These are appeals against assessments to income tax and unemployment Levy for the years of income 1981, 1982 and 1983, which were consolidated by order of the Court dated 26th October, 1990.
The appellant, a Pharmacist, operated a business under the name of “Harris Drug Store”, at Eastern Main Road, Sangre Grande, during the years of income 1981–1983.
For the income years 1981–1983, the appellant had submitted his income tax returns, which had been accepted, and assessed accordingly, by the respondent.
Subsequently, as a result of the receipt of a notification from Republic Bank Ltd. Sangre Grande, to the effect that the appellant had received bank interest for income years 1982 and 1983, the respondent conducted an audit examination upon the appellant for the income years 1981, 1982 and 1983, which according to para 5 (as amended) of the respondent's consolidated statement of case, revealed the following:
-
“(a) that the appellant received interest income from Republic Bank Ltd, Sangre Grande in the sum of $4,076.71 for income year 1982, which income was not reported by the appellant. The Respondent thereby calculated the capital source placed on fixed deposit during income year 1981, utilising an estimated rate of interest of 8% and arrived at a sum of $50,958.00. This estimated sum the respondent attributed to unreported income of the appellant for income year 1981. For the year of income 1982, the respondent allowed the appellant the statutory exemption limit of $3,000.00 in respect of interest earned
-
(b) that the appellant received interest income from the said Bank in the sum of $7,650.00 for income year 1983, which interest income was not reported by the appellant. The respondent deducted the sum of $1,,200.00 which it attributed to Carlton Harris in respect of a joint fixed deposit held with the appellant and included in the said sum of $7,650.00 and there being an increase of $2,373.29, in 1983 over, what was received by the appellant in 1982 the respondent thereby calculated an increase in capital source placed on fixed deposit during income year 1982, to be $25,591. This sum the respondent attributed to unreported income of the appellant for 1982; Total interest income thereby calculated to be received by the appellant from Republic Bank Ltd, Sangre Grande for income year 1983, was $6,450.00. Allowable deductions were granted to the Appellant in the amount of $3,000, thereby resulting in total adjustments for the said income year of $28,744.43. For the year of income 1983 the Respondent allowed the Appellant the statutory exemption limit of $3,000.00 in respect of interest earned.
-
(c) that the appellant received interest income from Trade Confirmers Ltd in the sum of $25,294.43 in income year 1983, which said sum was not reported by the Appellant. The Respondent accepted the capital source placed on fixed deposit during income year 1982 at Trade Confirmers Ltd. to be $108,630.00. it
The consequential adjustments of which the appellant was informed, are set out in para. 6 of the consolidated statement of case, as under:–
“By audit reports dated 3rd December, 1985 the Appellant was informed of the following adjustments to his income for the subject years under appeal –
INCOME TAX
1981
1982
1983
Unreported Income
$50,958.00
$134,221.00
–
Unreported Interest
–
1,076.00
28,744.00
Total Adjustments
50,958.00
135,297.00
28,744.00
Chargeable Income per return Adjusted Chargeable
19,751.00
15,524.00
24,121.00
income per return
70,709.00
150,821.00
52,865.00
Tax as adjusted
33,496.30
75,410.50
21,719.00
Tax as previously adjusted
4,662.83
3,183.40
6,398.00
Additional Tax
28,833.45
72,227.10
15,320.60”
The events which led to the filing of the appeal against assessments are as set out at paras 7–11 of the respondent's consolidated statement of case, as under:–
“7. Notices of Assessment dated 27th March, 1986 were sent to the appellant informing him of the above liability to income tax and unemployment levy for income years 1981 to 1983.
8. By letter dated 16th April, 1986, the appellant objected to the said assessments claiming that the said assessments were based on a capital investment and consequently not a taxable source.
9. By letter dated 30th September, 1987, the respondent wrote to the appellant requesting him to attend the office of the Respondent to discuss his objection and to provide documentary evidence in support of the above contention.
10. The appellant, through his representative alleged that the source of funds to meet the sums placed on fixed deposit were derived from the sale of a property. The appellant was requested to provide documentary evidence to show receipt of the monies of the alleged transaction. This he failed to do.
