Persad v Board of Inland Revenue

JurisdictionTrinidad & Tobago
JudgeBarnes, J.,Burke, J.,Dean-Maharaj, J.
Judgment Date18 April 1990
CourtTax Appeal Board (Trinidad and Tobago)
Docket NumberNos. I 33 and I 34 of 1984
Date18 April 1990

Tax Appeal Board

Barnes, J.; Burke, J.; Dean-Maharaj, J.

Nos. I 33 and I 34 of 1984

Board of Inland Revenue

Mr. S.S. Jairem and Mr. M. Haynes for appellant

Mrs. E. Bridgeman-Volney for appellant

Revenue law - Income tax — Assessment — Appeal against additional assessment to income tax and unemployment levy — Whether transfers between accounts should be treated as income — Evidence that both deposits and withdrawals of a business nature were made from or into the account in relation to trading receipts and payments — Appeal allowed.


By notices filed on 9th February, 1984 the appellant disputed additional assessment to income tax and unemployment levy for the year of income 1976, made pursuant to the Income Tax Ordinance, Ch. 33 No. l (now the Income Tax Act, Chap. 75:03).


In the Unemployment Levy Act No.16 of 1970 (now Chap. 75:03).


In the appellant'?s original return he had declared a chargeable income of $2,698, which had been accepted. by the respondent. Following a tax audit by the respondent, adjustments to this figure were proposed as set out at paragraph 5 of the Statement of Case filed on 13th July, 1937 (on record):–

“By audit report dated December 28, 1982, the respondent informed the appellant of the following proposed adjustments to be made to his chargeable income for the said income year.

Rental Income


Mortgage Interest


Annual Rateable Value


Deed of Covenant


Unexplained deposit


Total adjustments


Chargeable income per return


Adjusted chargeable income


Tax on adjusted chargeable income


Tax per return


Additional tax liability


Levy liability



On 28th December 1982, the respondent informed the appellant of additional assessments on the adjusted chargeable income. On 11th January 1903, the appellant served a notice of objection and gave the following grounds in support thereof,(vide paragraph 8 of the Statement of Case)(on record):–

“The appellants grounds of objection submitted by the appellant's counsel were –

  • (a) The assessment in my opinion was excessive and arbitrarily done.

  • (b) The annual rateable value of $4,627.00 should be exempted.

  • (c) The unexplained deposit of $504,916.00 an explanation was given to you on the source of these funds.”


Having considered the objection, the respondent made certain adjustments, resulting in a reduction of the chargeable income from $525,619 to $496,818, and communicated a further audit report in relation thereto on 10th January, 1984.


The appellant's Notice of Appeal was filed with the Tax Appeal Board on 9 th February 1984. His grounds of appeal and the contestions of the respondent are stated in paragraph 12 of the Statement of Case (on record), As follows:–

  • (a) Statement of allegations of fact –

    • (1) Wrongful refusal to accept that mortgage interest of $2,067.57S was an allowable expense and on a joint operation,

    • (ii) Wrongful refusal to accept the annual rateable value on 38/40 Sumadh Gardens as exempt.

    • (iii) Failure to take into account transfers between accounts and wrongfully treating same as income.

    • (iv) Failure to allow expenses against gross income.

  • (b) Statement of the reasons to be advanced in support of appeal

    As contained in appellant's explanations set out in his letter of the 4th January 1934 together with the (74) supporting schedules. (Already with the Board)”.

“The respondent will contend –

  • (a) that the return submitted by the Appellant for the year of income 1976 did not reflect the true income of the appellant for the said year.

  • (b) that as a result of the audit the respondent was of the opinion at the appellant had been assessed at a lesser amount than at which he ought to have been charged for the said income year. 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 the provision of S.89 of the Income Tax Act Chap. 75:01:

  • (c)that the appellant failed to supply to the respondent satisfactory evidence of his claim for mortgage interest allegedly incurred on the appellant's property at N0. 33 — 40 Sumdah Gardens, Vistabella; that the respondent was not therefore satisfied that the alleged expense was wholly and exclusively incurred in the production of income and that the respondent was accordingly justified in disallowing the said interest claim for the said income year.

