clr/1989/1989_3A_655.pdf

(1982)3CLR. 659cited withapproval. 20 The respondent Commissioner receivedunder a bilateralagreement between the Republic and United Kingdom information passed over 655 Charalambous v. Republic & Another

(1989)from the Inland Revenue Authorities that the applicant had received £495.94 by way of interest from bank deposits in thatcountry relating to the year ended5th April

1. The applicant was asked to account in respect of such information. The applicant strenuously denied that he hada bank account in England and thathereceived such aninterest in
2. However, theapplicantdid not produce any evidence tosupport hisdenial. 5 Relying simply on the slip of paper passed over by the Inland 10 Revenue to therespondentCommissioner,which borneapplicant'sname and address and the information relating to the said amount of interest credited to the account for the year which ended on 5th April 1980.the respondent Commissioner proceeded and assessed, the applicant in respect of theyears 1975-1980, bothinclusive, with an amountof £7.400, 15 i.e.£5.000 capital and£400 interest for each of the aforesaid years. The ground on which the Court annulled the sub judice decision appears in thefirst of thehereinabove Headnotes. 20 Subjudicedecisionannulled. No orderas to costs. Casesreferred to: 25 Eliades v.Republic

(1985)3 C.L.R. 1904, Georghiadesν Republic

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

(1985)3 C.L.R. 971, 30 Ieronymides ν Republic

(1988)3 C.LR.2657, Solomonides v.Republic (Commissioner of Income Tax)

(1968)3 C.L.R.

1. Recourse. Recourse against the assessments raised on applicant in respect of income tax and special contribution for the years 40 1976-
2. 656 35 3 C.L.R. Charalambous v. Republic & Another P. Demetriou, for the Applicant. Y. Lazarou,Counsel of theRepublic B,for theRespondents. 5 Cur.adv.vult. A. LOIZOU, P. read the following judgment. By this recourse the applicant challenges thevalidity of the income tax assessments for the years of assessment 1976 to 1980 and the 10 special contribution assessments for the quarters of the years 1976 to 1980, the particulars of which are shown in the Schedules thatareattachedtotheopposition asAppendices "A" and"B". 15 20 The applicant who derived his income at the material time from his coffee shop business at 9, Markou Drakou Street, Pallouriotissa and from investment income from abroad, submitted in time his income tax returns for the years 1975, 1976, 1977, 1979 and 1980 but did not submit any return of income for the year
3. Inthe returns submitted he declared as his only source of income his coffee shop business and the annualvalue of hisresidence.Noreturnsfor special contribution were submitted for any of the quarters of the years 1975 to
4. 25 Hisincometax andspecial contributionliability for the years of income ί975 to 1978,was determinedby means of a"Capital Statement" submitted as a 31st December
5. The assessments imposing incometax ontheincomereceived bythe 30 applicant during these years were issued on the24th May 1979 andthose imposing special contributionwere issued onthe27th October 1979 for the quarters of the year 1976 and on the 9th February 1980 for thequarters of theyear 1977 andfor the first quarter of the year
6. 35 On the 9th May 1980, and 4th May, 1981, the respondent Commissioner raised original income tax assessments on the applicant in respect of the years 1979 to 1980 against which he objected. These objections were determinedby the respondent 40 Commissioner on the 5th August 1980 and the 4th June 1981 respectively. 657 A.Loizou. P. Charalambous v.Republic &Another

(1989)Soon after the determination of the above assessments the respondent Commissioner received certain confidential information from the United Kingdom inland Revenue that the applicant had received £495.94 by way of interest from bank deposits in that countrv relating to the vear ended 5th April 5 1980(Appendix " C ) . Asthe applicant hadnot declared such income inhis income tax returns for theyears 1979to 1980,orfor anyother previous year,he was requested bytherespondent Commissioner on the 10 6th September 1982.to give reasons why hedidnot declarehis investment income arising abroad and to give details of such income for each relevant year.Theapplicant,however,failed to comply andsoonthe5thApril 1983.areminderwassenttohim by registered post but again there was no response. Hence he 15 was prosecuted under Case No.596/84 and he was fined £5 on the 10th September 19S