11. No additional information having been given by the appellant in support of his contention, the assessments were accordingly confirmed and the appellant so informed by letter dated 23rd March, 1988.”
The appellant's grounds of appeal, and the contentions of the respondent are set at paras. 12 to 14 of the consolidated statement of case, as under:–
“12. By Notices of Appeal dated 19th April, 1988, the appellant appealed to the Tax Appeal Board against the decision of the respondent for the subject income years. The grounds of appeal are as follows:
(a) STATEMENT of ALLEGATIONS of FACT
The assessments are arbitrary, excessive and incorrect.
(b) REASONS IN SUPPORT of APPEAL
(i) the appellant did not understate his income in the sum alleged or at all.
(ii) Alternatively, the sum assessed to tax is of a capital nature and is not subject to tax under the provisions of the Income Tax Act.
(iii) the assessments are not justified in law or fact.
13. The respondent will contend –
(1) that for the years of income 1981 to 1983, the appellant's income tax returns did not reflect his true income for those years;
(2) that as a result of the audit, the respondent was of the opinion that the appellant had been assessed at a lesser amount than that which he ought to have been charged for the said income years. The respondent has on the facts and in the circumstances of the case and to the best of its judgment raised additional assessments on the appellant under provisions of Section 89 of the Income Tax Act, Chapter 75:01;
(3) that the appellant failed to prove that the source of income to fund fixed deposits held at Republic Bank and Trade Confirmers Ltd originated from a capital receipt;
(4) that the appellant failed to provide satisfactory evidence to prove his claims.
14. The respondent further maintains that the said additional assessments are justifiable in law and in fact:”
The appellant himself testified, as well as his brother Carlton Harris. Also testifying on behalf of the appellant was Krishna Seegobin, a Chartered Accountant, who had prepared the accounts and balance sheets for “Harris Drug Store” for the relevant years. He had also assisted in the preparation of income tax returns of the appellant for the said years. For the respondent, Ramsaran Soomai, a Tax Officer IV, testified as the Tax Auditor.
The issues to be determined are set out at para 5 (as amended) of the respondent's consolidated statement of case, already quoted.
As provided by section 8(2) of the Tax Appeal Board Act, Chap. 4:50 the onus of proving that the assessment or other decision complained of is excessive or wrong is on the appellant. It should also be stated that the standard of proof required is proof on a balance of probabilities.
We now turn to the evidence before us.
Seegobin testified that he had prepared the accounts (all on record) for “Harris Drug Store” for the years ended 31/3/82, 31/3/83 and 31/3/84 on 1/6/82, 23/6/83 and 7/12/84 respectively.
He had also filed income tax returns (all on record) for Patrick Harris for each of the years 1981, 1982 and 1983 on 28/10/82, 3/1/84 and 17/12/84 respectively.
Seegobin stated that the income tax returns and the accounts of the Drug Store reflected the information he had received from the appellant for the respective years. He also testified that nothing was disclosed to him by Patrick Harris as regard interest income received from Trade Confirmers Ltd and Republic Bank Limited, Sangre Grande.
Patrick Harris testified that in 1981 he owned and operated a Drug Store. He had filed his income tax return for the year 1981. He had utilised the services of Krishma Seegobin, a chartered accountant to prepare his returns for the years 1981 to 1983. He had seen the returns and had signed them.
Regarding the matter of unreported income, the appellant was referred to the following documents on record relating to fixed deposits said to have been held with Trade Confirmers Ltd. and Republic Bank Limited, Sangre Grande. The contents of those letters are dealt with individually hereunder:–
(i) Letter dated 6th September, 1985 from Republic Bank Ltd., Sangre Grande, to Board of Inland Revenue (vide folio (10) in file I 53 of 1988) This letter stated:–
“We advise as follows:
(1) Fixed Deposit #490705 1177–51 in names of Patrick and/or Patricia Harris — Interest paid for period 15.4.83 to 14.4.84 = $2,400.00 (Principal Amount $30,000) Interest paid for 15.4.84 to 13.7.85 = Nil.
(2) Fixed Deposit #4907051185 — 51 — Interest...
To continue reading
Request your trial