Quesnel v Board of Inland Revenue
| Jurisdiction | Trinidad & Tobago |
| Judge | Barnes, J.,Burke, J.,Dean-Maharaj, J. |
| Judgment Date | 23 October 1992 |
| Court | Tax Appeal Board (Trinidad and Tobago) |
| Docket Number | Nos. I 401 – I 402 of 1990 |
| Date | 23 October 1992 |
Tax Appeal Board
Barnes, J.; Burke, J.; Dean-Maharaj, J.
Nos. I 401 – I 402 of 1990
Appellant in person
Miss Allison West for respondent
Revenue law - Income tax — Assessment of alleged unreported income — Appellant had satisfied burden of proving that no income was unreported — Appeal dismissed.
Notices of Appeal filed on 28th December, 1990, (on record) the appellant assessments to income tax and unemployment levy for year of income 1982 of $75,502 and $7,461.20 respectively.
At the hearing, the issues contested were –
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(1) Whether the appellant had been properly assessed in respect of an amount of $127,911 treated by the respondent as unreported income.
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(2) Whether an amount of $132,744 claimed as a loss from an agricultural venture may be set off against other income by the appellant so as to determine the chargeable income of the appellant for year of income 1982.
We deal firstly with the issue of the unreported income. The appellant testified; as did Gerard Pichery, a qualified account who as a field Auditor II on the staff of the respondent had conducted a Tax Audit on the appellant for years of income 1982, 1983 & 1984.
Documentary evidence considered comprised:
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(a) Letter dated 14th July, 1988 from the respondent to the appellant setting out adjustments proposed by the respondent resulting from r: audit for years of income 1982, 1983 and 1984 and marked “B”.
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(b) Letter dated 16th August, 1988, from the respondent to the appellant - marked “C” which reads.–
“Audit of your Income Tax Returns for Income Years 1984, 1983 and 1982. File No.209410-8
In a letter dated 14th July, 1988, you were informed by the Board of ‘“‘v proposed adjustments to your chargeable income for the years 1982 to 1984 request was made for your comments on these proposed adjustments.
A letter dated 18th July, 1988, was received from you by the Board and, contents were noted. However no reference was made in your letter to the adjustments.
The Department would appreciate receiving your comments on the adj proposed in our letter dated 14th July, 1988, to you by 25th August, 1988 which the adjustments would be made to your chargeable income.”
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(c) A tax audit report dated 26/8/88 signed by Pichery in regard, year of income 1982 - Exhibit G.P.1.
Certain facts and circumstances following the making of the return and the raising of the assessment to unreported income for the year of income, 1982 have revealed from the evidence as under:–
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(i) The appellant had submitted a return for the year of income 1982 in which he had declared income from emoluments;
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(ii) In 1988 before he had been assessed to tax for 1982 he had been audited by the respondent;
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(iii) At the end of the tax audit exercise, he had received the document marked “B” which included inter alia the following relating to unreported income for year of income 1982:
“For 1982
(i) Unreported Income - $127,911
This was arrived at by the use of an indirect method of assessment which involved the analysis of your bank records.
Bank deposits
217,469
Less: Transfers between bank accounts
4,822
Rent
39,720
Dividends
189
Salary
38,715
Refund of share application movies
4,172
Tax refund
1,940
89,558
Unexplained deposits
127,911
Total Outlay
211,039
Bank balance @ 1.1.82
2,177
Add: Deposits
217,469
219,646
Less: Bank balance at 31.12.82
2,285
Total cheques written
217,361
Less: Cheques for cash
(1,500)
Transfers between accounts
(4,822)
Expenses met from unknown sources
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Unreported Income
127,911
(iv) A further letter dated 16th August, 1988 - document marked “C” was received;
(v) The respondent, having not received comments from the appellant such as it had required by Documents “B” and “C” issued its tax audit report Exhibit G.P.1. dated 26/8/88, setting out inter alia the adjustment proposed in Document “B”.
(vi) Following an objection by the appellant to the adjustment made based on the tax audit report, and before the determination of that objection, discussions had taken place between the appellant and Pichery.
(vii) Determination of the objection had resulted in the appellant being assessed on unreported income in the sum of $127,911.
The appellant's testimony as it related to the alleged unreported income was brief. In examination and cross-examination he referred to certain occurrences at and after the tax-audit stage.
