clr/1989/1989_3A_411.pdf

(5)and 21

(3)— No time limit for the determinationof an objection undersection 20

(5)— Time limit of six months ;uregards new assessment,which becomes necessarybyreason ofadecision inarecourse —Determination ofanobjectionannulledby a decision of this Court — Reconsideration of matter and new assessments made — Whether time limit in virtue of section 21

(3)applicable — Question determined in the posilive — Sub judicc new assessments declarednullandvoid. Applicant objected against noticesofassessment ofincometaxissued to him on 30th October. 1974. The objection was finally determined on 16L!I August, 197S. The determination of the objection was impugned before thisCourt. The sub judicc decision in that recourse (420/78) was annulled, because of the decision of the Supreme Court in recourse 327/77, whereby it was decided that the wife's income from property shouldnot beaggregated to the income of the husband. There followed a reconsideration of the case and new assessments were raised, but outside the limit of six months provided for in section 21

(3).which began to mn upon the issue of the annulling decision of the Court. 411 loakim v. Republic

(1989)It appears that in any event, in raising the new assessment, the respondent did not only deduct the wife's income from the husband's income, but considered the matter, as if the sub judice decision in recourse 420/78 hadbeen annulled intoto 5 Held,annulling thesub judicc decision

(1)The provisions ot section 21

(3)of the Assessment and Collection of Taxes Laws 197S-1979 arcapplicable to thepresent case Therefore, since thesub judicc assessments were raised after theexpiration of 6 10 months as from the date, when the annulling decision in recourse 420/7S was issued, they have to be declared null and void

(2)In any event, even if the contention of counsel for the respondent is accepted,that is thatthedecision iniccourse 420/7S didnot annul the 15 whole, but only part ol the sub judice decision, the sub judice assessments shouldagain bedeclared null andvoid,because, insucha case, it is obvious that therespondent was notentitled todepart from that part ol theMbjudicc inrecourse420/78 decision,which hadbeen confirmed by hyphothesis underArt 1464(a) of theConstitution 20 Sub judice decision declaredin whole null and void No orderasto costs 25 Cases referredto Iodnmdcs and Others ν Republic

(1979)3CLR 295, Republicot Cyprus,through TheAttorney-GeneralandOthers ν Trangos

(1965)3C1 R 641, 30 Solomonides (Or) ν Republic (Commissioner of Income Tax)

(1968)3 CLR 105, Constanne Estates ν Republic

(1982)3 CLR S59, 35 Ioanmdcsv Republic(19S5)3 CLR 1801, River Estates Ltd ν Republic(19S6) 3 CLR 2575, 40 IgnatiouandAnother ν Republic

(1989)3 CLR 346, 412 3C.L.R. Ioakim v. Republic Pitsiakkos v. Republic

(1985)3CLR. 1700, Pantelidou v. Republic

(1986)3C.L.R. 687, 5 Pelides v.Republic(CouncilofMinisters)andAnother3R.S.C.C. 13, Mavromativ.RepublicandAnother(No. I)

(1966)3C.L.R.

1. Recourse. 10 Recourse against the income tax assessment raised on applicant for theyears 1970and
2. L. Demetriades, for the Applicants. 15 A. Evangelou, Senior Counsel of the Republic, for the Respondents. Cur. adv.vult. 20 STYUANIDES, J. read the following judgment. The applicant by means of this recourse seeks declaration that the notices of assessment, dated 13th July, 1985, issued by the Respondent - the Commissioner of Income Tax (the "Respondent") and received by the applicant in respect of the 25 yearsof assessment 1970

(71), 1971

(72),are nullandvoidandof no effect whatsoever. The applicant relies on a number of grounds of Law. The first ground isthat:30 35 40 "The attempt by the Respondent to proceed with a new (second) determination of objections to assessment which were already declared by the Court on 21st April, 1981 as null and void, is ultra vires and made in excess or abuse of power or authority,not only on theground that theCourt in annulling the assessments in question didnot order that new assessments or a new determination of the objection be made,but alsoonthegroundthat theywerenot madewithin six months from the 21st April, 1981, as provided in subsection

(3)of Section 21 of Law4 of 197S. There was no objection to any assessments which the 413 Stylianides,J. Ioakim v.Republic

(1989)Commissioner could determine, asthe assessments towhich thenew notices refer weredeclaredbythe Court asnull and void on the21st April, 1981." The determination of this ground of law in favour of the 5 applicant disposes finally ofthiscase. On the application of both counsel and the approval of the Court addresses wereheardon thisground onlv. 10 The facts relevant to thisquestion, asthey emerge from the statement of facts in the recourse and the opposition, are in brevity as follows:The applicant derived incomeduringthematerial timesfrom 15 emoluments as Managing Director of a number of private companies, the sale of immovable properties and rents from a joint venture with his brother. The applicant submitted his income tax returns for the years 1970, 1971,and 1972 on 9th March, 1971 18th September, 1972 and 24th April,

