Chang Min Tat J:

The appellant, after "a back-duty investigation" by Revenue as to his tax liabilities, was assessed to tax in the sum of $8,145,841.50. This sum represented in part additional assessments for the years of assessment 1953, 1957 to 1961 inclusive and also 1971. The balance consisted of original assessments for the years of assessment 1962, 1966 to 1972, inclusive, in respect of which years no tax had previously been computed; in other words for those years returns were made by the appellant, showing no income chargeable to tax.

He appealed to the Special Commissioners. The hearing before them occupied a total of 30 days spread over nine months from 3 December 1974 to 2 September 1975. Oral evidence was taken from the appellant himself, and on behalf of Revenue from Mr. Sadasivam, an Assistant Director of Inland Revenue (Investigation) who was in charge of this back-duty investigation and who was himself a Chartered Accountant. Both witnesses were examined and cross-examined at length. A total of 240 exhibits were also introduced and considered. Finally on 27 September 1975, the Special Commissioners made an unanimous deciding order, assessing the appellant's tax liabilities for these years at a total of $10,323,230.75. They have therefore made an increase of $2,177,389.25 from the additional and other assessment by Revenue.

From that order, he now appeals to this court.

At this stage, a comparative table will be instructive:

Column A Column B Column C

Tax

Year Tax as assessed Tax assessed

of assess- previously & demanded in Deciding

ment by Revenue Order

1953 $ 5,006.00 $58,188.00 $161,062.80

1957 18,900.20 40,000.00 113,438.00

1958 63,386.20 11,606.00 37,091.20

1959 123,145.00 800,000.00 669,500.00

1960 68,080.60 360,000.00 615,575.25

1961 524,680.30 1,800,000.00 1,787,752.80

1962 Nil 901,158.85 1,010,921.50

1966 Nil 12,844.40 517,183.00

1967 Nil 101,710.00 631,126.25

1968 Nil 1,391,050.25 1,772,644.65

1969 Nil 244,540.60 399,368.35

1970 Nil 517,565.00 758,963.30

1971 Nil 150,687.50 (1,106,608.95

1971 - 670,665.90 (

1972 Nil 1,085,825.00 741,944.70

227227227227227227227 227227227227227227227227227 227227227227227227227227

$803,198.30 $8,145,841.50 $10,323,230.75

227227227227227227227 227227227227227227227227227 227227227227227227227227-

The years covered the operation of the Income Tax Ordinance, 1947 and after 1966, the Income Tax Act, 1967. Fortunately, nothing turns on any differences in the provisions of the two Ordinances. It is common to both that the period of limitation is 12 years. Claims for the years of assessment 1953, 1957 to 1959 inclusive are statute-barred unless there was fraud or wilful default on the part of the taxpayer: s. 69(1) Income Tax Ordinance, 1947 and s. 91(3) Income Tax Act, 1967. Claims for the other years are well within the period of limitation and under both statutes, the onus of proving that they were excessive or erroneous lay on the taxpayer: s. 76(3) Income Tax Ordinance, 1947 and para 13 of Sch 5 to the Income Tax Act, 1967.

PART ONE

(1) The appellant and Inland Revenue The appellant was a man with many irons in the fire. He was engaged in money-lending, printing and publishing and in fragmentation of estate. The Special Commissioners found that he was adjudged a bankrupt in 1948 and that "before his discharge sometime in 1952 he had however started fragmentation business in his wife's name" with a capital of $10,000. Fragmentation, as it has been called, is the buying of large rubber estates and selling them in small lots.

On 16 August 1972, Mr. Sadasivam called the appellant for an interview. At that interview, the appellant maintained the correctness of his past income tax returns. Later the same day, Mr. Sadasivam went with the appellant to the latter's office at 132 Penang Street and residence at 216B Macalister Road, both in Penang. Another party of Inland Revenue officials went to his other office premises at 46 Jalan Arumugam