clr/1989/1989_3A_455.pdf

(1983)3 C.L.R. 52, Georghiades v.Republic

(1982)3 C.L.R. 659, 20 Pikis v.Republic

(1965)3C.LR. 131. 455 Kalogyrou v.Minister of Finance &An.

(1989)Recourse. Recourse against the income tax assessment raised on applicant for the year

1. 5 A. Papacharalambous, for the Applicant. Y.Lazarou,Counsel of theRepublic B,for theRespondents. Cur. adv.vult. 10 DEMETRIADES, J. read the following judgment. By his present recourse the applicant challenges the decision of the Commissioner of Income Tax to raise an assessment of the income of the applicant for the year 1980and his decision that 15 theapplicant wasliableto paythesumof£2,770.70income tax. The facts of the case are the following: On the 20th March, 1981,the applicant submitted returns of 20 his income for the year of assessment 1980and declared ashis only income salaries from his employment with Anax Trading Ltd. In May 1981,the Commissioner raised an assessment on the applicant for that year and assessed his income from employment as declared by him, plus £170.- other income but 25 no tax was payable on such assessment as the applicant's chargeable income wasbelow thetaxable limit. On the4th August 1982,the Commissioner, having received information from the United Kingdom Inland Revenue that the 30 applicant kept bank accounts with the branch of Barclays Bank Ltd at 19-21 Brooks Street London, W.l, and that interest amounting to Sterling £l,062.50p was paid or credited to his accounts for the year that ended 5th April, 1981,by registered letterrequestedtheapplicanttogivehimfullparticularsregarding 35 his bank accounts which he kept abroad. The applicant did not replyto this letter and, as a result,the Commissioner sent him a second letter, dated the 5th April, 1983, requesting the same particulars. By letter dated the 10th May, 1983,the applicant informed the Commissioner that all hisincome,both within and 40 outside Cyprus,had alreadybeen declared. 456 3C.L.R. Kalogyrou v. Minister of Finance & An. Demetriades,J. By letter datedthe 15th December, 1983,the Commissioner informed theapplicant that hehaddecidedto raisean additional assessment for the year 1980and that hebased the tax payable on the following amounts: 5 plus (a) 10 £1,150.£7.000.- (b) £1,000.TOTAL income as declared, capital which wasremitted abroad and which wasconsidered tobe theresult of undeclared income,and interest earnedfrom (a)above. £9,150.- According to the information supplied to the Commissioner 15 by theUnited Kingdom InlandRevenue,the applicant waspaid or credited with the following amounts of interest for the year that ended on the5th April,
2. £320.07 20 £275.95 £466.48 TOTAL £1,062.50 25 On the 27th January, 1984, the applicant objected to the revised assessment. On the 9th April, 1986, the applicant was interviewed by Officers of the Office of the Commissioner regarding his 30 investments abroad. During the interview it was disclosed to him that they had information that he was keeping deposit accounts with the said branch of Barclays Bank but the applicant, stated that he was not in a position to confirm the existence ofthebank accounts with theabove Bank. 35 On the 10th April, 1986, the Commissioner wrote to the applicant and gave him one month's notice to submit to him copiesof hisbank deposit accounts abroad. In reply applicant's lawyers wrote and informed the Commissioner that their client 40 hadno other income other than that disclosedinhisreturns. The respondent Commissioner, after considering the 457 Demetriades,J. Kalogyrou v.Minister of Finance &An.