1. 20 respectively. Disputes arose as to the taxable income and the sources thereof and. after investigation and negotiations between the Respondent and the income tax consultant of the applicant no 25 agreement was reached for theyears in question. The Respondent examined applicant's and his wife's capital statements asat 31stDecember, 1972and31stDecember, 1957, submitted bytheir tax consultant. 30 The applicant wasassessedfor the years of assessment 1971 and 1972 by notices of assessment issued to him on 30th October,
2. He objected against both of these assessments by a letter dated 12th November, 1974 of histax consultant. 35 As no agreement was reached, the Respondent on 16th August, 1978determinedtheobjection andhissuchdecisionwas communicated to the applicant by letter of even date. 40 The applicant being aggrieved filed Recourse No.420/78 to the Supreme Court, applying thereby for a declaration that the 414 3 C.L.R. 5 10 15 20 Ioakim v. Republic Stylianides, J. assessments raised on theapplicant inrespect of his income for the years of assessment 1971

(70), 1972

(71)were null and void andof noeffect whatsoever. Thatrecourse was based onnoless than nine grounds of law. On 21st April, 1981, counsel of the parties were before the'Court. The record reads:"Mr. Evangelou: In view of the decision of the Supreme Court in Recourses Nos. 327/77 etc. regarding the aggregation of the wife's incomefrom property with that of the husband, it is considered that the decision taken by the respondent Commissioner is this case, in so far as it relates to the same issue, is wrong and should be declared null and void and of no effect whatsoever. Mr. Nathanael: In view of the statement of my learned friend, with which Iagree, Ipray that the Court declares the decision null and void. COURT:In thecircumstances,thedecision of therespondent is hereby declared null andvoid andof no effect whatsoever. Courtto Mr.Nathanael: Doyou,inthecircumstances,claim costs against therespondent? 25 Mr. Nathanael: No! COURT: There will be no order as to costs." 30 Thereafter new negotiations startedbetween theRespondent and the tax consultant of the applicant. The basic differences were not resolved. On 11th July, 1985, a letter -Exhibit Cto the recourse -was sent to the applicant. Thematerial part thereof reads:- 35 "Αναφέρομαι στις ενστάσεις σαςδιάταφορολογικάέτη 1959-1972και.σαςπληροφορώ ότι αφού εξετάσθηκαν πλή­ ρως όλαταυποβληθέντα στοιχεία,αποφασίσθητο φορολογηθέν εισόδημασαςόπωςτούτοπαρουσιάζεται πιοκάτω. 40 2.Τοπιοσοβαρόσημείοπουεπηρεάζει τοφορολογητέοει­ σόδημα σας είναι ηπώληση μεγάλου αριθμού οικοπέδων, 415 Stylianides,J. Ioakim v.Republic

(1989)το κέρδος των οποίωνυπόκειταισε φορολογία,διότι η πράξηθεωρείται εμπόριο μεσκοπότοκέρδος. Τούτο επί­ σηςπαρουσιάζωαναλυτικάπιοκάτω.

1. Το φορολογητέο εισόδημα εξακριβώθηκεμε δύο τρό- 5 πους (α)μεκεφαλαιουχικήκατάστασηκαι(β)μετοεισό­ δημακάθεχρόνου. Και οιδύο τρόποιείναι σύμφωνοι. 4 10
2. Αυτό το εισόδημακατανέμεται σύμφωναμε τιςδηλώ­ σεις σαςπου γίνονταιαποδεκτές. Τοκέρδοςαπό τηνπώ­ λησητωνοικοπέδωνκατανέμεταιως εξής:1970: 15 1971:
3. Επισυνάπτω φορολογίεςγιαταεπηρεαζόμενα χρόνια. 20 Notices of assessment for theyears of assessment 1971and 1972 were issued andsent tothe applicant. These are thesub judice assessments. 25 Itisthecontentionfor theapplicantthattheassessments for the years of assessment 1971

(70)and 1971

(72)were declared null andvoid by the Supreme Courtin Recourse420/78. That in consequence of that decision of the Supreme Court new assessments should have been made within the period of six 30 months prescribed by section 21