  • (d) that the appellant did not conform with the provisions of Section 18 B(2) of the Income Tax Act in failing to satisfy the respondent to his entitlement for an exemption of the A.R.V, of his property situated at No. 38 – 40 Sumdah Gardens Vistabella.

  • (e) that the appellant failed to satisfy the respondent that deposits of $484,215.00 held at the Bank of Nova Scotia San Fernando were not of a taxable nature. The respondent therefore claims its entitlement to treat the unexplained source as income subject to taxation.

  • (f) that the appellant failed to satisfy the respondent that the said additional assessments are excessive or wrong or to what extent they are incorrect”


At the hearing the appellant conceded in regard to the disallowance of $2,067.57 as mortgage interest. The remaining issues for determination by this Court are:–

  • (1) Whether the respondent has rightly rejected the appellant's treatment of the sum of $4,627, the annual rateable value (A.R.V.) of a property at No. 30 — 40 Sumadh Gardens, Vistabella, as exempt income pursuant to section 42(2) of Chap.

  • (2) Whether the respondent was correct in holding that deposits into a bank account totaling $434,215 represented unreported taxable income of the appellant for the year of income 1976. This amount was computed as under:

Total deposits


Less Bank transfers


Loan deposited





In regard to (2) above, the appellant's grounds of appeal (already referred to) stated as under

  • (iii) Failure to take into account transfers between accounts and wrongfully treating same as income; and

  • (iv) Failure to allow expenses against gross income.


With respect to the unexplained deposits of $504, 916, the appellant had stated in his notice of objection that a ground of objection was that he had given to the respondent an explanation as to the source of these funds. The objection was determined on 10th January, 1984. In that communication, the appellant was advised, inter alia:–

“I refer to your letter of objection dated January ll, 1983 regarding your tax liability for the income year shown above.

I have considered the reasons set out in your letter of objection and reviewed the assessment. As a result, certain adjustments have been made, the reasons for which are shown in the attached Audit Report. However, where I was unable to change items with which you disagree, I have provided explanations for this action.”


It is clear from the record that over the period 11th January, 1983 to 10 th January, 1984, the respondent had been requesting detailed information relating to the disputed deposits and bank transactions of the appellant, however, it was not until 4 th January, 1984 (six days before the expiry of the objection period) that the appellant had complied.


In these circumstances it is not surprising that the comprehensive explanations contained in the appellant's letter dated 4th January, 1984 were not given due consideration before the determination of the objection. However we consider it unfortunate that there was little or no challenge to the points raised in the said letter, even at the hearing.


Section 3(4)(a) of the Tax Appeal Board Act, Chap. 4:50 states that this court shall have jurisdiction to hear and determine “appeals from the decision of the Board of Inland Revenue upon objections to assessment under the Income Tax Act we are presented with certain basic information relating to the taxpayer's affairs. The assessment is based on inferences relating to the receipts of the appellant with no input as to expenses which may have been justified in ignoring the appellant's claim for expenses due to the belated receipt of the information, by letter dated 4 th January 1984. However, this court must now give due consideration to this evidence.


Before we consider the evidence, it would be appropriate at this stage to examine the legal submissions of Counsel relating to the onus of pursuant to section 8(2) of the Tax Appeal Board Act which reads,-–

“The onus of proving that the assessment or other decision complained of is excessive or wrong is on the appellant.”


Counsel for the appellant urged that though the burden of proof falls on the appellant this does not mean that the respondent, in the absence of firm evidence is given carte blanche to make wild or extravagant claims. In support of his argument Mr. Haynes referred to the dicta of Walton J. in Johnson v. Scott. 52 T.C. 383 at p.393

“The fact that the onus is on the taxpayer to displace the assessment is not intended to give the Crown carte blanche to make wild or extravagant claims. Where an inference, of whatever nature, falls to be made, one invariably speaks of a fair” inference.”


He further submitted that once the taxpayer established in a prima facie manner his version of a factual situation it is for the respondent to answer or dislodge those facts. Hence the burden shifts from party to party as the case unfolds.


Mr. Haynes reminded the court that though the respondent may at the assessment stage require absolute proof from the taxpayer, once the taxpayer comes to court the standard required is that required in a civil case — on a balance, of probabilities.


It should be...

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