(1984)1984 July 13 [PIKIS, J.] IN THE MATTER OF ARTICLE 146OF THE CONSTITUTION CHRISTOS TRYFONOS, Applicant, v. THE REPUBLIC OF CYPRUS, THROUGH THE COMMISSIONER OF INCOME TAX, Respondent. (Case No.219/83). Incometax—Capitalallowance—Deduction for—Discretionary power of Commissioner to reject unauthenticated claimsfor—Principles applicable—Section 51oftheAssessment andCollection ofTaxes Law—Applicant failing to make a completedisclosure of his financial affairs—And raising a claim for deduction whencon- 5 fronted withprospect ofpaying income tax—Within discretion of Commissioner inexercise ofhispowers under the abovesection to reject the claim. Attheinvitationoftherespondent Commissionertheapplicant submitted ,returns for income tax that disclosed no income. 10 When the respondent Commissioner came to know that applicant was thejoint owner of an excavator applicant put forward for thefirst time a claimfor a capital allowancepursuant to the provisions of section 12 of the Income Tax Laws,1961-1981. The Commissioner rejected his claim and hence this recourse. 15 Held, that the discretionary power of the Commissioner, under section 51oftheAssessment and Collection of TaxesLaw to reject unauthenticated claims for deduction* is a correlative of the duty under the law of the taxpayers to - (a) make a full disclosure of their income and assets, where necessary, and (b) 20 the control they have over their financial affairs and peculiar amenity to substantiate their claims, as well as their obligation to keepproper recordsoftheir financial affairs; that since the applicant was less than forthcoming in making a complete 884 3 C.L.R. 5 10 Tryfonos τ.Republic disclosure ofhisfinancial affairs, andraisedaclaimfordeduction only when confronted with theprospect ofpaying incometax it was within the discretion ofthe Commissioner, inexercise ofhis powers unders.5I, toreject theclaimfordeduction; accordingIy the recourse must fail. Application dismissed. Cases referred to: Rainbow v. Commissioner of IncomeTax
(1984)3 C.L.R.
- Recourse. Recourse against theincome tax assessment raised on appli cant for the years of assessment 1979-
- Chr. Triantafyllides, for the applicant. M. Photiou, for the respondent. Cur. adv.vult. 15 PIKIS J. read the following judgment. The assessment to income tax of the applicant for assessment years 1979- 1981, embodied in thedecision communicated tohimby letter dated 10.3.83, is challenged as vulnerable tobesetaside, wholly or in part, on two grounds:- 20 (A) Failure to make proper provision by way of capital allowance for an excavator, and (B) unwarranted imposition of a surcharge of 10% in the nature of a fine, acknowledged in the opposition to have been imposed by mistake. 25 To that extent, therecourse succeeds andthat part of the decision concerning the surcharge is set aside. There remains to decide the propriety of the refusal ofthe Commissioner tomake allowance bywayofdeduction from the taxable income of applicant for investment in an excavator. 30 The decision was taken in the exercise of the discretionary powers of the Commissioner under s.51 of the Assessmentand Collection of Taxes Law, empowering him to reject, at his discretion, claims fordeductionsnotfounded on reliable audited accounts. Like everydiscretionary power,itmust be reasonably 35 exercised inthe light of the facts and surrounding circumstances of thecase. Itispertinent,therefore, toreview thefacts leading to thedecision ofthe Commissioner,recountedintheopposition. At theinvitation of the Commissioner» theapplicant submitted 885 Pikis J. Tryfonos v. Republic
(1984)returns for income tax for the relevant years,that disclosed no taxable income. He also submitted, apparently at the request of the Commissioner, a statement of assets and liabilities as at 18.10.
- In the course ofinterviewing the applicant and the context of 5 the inquiry into his affairs, it transpired that he became the joint owner of an excavator registered in the joint names of applicantandacertainTreppides. Allegationsbythe applicant, that thepurchasewasmostlyfinanced byTreppides-hisrelation from the United Kingdom -were rejected after examination of 10 the instalments paid by the applicant to the Cyprus Popular Bank (Finance) Ltd., who had, it appears, financed the transaction. Upon the basis of the capital statement and the information received from inquiries made, the assessments under consideration were raised on 21.2.
- The objections of the 15 applicant to the assessments were rejected on 10.3.
- Thereafter, applicant put forward, for the first time, a claim for a capital allowance,pursuantto theprovisions of s.12ofthe IncomeTaxLaws,1961-1981,calculatedbyreferencetothecost of theexcavator. It wasthefirst time a claimfor deduction of 20 the kind was raised. Negotiations for the settlement of the dispute, held between the Commissioner and an accountant engaged to advise the applicant with a view to resolving the dispute, were abandoned with the initiation of the present proceedings. 25 Very recently*, I examined the nature of the discretionary powers of the Commissioner under s.
- The power of the Commissioner to reject unauthenticated claims for deduction, is a correlative of the duty under the law of the taxpayers to (a) make a full disclosure of their income and assets, 30 where necessary, and (b) the control they have over their financial affairs and peculiaramenitytosubstantiatetheirclaims,aswellas theirobligationtokeepproperrecordsoftheirfinancial affairs. Nina Rainbow v. Commissioner of Income Tax
(1984)3 C.L.R. 846. 886 35 3 C.L.R. Tryfooos v. Republic Pikls J. As one may infer from the history of the assessments, the applicant was less than forthcoming in making a complete disclosure of hisfinancial affairs, and raised a claim for deduction only when confronted with the prospect of paying income tax. 5 In such circumstances, it was within the discretion of the Commissioner, in exercise of his powers under s.51, to reject the claim for deduction. Nothing heard before me persuades me this was not a course reasonably open to the Commissioner. This being the case, the recourse of applicant fails. It is 10 dismissed. Let there be no order as to costs. Recourse dismissed. No order as to costs. 887