(3)of the Assessment and Collection of Taxes Law. 1978(Law No.4/78) (the"Law") and no validassessment couldbe raised after theexpiration ofthat mandatory period. The objection raised by the applicant and determined on 16th August, 1978, merged in the acts that 35 followed, which were declared null andvoid by the Courtand, therefore,therewas nooutstandingobjection fordetermination by the Commissioner. Counsel for the Respondent,on the other hand,submitted 40 that thesubjudice assessments inRecourse420/78 were wrong, in the light of the Decision of the Supreme Court in Case No. 416 3C.L.R. Ioakim v. Republic Stylianides,J. 327/77 - Ioannides and Others v.Republic

(1979)3 C.L.R. 295 -concerning the aggregation of the income of husband and wife. Counsel applied to the Court to declare null andvoid the part of the decision which related to the aggregation of the 5 income of husband andwife. In Recourse 420/78 the Court, in substance and effect, annulled only that part of the decision whichrelated to the aggregation ofthespouses'income andthe other part, which related to the other issues, remained untouched. As a result the whole matter of the disputed 10 assessments, reverted to the objection stage and the original assessments issued on 31st October, 1974,which related to the yearsofassessment 1971and 1972,remainedunderprotest.The respondent Commissioner actually in the present case determined that objection, under section 20

(5)of the Law, 15 without raising new assessments, and communicated his reasoned decision by his letter dated 11th July, 1985, afore quoted. That the delay in the determination of the outstanding objection isnot contrarytotheLaw,asthereisnotimelimit for such determination. 20 Counsel for the applicant in reply submitted that, if the annulling decision of the Court in Recourse 420/78 left unaffected the part of the sub judice decision which did not relateto theaggregation oftheincome ofthehusband andwife, 25 the Respondent couldnot revert to the same matter again. 30 35 In the opposition it is stated that the acts and/or decisions complained of were taken under sections 5

(1).6. 13.

(2)(b) and 23

(1)of theTaxes (Quantifying andRecovery) Laws, 1963and 1969 (Law Nos 53/63 and 61/69) and that the objections against the above assessments were determined under sections 3,20

(5)and59oftheAssessment andCollection ofTaxesLaws 1978-1979. Section 23

(1)of the Law provides for rectification of omissions andunder-charges. Under section 23

(1)the Respondent has power to raise new oradditional assessmentswhenitappearstohimthatataxpayer 40 was not assessed at all or was under-charged. The power conferred undersection23

(1)maybeexercisedwithinsixyears after the end of the year of assessment. Under sub-section 2of 417 Stylianides, J. Ioakim v. Republic

(1989)section 23,where any person has been guilty of fraud or wilful default, the time limit of thesix yearsmentioned in sub-section

(1)isincreased to twelve years. Theonlylimitationtotheexerciseofthesepowersisthetime 5 to which Ihave referred. TheRespondent isentitledtoinvokehispowersundersection 23

(1),wheneverhe,bonafide,forms theviewthatnoassessment was raised, or the tax levied is insufficient - (TheRepublic of 10 Cyprus, through

1. TheAttorney-General,
2. The Ministry of Finance through The Director of the Department of Inland Revenue, and Ioannis Chr. Frangos

(1965)3 C.L.R. 641; Dr. Solon Solomonides v.Republic (Commissioner of Income Tax)

(1968)3 C.L.R. 105; Constanne Estates v. 15 Republic

(1982)3C.L.R.859; Ioannides v.Republic

(1985)3 C.L.R. 1801;River Estates Ltd. v.Republic

(1986)3 C.L.R. 2575; and Apostolus Ignatiou and Another v. The Republic of Cvprus, through The Commissioner of Income Tax

(1989)3CLR. 346). 20 The sub judice decisions, having regard to the facts and circumstances, were not either assessments or additional assessments inthe sense of sub-section

(1)of section

1. 25 The exclusive Revisional Jurisdiction of the Supreme Court iscircumscribed in Article 146oftheConstitution. Paragraph 4 thereof reads:"
2. Upon such arecourse the Court may, byits decision - 30 (a)confirm, eitherinwholeor inpart,such decision or act or omission; or (b)declare,either inwhole or in part, such decision or 35 act tobenullandvoidandofnoeffect whatsoever; or (c)declare that such omission, either in whole or in pan, ought not to have been made and that 40 whatever has been omitted should have been performed." 418 3 CX.R. Ioakim v.Republic Stylianides, J. A taxpayer, however, is not entitled to resort to this Court underArticle 146oftheConstitution,unlessheobjects inwriting tothe Directortoreview andreviseanassessmentundersection 20of the Law. He can only file a recourse in case of failure to 5 reach anagreement withtheDirectorandafter determination by the latter of the amount of tax payable, as subsection

(5)of section 20 provides.Thus,an objection to the assessment and a determination thereof isnecessary pre-requisite before the filing of a recourse against a taxation raised under the provisions of 10 such Law. {Pitsiakkos v. Republic