He had had discussions with the representative of the respondent, Gerard Pichery, and had been asked whether he had been involved with several business. To this his answer had been in the affirmative. He had said then that he had no taxable income other than that reported.
In answer to a question as to whether he had been asked to produce records, he asserted that he had been so asked and had complied, in particular Bank statements had been produced as had been requested. In regard to these, Pichery had at some stage requested that he identify all sources of deposits over $5,000 had identified what he could. The bank statements produced on request had been in respect of two personal accounts, one of which was a joint account with his wife parties having made withdrawals and deposits.
In regard to Haven Hill Farm and Avalon Limited, the former of which he was a partner and the latter a shareholder, the appellant stated in cross-examination that he had been responsible for the accounting work and books had been kept. Thee books and records had been made available to and had been examined by the tax auditor. He asserted that books had been kept by him in such cases as it was his responsibility to do so.
The tax audit had proposed adjustments to his chargeable income including of:–
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(1) Income from interest - $ 23,172
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(2) Unreported income - $ 127,911
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(3) Disallowance of a loss claim relating to the partnership -.Haven Hill Farm - $ 132,744
Having conceded (1) above the adjustment at (2) had been disputed, as he stated that he had no income other than what had been returned, with the sole exception of an undisclosed sum for emoluments from consular services which were exempt from tax. The agricultural loss as at (3) above he had considered to be a proper claim under the Income Tax Act, Chap. 75:01.
Gerard Pichery, the Tax Auditor, testified as to the adjustment made to the appellant's assessment, following the tax audit he had conducted.
Regarding the amounts of $127,911 treated as unreported income, Pichery stated that during the audit he had asked the appellant to produce personal bank statements and two such had been produced. One of these had been stated as been held jointly with the appellant's wife, with either party being able to deposit or withdraw funds.
Pichery's justification for treating the sum of $127,911 as unreported income following his audit, was simply that the bank accounts having been produced and examined, of a total of. $217,469, $89,558 had been eliminated having been specifically identified as being non-taxable income.
Subsequent to tax audit and in regard to the unidentified portion, Pichery had directed his attention to and queried deposits over $5,000. There were two such deposits. The appellant had not been able to explain the source of a deposit of $15,000. As regards another for $25,000, the explanation provided had been that this sum represented proceeds of the sale of a motor car No. PAH 2930.
At the conclusion of the audit, Pichery made the adjustments as stated in the audit report, having as he said arrived at the amount of unreported income by an indirect method of taxation.
In cross-examination, the witness having stated that his work experience included 50 to 100 tax audits, conceded that the appellant had co-operated fully with him during the period of his enquiries. He also agreed that generally the records relating to a business would be better kept than those of a personal nature.
In cross-examination, it was put to Pichery that he had audited the books and accounts of Haven 11111 Farm and Avalon Limited having had access to the book and records. He replied that he had seen those relating to Haven Hill, an examination, as he was principally concerned with the legal aspect of the claim. He did not recall details relating to the books and record of Avalon that at no time did he seek explanations regarding the deposits under $5,000, the total of which was $87,911. His stated position was that it was for the appellant to explain all of these, including such as represented consular fees (if any).
In cross-examination, Pichery explained why he had not accepted the appellant's statement that the sum of $25,000.00 had been the proceeds of sale of a car. He stated that the car in question(PAH 2930) had been found by him to have to a registered owner other than the appellant. He did concede that the appellant had never claimed ownership, but nevertheless he had proceeded without further enquiry as to a possible connection between the-appellant and the person registered as owner.
In response to the question as to whether he had sought specific explanation to amounts under $5,000, the witness referred to two letters - marked “B' and “C” and dated 14/7/88 and 16/8/88.
The following authorities were cited:
For the respondent
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(1) Maxwell on the Interpretation of Statutes, 12th edition
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(2) Board of Inland Revenue v. Boland Maraj, Court of Appeal of Trinidad & Tobago C.A. No.43 of 1981 Kelsick, C.J. at pages 24/25
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(3) Maniram Maharaj v. Board of Inland Revenue, I 88 of 1980 Tax Appeal Board of Trinidad & Tobago.
For the appellant
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(1) Craies on Statute Law 4th Edition Pages 331, 333 ( Young v. Adams): UK Act of Parliament...
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