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| Sunday, 10 October 2004 |
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Is the appellant a compellable witness at an appeal ? Observations by Cecil Aluthwela in a series of articles former Deputy Commissioner of (Appeals) Department of inland Revenue Cecil Aluthwela gives his observations on the article titled " On tax appeals - Some reflections" by Stanley Fernando (BA Ceylon) Attorney-at-Law Lecturer and Examiner in Tax Law, Council of Legal Education, Visiting lecturer in Tax Law, Faculty of Law, University of Colombo which appeared in the July 1993 issue (vol.1 No.1) of the Journal of the Institute of Taxation. These observations present different points of view which may be of benefit and interest to the tax paying public. The Inland Revenue Act (Sri Lanka) referred to is Act No 28 of 1979. The sections referred referred to are those in the Act. Under this subject Mr. Stanley Fernando states, "there is nothing in the inland revenue act which obligates the appellant to give evidence or submit himself to examination by the Commissioner-General of Inland Revenue or by the assessor". To say that there is nothing in the Inland Revenue Act which casts an obligation on the appellant to give evidence or submit himself to examination by the Commissioner-General or the Assessor is, to say the least, is based on a misunderstanding of the Inland Revenue Act. Under section 117 (5) the Commissioner-General can refer a petition of appeal to an assessor with a view to making further inquiry. Apart from any independent inquiries an assessor may make, he will invariably summon the appellant with a view to making further inquiry and if possible reach a settlement. In the course of such meeting the appellant will contest the assessment. He will do so by producing evidence, by giving evidence himself, leading the evidence of witnesses and making submissions. If the issue in appeal is the quantum of living expenses, (an item regarding which only the appellant could testify), based on a capital computation, how else is the appellant to contest the assessment other than by producing evidence himself and making submissions. The assessor will naturally examine the appellant on the evidence produced and the submissions made, That means the appellant will have to submit himself to examination by the assessor. How else can as assessor carryout an inquiry under section 17 (5)? In the circumstances it is not understood how Mr. Stanley Fernando can conclude that there is nothing in the Inland Revenue Act which obligates an appellant to give evidence or submit himself to examination by assessor. If the assessor cannot reach an agreement with the appellant he will refer the appeal to the Commissioner-General. In terms of section 117 (7) the Commissioner-General will summon the appellant with a view to hearing him regarding the appeal. The appellant could attend through an authorized representative, but the Commissioner-General could require the appellant to attend in person. The obvious purpose in summoning the appellant is for the appellant to be heard in respect of the appeal. Now if he is to be heard in respect of the appeal he naturally has to give evidence and/or make submissions. The Commissioner-General will not determine the appeal only on the evidence of the appellant or on the submissions made by him. He will examine the appellant on the evidence given and also on the information and evidence available in the file. Does not all this amount to the appellant giving evidence or submitting himself to examination? Hence Mr. Stanley Fernando's view that there is nothing in the Inland Revenue Act which obligates the appellant to give evidence or submit himself to examination by the Commissioner-General or the assessor is contrary to the statute. Mr. Stanley Fernando further submits that, Neither sections 117 (8) 121 (7), 121 (3) of our law which enables the commissioner-general of inland revenue and the board of review to require the appellant to attend in person if they consider the personal attendance of the appellant is necessary for the appeal, confer any statutory authority to make the appellant a compellable witness at an appeal hearing. It will be observed that the act does not contain any penal sanction which can be enforced against the appellant in a court of law for failing to attend in response to a notice under section 117 (7) and 121 (3)". As I said earlier sections 117 (8) and 121 (7) are not intended to summon an appellant. They are intended to summon third parties totally unconnected with the appeal. Thus Mr. Stanley Fernando is in error when he says that section 117 (8) and 121 (7) enable the Commissioner-General and the Board of Review to summon an appellant. There is no penal sanction against an appellant when he fails to respond to a notice under sections 117 (7) and 121 (3) for the simple reason that these sections are built into the statute to prevent the commissioner-general and the board of review determining an appeal behind the back of an appellant. They are designed to give effect to the rule "audi alterem partem". These sections are there for the benefit of the taxpayer. If he is not interested in benefiting from them why should the law go out of its way to impose penal sanctions. Mr. Stanley Fernando goes on to state that the appellant "May be able to sustain his case by calling other witnesses or documentary evidence or to rely on a mere submission of fact and law". This view too is incorrect. Take for instance an appeal against an assessment based on a capital computation. In such a computation there are a number of items regarding which only the appellant can testify; for example opening cash in hand, closing cash in hand, living expenses, and so on. In regard to these the appellant cannot sustain his case by calling other witnesses as Mr. Fernando suggests. In the United Kingdom too, in view of the heavy onus on the appellant, there is a consistent trend of judicial opinion which has disapproved the appellant's attempts to sustain his case through others. Submissions made by the appellant's representative on behalf of the appellant in his absence were disapproved in Farrand v Satterthwaite. The judge remarked "You cannot ..................Come and get your case decided merely on the statement of a solicitor which the other said they do not accept". In Hudson v Humbles court held that the accountant's aubmissions were not evidence. In Amis v Colls court decreed that the Commissioners were entitled to attach importance to the fact that the appellant gave no evidence. What is more in R v Rochford Coners ex parte Bales, the Commissioners summoned the taxpayer to appear as a witness. The taxpayer did not attend despite the fact that the Commissioners said his presence was essential. The Commissioners imposed a fine of Sterling pounds 25 in his absence. Finally, Mr. Fernando states There is no law which compels him (the appellant) to subject himself to an inquisitorial examination either by the Commissioner-General of Inland Revenue, the assessor or the board of review. The law envisages an appeal hearing, the hearing of the appeal of the appellant and not an inquisitorial brain washing". The words within brackets are mine. I am afraid, M. Fernando has completely misunderstood the true nature of the proceeding in an income tax appeal. Therein no comparison between the proceeding in an income tax appeal and the proceeding in an appeal on a civil suit in a court of law. The appellate proceeding in courts are adversary proceedings. While that of the Revenue authorities are inquisitorial in nature. In a civil suit the judge sits in judgement of the case between two contesting litigants. The position in income tax appeal is totally different. The appellate authority, whether it be the Commissioner-General or the Board of Review is well and truly committed to the assessment process. The appellate authority does not stand outside the ring, so to say. It enteres the arena of conflict. In this context regard may also be had to a section of the Income Tax Ordinance No. 13 of 1959. According to Section 21 (1) of that Ordinance the assessable income of a married woman, during the subsistence of her marriage, was deemed to be the assessable income of her husband. However section 21 (2) was to the effect that the marriage was not deemed to subsist if:- (a) the wife was living apart from her husband under the decree of a competent court. Or (b) duly executed deed of separation or if the husband and wife are in fact separated in such circumstances that the separation is likely to be permanent. To be continued |
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