(1985)3 C.L.R. 1700; Pantelidou v. Republic

(1986)3C.L.R. 687.) In the past, in the early dates of the Republic, no statutory provision for review ofthetaxation by an administrative organ 15 existed andthe Supreme Constitutional Court in Nicos Pelides and the Republic (Council of Ministers) and Another 3 R.S.C.C. 13,observed thefollowing at p. 17:"The Court takes this opportunity of stressing that though 20 Article 146grants it exclusive jurisdiction inadministrative law matters there is nothing in such Article to prevent procedures for administrative review of executive or administrative actsor decisions from being provided for in a Law. Such review may beeither25 (

1. a)by way of confirmation or completion of the act or decision in question, in which case no recourse is possible to this Court until such confirmation or completion has taken place (e.g. under section 17 of 30 CAP 96);or 35 40 (
2. b)by way of a review by higher authority or by specially set-up organs or bodies of an administrative nature, in whichcaseaprovision forsuchareview willnot beabar to a recourse before this Court but once the procedure for such a review has been set in motion by a person concerned no recourse ispossible to this Court until the review hasbeen completed. Such review procedures, as aforesaid, are in no way contraryto,orinconsistentwith,Article30oftheConstitution because speciallyset-uporgans orbodiesof an administrative 419 Stylianides,J. Ioakimv.Republic

(1989)naturearenotjudicialcommitteesorexceptional courtsinthe senseof paragraph 1 ofsuchArticle." An administrative act, the validity of which is challenged before the Supreme Court,maybeeitherconfirmed or annulled 5 inwholeorinpart. Ifitisnotdeclarednullandvoiditcontinues to be valid. When an administrative act, such as the decision of the Respondent, under section 20

(5), is declared null and void, the 10 Respondent, underthe provisions of paragraph 5 of Article 146 oftheConstitution, isboundto giveeffect to thedecision ofthe Court andre-examine thewholecaseinthelight ofthelegaland factual situation existing at the time the annulled decision was taken.Thisdoesnot precludehimfrom carryingfurther inquiry, 15 if necessary. Sub-section

(3)ofsection21, however, imposes,both for the interest of the State and the taxpayer, a mandatory period within which certain act has to be made after an annulling 20 decision. It reads:"21. -

(3)If in consequence of adecision on arecourse it becomes necessary to make a new assessment in order to give effect to the decision of the Supreme Court or comply 25 with the directions thereof, such new assessment may be made within sixmonths from the date ofsuch decision." There is no time limit, however, under section 20

(5)for the determination of an objection - (Theophilactos Mavromati 30 (No. 1) and the Republic of Cyprus, through 1. The Director of Inland Revenue, 2. The Minister of Finance

(1966)3C.L.R. 143;loannides v.Republic (supra). Inthe present case,ifthe Decision oftheCourt of21stApril, 35 1981, had annulled only the part of the sub judice acts which referred to the aggregation of the income of the spouses, then the remaining part of the act of theRespondent would have by implication been confirmed. Therefore, they continue to be valid and operative andRespondent hasno power or authority 40 to raise the assessments challenged bythis recourse. 420 3C.L.R. loakim v.Republic Stylianides,J. If, however, the Court on 21st April, 1981, annulled the whole of the sub judice decisions, the Respondent had to give effect to that Judgment; if, in consequence thereof, it was necessarytomakenewassessmentsinordertogiveeffect tothe 5 Judgment oftheSupremeCourt,hehadto dosowithin thetime limit prescribedbythe Law. Assumingthatthe Court annulled intoto the actsimpeached by Recourse 420/78, as no directions were given, it is 10 abundantly clearthat new assessments hadto beraised andthis shouldhave been done upto21st October, 1981-not after the lapse of more than four years. Assuming again, that the Decision of the Court annulled the 15 part which related to the aggregation of the income of the spouses, then the remaining part of the Respondent's decision impugned was confirmed. Thematter was res judicata and the Respondent had no power in 1985 to take the sub judice decisions andissuethecomplained of assessments. 20 On either view of thematter, theRespondent hadno power under the Lawto proceedandissuethe subjudicedecisions. Having regard to the plain and unqualified wording of the 25 operative part oftherecord ofthe Court of21stApril, 1981,in Recourse 420/78 -the annulling declaration ofthe Court -1am of the opinion that the Court declared in whole the impugned actsnullandvoidandofnoeffect. Thereupon therecoursewas brought to an end. 30 For the foregoing reasons, the sub judice decisions are contraryto law andtheyarethe result of excessof power. The sub judice decisions are declared in whole null and void 35 and ofno effect whatsoever. Let there beno order asto costs. 40 Subjudice decisions annulled. No orderastocosts. 421