1. a surprisingly lenient, in my view, sentence as against which however, the prosecution filed no appeal. 20 On the Sth June 1984, the applicant- submitted a statement (Appendix "D") bywhich hestated that hisonly income for the years
2. 1979 and 1980was that declared in his income tax returns. On the 12th November 1984, the applicant, at the request of the respondent Commissioner called at his office in 25 Nicosia together with his son Charalambos and in spite of rhe fact that he was shown [heUnited Kingdom bank certificate lie emphatically denied that he had such income or indeed a bank account with that bank. However, the son of the applicant undertook to communicate with the bank so as to clarify the 30 matter but he failed to doso. Subsequently at various datestherespondent Commissioner proceeded andrevised theincome tax assessments inrespectof the years of assessment 1976 to 1980 and the special 35 contribution assessments for the years 1977 to
3. The applicant objected against all the above assessments save the special contribution assessments for the quarters of the years 1979to
4. 40 On the 21st December 1985,the respondent Commissioner proceeded and determined the applicant's objections. His 658 3 C.L.R. Charalambous v.Republic &Another A. Loizou, P. decision wascommunicatedtotheapplicant onthesamedayby lettertogetherwiththerelevant NoticesofTax payablewherein it wasstated inter alia: 5 10 "Ihave decidedtoassesstheamount you haveinvested at £5,000 and to consider that this was derived from your non declared profits prior to and after the date of the last examination andothertaxation matters.Ihave alsoassessed the interest at the amount of £400 annually for the years 1975-1980." It is apparent from the facts as set out hereinabove that the recourse against the original assessments for the years 1976 to 1980, and against the special contribution assessments for the 15 quaners of the year 1976, 1977andthefirst quarter ofthe year 1978aswellasthequanersoftheyears 1979and 1980.isoutof time asithasnot been madewithin seventy -five daysfrom the dates that such assessments were made, but this is of no significance in view of there-examination that followed. 20 The question therefore for determination is whether it was reasonably open totherespondent Commissioner, to includein the applicant's chargeable income for the vears of assessment 1976to 1980,theamount of£7,400.-. 25 The respondent Commissioner received by vinue of the Convention, signed on the 20th June 1974, between the RepublicofCyprusandtheGovernment oftheUnitedKingdom of Great Britain and Northern Ireland, for the Avoidance of 30 Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, as amended by a protocol signed on the2ndApril 1980,information from the InlandRevenueof the United Kingdom, attached to the opposition as Appendix " C \ that a person bearing the name of the applicant and with 35 the same address asthat whichtheapplicant hasbeen declaring on his returns and correspondence to the respondent Commissioner since 1970,hadreceived inthe fiscal year ended 5th April 1980,interest amounting to £495.94 sterling from an external account that he had with Midland Bank Ltd., in the 40 United Kingdom whichhehadfailedto declare in hisreturns. Once the respondent Commissioner received such 659 Λ. Loizou, P. Charalambous v. Republic & Another

(1989)information he requested the applicant on several occasions to give full paniculars as to thesaid external account but he failed to doso,just as hehadfailed to adduceevidence to substantiate his assenion that he had no such account to controven the information in thehands of the respondent Commissioner. 5 Bearing in mind the applicant's failure to contradict such information despite being afforded ample opportunity to do so and considering its source aswell as its nature,it was submitted on behalf of the respondent Commissioner that it was 10 reasonably open to him to act upon such information and raise the additional assessments in question. (See EHades v. The Republic

(1985)3 C.L.R. 1904). Needless tosay herethatthis Counincases of tax reviewhas the same jurisdiction as in any other field of administrative recourse. It is confined to a review of the legality of theaction of theadministration within thesphere of theirlawful authority. Provided they operatewithin theframework of theirpowers the administration isthejudgeof thefact finding process. And ifthe inquiry into thefacts is the dueand proper in the circumstances and the decision one reasonably open to them, the Coun will not interfere with such appreciation asaproperexercise oftheir powers. (See Lilian Georghiades v. The Republic

(1982)3 C.L.R. 659). As regards the conclusion of the respondent Commissioner that theaccountinquestion belonged totheapplicant,Ifindthat the assertions advanced by hiscounsel inhis written addressthat the information in question was never passed over to the 30 applicant sothathemight adduceevidence tocontradictsame is untenable,as it is evident from theaffidavit of Mr.P.Panayides and its attachments (Exhibit 2). Nor can Iaccept the allegations contained in the affidavit of 35 Mr.J.Karaviotis thatthetrue owner of the accountwas thelate Anna Charalambous for it is obvious from the information slip that the account in question belonged to Mr.A. Charalambous and notto Mrs or Miss A. Charalambous. An additional reason why this affidavit should be ignored is because its contentswere 40 never placed before the respondent Commissioner when the same assessments were made. 660 20 3 C.L.R. Charalambous \. Republic &. \nother A. Loizou, P. Itmaybesaidherethatareview bythisCourt isrestricted to the evidence that wasbefore the administrative organ and does not extendtomaterial which isproducedlorthefirst time atthe hearing of the recourse (See Andreas Xiros v.The Republic 5

(1985)3 CLR 971, Athinoulla Th. leronymides v. The Republic (19SS)3CLR 2657. On the other hand as tar as the actual assessment by the respondent Commissioner is concerned, I consider that the 10 information receivedbyhimthat theslipbearingthe applicant's name, address and ''amount ot interest paid or credited during the year ended5th April 1980''.isnot conclusive evidence that the applicant, as stated in the letter ot the respondent Commissioner oi the 21st December 1985.had an amount ol 15 £5.000 invested or that such account existed during the years 1975-19S0 in respect ot which he received £400 interest annually As there does not appear that the respondent Commissioner conducted an inquiry to lead him to the above conclusion or to give any reasons for this. I consider that this 20 , part olhisdecision must beannulled tor lack of due inquiry and insufficient reasoningthemaximum that couldsafely be interred would be that interest tor that vear had been earned, it might ha\e given to the whole case adifferent context had there been slips with earned interest tor more than one year. (Tor a 25 somehow similar approach see Solomonides \. The Republic (Commissioner of Income Tax)

(1968)3CLR 105) for theabovereasonstherecoursesucceedsmlespectof this groundrbut-f-make-no-order-as-to-costs^ 30 Suojuaice decisionannulled No ordei asto costs 661 -