|
|
|
  |
| Sunday, 21 November 2004 |
 |
|
 |
Business |  |
| News Business Features Editorial
|
Applicability of the Evidence Ordinance in Appeal Hearings 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 to are those in the Act. On this topic Mr. Fernando after considering a number of authorities states - "It is submitted that the wide sweep of section 121 (9) of the Inland Revenue Act, No. 28 of 1979 does not empower the revenue or the Board of Review to determine the liability of a taxpayer on evidence which is other than lawful evidence". He also states that - "The dicta of H.N.G. Fernando J in Mahavitarana v C.I.T. (supra) lend support to the view that Section 121 (9) although very wide does not empower the reception of evidence which is other than lawful evidence in a tax appeal". Firstly, one must be clear as to what is meant by lawful evidence. In Collis vs. Hoare it was defined as facts and circumstances which in law are permitted to be received. Another definition is "all legal means which prove or disprove any matter of fact." I think both these definitions are to the same effect; namely that the evidence should be acceptable to the law. On such a basis it will be difficult and in some instances even impossible, to work the Revenue Acts. Many forms of evidence have to be relied on which in law are not acceptable. To decide on the type of evidence that should guide the Revenue Appellate Authorities and the Board of Review one should have regard to:- (1) the Huxham Report (2) the judicial dicta in this regard in the United Kingdom. Regarding (1) this is what is spelt out in the Huxham Report. "The assessor has to rely on indirect sources of information in arriving at the assessment. These will not be entertained under the ordinary legal rules of evidence". As regard the Board of Review he (Huxham) said that its principal duty will be to determine the amount of the appellant's income from business and other sources and its proceedings will be brief and non-legal as possible. The atmosphere aimed at is that of a group of businessmen discussing a business problem rather than that of a Court of Law. Thus, from the above it is quite clear, that according to Huxham, the author of the Income Tax Scheme, evidence considerably less in weight than lawful evidence is sufficient for the Revenue Authorities and the Board of Review to determine the liability of a taxpayer. Regarding (2) what is the position emerging from the case law in the United Kingdom ? In this regard. In Cain v Schofield it was said, that the Commissioners quite correctly brought their business experiences to decide the issue. In Ridley vs. Wilkinson the Commissioners decided the issue from their local knowledge of the district. In IR.vs.L.B. Holdings Ltd. (in liquidation) the Court held that it is for the Commissioners to use their business knowledge and common sense. In Forest Side Properties (Chingford) Ltd.vs.Pearce, the Court accepted the position that the Commissioners had used their local knowledge in respect of a particular property. In Stocks vs.Sulley, Court held that if the Commissioners are not offered any evidence, they are entitled to act on their personal knowledge, "both as regards the value of the property generally and the nature and history of the property in question". Business experience, local knowledge, business knowledge and common sense, personal knowledge are not tantamount to lawful evidence. Yet, assessments based on such knowledge and experience have been approved by Court. Besides in the United Kingdom it has been held, that in certain circumstances the Revenue Authorities are entitled to (a) guess what the income is, vide Ogilvie vs.Barron (b) make a random assessment vide Macpherson & Co.vs.Moore. Now is an assessment made on the basis of guess work or at random be considered to be one made on lawful evidence ? Further cases have been decided on hearsay evidence. Vide Spedding vs.Sabine (Hearsay evidence is what some one is supposed to have said). Now is that lawful evidence?. Continued next week |
|
| News | Business | Features
| Editorial | Security
| Produced by Lake House |