(1989)objection raisedbytheapplicant,decidedtodeterminesame for the year of assessment 1980, relying on the information received from the United Kingdom Inland Revenue and informed the applicant of his decision by letter dated the 16th June, 1986,enclosinginitnoticeofthetaxpayable. Asaresult, 5 the applicant filed the present application. The applicant gave evidence and denied that he kept an account withtheBarclays Bank in London andinsupport ofhis allegation he referred the Court to a letter received by his 10 counsel from the said Bank in response to a letter of his and whichstated that: "After checking our records on several occasions I can find no trace of an account in the name of A. Kalogvrou during 15 the period of 1980-1986". I shall here set out the letter of applicant's counsel to the Barclays Bank in London,because Ifindthat itisvery material for the present case: "DearSirs, I have been instructed by my client Mr. Angelos Kalogirou of Euridikis 14, Aglandjia, Nicosia, Cyprus to 25 inform you the following: The Commissioner of IncomeTax oftheREPUBLICOF CYPRUS taxed my client alleging that he was having an account with your Bank for the years 1980-1986. 30 It istheallegation of myclient thatheonno occasion had any account with your Bank. Consequently you are asked to acknowledge receipt of 35 this letter confirming myclient's allegations." It isto be notedthat theinformation given bythe United Kingdom Inland Revenue, which is exhibit No. 1 to the written address of counsel for the respondents, gives the 40 name and address of the person to whom the information related as Kalogeros (Mr) Angelos Dimitriou, P.O. Box 458 20 3C.L.R. 5 Kalogyrou v.Minister of Finance&An. Demetriades,J. 2154,Nicosia, Cyprus,whilst,asit appears from hislawyers' letter, which isset out above,thename andaddressgiven to the bank is Mr. Angelos Kalogirou, of Euridikis 14, Aglandjia, Nicosia,Cyprus. Fromonlythisfact, itisobvious that the Bank, in its search, was looking for an account or accounts kept by a different person than the one which was intheirbooks. In any event, and despite the original allegation of the 10 applicant thathisaddressin 1980wasnotP.O.Box 2154,hedid admit that until 1974 this P.O. Box was the address of a companyranbyhimandhisbrother andthatthesameP.O.Box was used by Anax Trading Ltd., his employers at the material ' time. 15 The question that poses for decision in the present recourse is whether it was open to the Commissioner to reach the sub judicedecision. Counsel fortheapplicant submittedthatthesub judice decision must be declared null and void as the 20 Commissioner based his decision on wrong facts, in that he ought not to rely on mere information supplied to him, which theapplicant could not havethemeans to trace or check. It is well settled that an administrative decision is null and 25 void if the administrative organ fails to carry out a sufficient inquiry into all the relevant factors surrounding the case. It is, also, a cardinal principle of administrative law that this Court willneversubstitutethedecisionofanadministrativeorganwith its own ifsuch decision wasreached after it hadmade a correct 30 assessment of the factual background of the case and acted in accordance with the notions of sound administration. Further, this Court will never interfere with a decision of an administrative organ ifthe decision wasreasonably open to it. 35 In reaching my above view I have useful guidance from, amongst others, the following cases of the Supreme Court of Cyprus: Mangli v. The Republic

(1983)3 C.L.R. 52, 56, Georghiades v. The Republic

(1982)3 C.L.R. 659, 669 and Pikis v.TheRepublic

(1965)3C.L.R. 131, 149. 40 In the present case the Commissioner received information from the Inland Revenue inthe United Kingdom that a person 459 Demetriades,J. Kalogyrou v.Minister of Finance &An.

(1989)bearing the name of the applicant, and whose address was the sameasthatusedbyhimatacertaintime,had,in 1980.received income from capital deposited with the said Bank in England which the applicant had failed to declare in his returns for that year.The information on which the Commissioner relied upon 5 was received by virtue of a Convention signed between the RepublicofCyprusandtheGovernment oftheUnitedKingdom of Great Britain and Northern Ireland, for the avoidance of doubletaxation andtheprevention offiscal evasionwithrespect to taxes on income.This Convention waspublished inGreek in 10 theGazetteoftheRepublicNo.1107ofthe5thJuly, 1974,under Notification No. 1152andin English inGazette No. 1148ofthe 1stNovember, 1974,under Notification No.1608. By the provisions of Article 26 of this Convention, the 15 competent authorities of the contracting states "shall exchange information for the prevention of fiscal evasion " Once the Commissioner had received the information regarding the income the applicant received in the United 20 Kingdom and which information he passed over to the applicant, and as the applicant, who had all the means to contradict the information of the Commissioner, had failed to doso,Ifindthat itwasreasonablyopen totheCommissioner to reach his decision andthat hewasnot under adutyto carry out 25 a further inquiry into the United Kingdom income of the applicant. Intheresult,the recourseisdismissedwith costsinfavour of the respondents. Recoursedismissedwith costs. 460 30