Prudential Insurance Consultants and Service Ltd v The Board of Inland Revenue

• Jurisdiction: Trinidad & Tobago
• Judge: Koylass, C.,Burke, M.
• Judgment Date: 30 July 1981
• Court: Tax Appeal Board (Trinidad and Tobago)
• Docket Number: I 27-31/1979
• Date: 30 July 1981

Tax Appeal Board

Koylass, C.; Burke, M.

I 27-31/1979

Prudential Insurance Consultants and Service Limited

and

the Board of Inland Revenue

Appearances:

B. Toolsie for the appellant.

B. Roopnarine for the respondent.

Cases referred to:

• (1) Roytrin Nominees Ltd. v. BIR (1967–77) 1 T.T.T.C. 458.

• (2) George v. Federal Commissioner of Taxation, 10 ARD (Australia).

• (3) Anthony Norman Sabga v. BIR (1978–85) 2 T.T.T.C. 274.

• (4) Atkinson v. BIR (1967–77)1 T.T.T.C. 664.

Application pursuant to Rule 26 of the Appeal Board Rules 1967 for Statement of Case from Board of Inland Revenue to be sent back for amplification or amendment.

Civil Practice and Procedure - Statement of Claim — Amendment — Whether the application for the statement of claim should be amplified where there was sufficient reason set out which provided in support of the assessment — Application dismissed — Rule 26(1) of the Appeal Board Rules.

The respondent assessed the appellant company for income tax for the period 1973–1977 to be $250,000.00. In accordance with Rule 26 of the Appeal Board Rules, 1967 the appellant filed an appeal submitting that the figures as assessed were excessive or wrong and that the correct figure was $8,450.

In completing this assessment the respondent refused to accept the appellant's tax returns on the ground that they did not reflect the appellant's true profit. In accordance with section 39(2)(b) of the Income Tax Ordinance the Board of Inland Revenue to the best of its judgment determined the amount of the chargeable income of the appellant and assessed it accordingly.

The appellant contends that the BIR in accordance with Rule 26 should make available its reasons for assessment and in so doing should follow the procedure required for making a statement of claim in civil proceedings.

Held:

• (i) the appellant's true profits were exclusively within its knowledge and so it bears the burden of showing the assessment to be incorrect and to submit the correct sum and the respondent is under no duty to disclose the source on which it relies in making the assessment;

• (ii) a statement of claim and a statement of case bear fundamental differences and so the court should not treat them similarly, but in treating with a statement of case it should apply the necessary modifications to the principal that pleadings should be clear, known to all parties and avoid surprise at trial and it was therefore sufficient for the Board to state that the returns filed by the appellant did not reflect the true profits of the company.

Application refused

1 On the 28th May, 1981, the appellant filed on application for an order pursuant to rule 26 of the Appeal Board Rules, 1967 (hereinafter referred to as “the Rules”). The application relates to a consolidated statement of case dated 16th March, 1981, and reads as follows:–

• 1. That the respondent be ordered to state –

  • (a) The material facts upon every point specified in the Notice of Appeal.

  • (b) The reasons in support of such assessment or other decision.

• 2. In the alternative that the respondent's statement of case be sent back to the Inland Revenue for amplification or amendment within such time as the Court thinks fit.

2 Rule 26 of the Rules reads as follows:–

26

(1) In addition to the documents referred to in section 43D(6) of the Ordinance, the Inland Revenue shall, within twenty-one days after the service upon them of a notice of appeal – (a) file in the Registry a statement of case setting out – (i) the assessment, directive or other decision of the Inland Revenue appealed from; (ii) the material facts upon every point specified in the notice of appeal as a ground of appeal; (iii) the reasons in support of such assessment, directive or other decision; and (b) serve a copy of the said statement on the appellant. (2) The Court may cause the statement of case to be sent back to the Inland Revenue for amplification or amendment, and the Inland Revenue shall within the time specified by the Court – (a) amplify or amend the statement of case and file the same in the Registry; (b) serve a copy of the amended or amplified statement on the appellant.

3 We must observe that though on the face of the application, one of two alternative orders was sought, in effect at the hearing, Counsel was seeking to have the consolidated statement of case sent back for amplification pursuant to rule 26(2) by the inclusion in it of the particular required by rule 26(1)(a)(ii) and

4 The notices of appeal in regard to the assessments for the years 1973 to 1977 are stated in similar terms. In appeal No. I 27 of 1979 the grounds of appeal are stated as follows:–

• (a) Statement of allegations of fact. (1) The Chargeable profits of the appellant for the 1977 income year were $8,540 and not $250,000.

  • (2) The assessments are therefore, hypothetical, excessive and arbitrary.

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

  • (1) The respondent had no basis for making the assessments subject to this appeal.

  • (2) The said assessments are unjustified both in law and in fact.

5 Paragraph 10 of the statement of case, in respect of which amplification or amendment is being sought, reads as follows:–

6 The respondent will contend:

• (1) That the Corporation Tax Returns filed by the appellant did not reflect the true profits of the company.

• (2) That it may refuse to accept the returns of the company by virtue of Section 39(2)(b) of the Income Tax Ordinance and to the best of its judgment, determine the amount of the Chargeable Income of the appellant and assess it accordingly.

• (3) That although reasonable opportunity was given to the appellant the appellant failed to satisfy the respondent that the assessments raised upon the appellant are arbitrary or excessive.

7 At the hearing of the application, Counsel for the appellant submitted that the statement of case ought to be in compliance with the requirements of rule 26(1) of the Rules, but there had been a total failure to comply, especially with rule 26(1)(a)(ii) and (iii). In support of that contention he pointed out that although in paragraph 10(1) of the statement of case the respondent was contending that the appellant's tax returns did not reflect the true profits of the appellant, the respondent had not stated in what respect the profits had not been accurately stated, or what the true profits were alleged to be.

8 As regards paragraph 10(2), he contended that when section 39(2)(b) of the Income Tax Ordinance (hereinafter referred to as “the Ordinance”) was resorted to, the respondent should not be allowed to rely on facts which had not been disclosed in the statement of case.

9 At one stage, counsel had submitted that the respondent, having made original assessments, could only seek to raise additional assessments if it could establish that the returns made had been fraudulent, or if some new fact or facts had been discovered. This contention was not pursued when it was pointed out by the Court that fraud had not been alleged and also that the assessments had purportedly been made as original assessments.

10 Counsel also argued that the reasons in support of the assessments, required by rule 26(1)(a)(iii) to be set out in the statement of case, had not been so stated.

11 Another submission of counsel was that a statement of case was analogous to a statement of claim in civil proceedings and that the object of the...