MOHIDEEN
VS.
 COMMISSIONER GENERAL OF INLAND REVENUE (INCOME TAX STATED CASE)

COURT OF APPEAL
ANIL GOONERATNE, J.
WIJESUNDERA J.
CA 02/2007
BRA/497 - INCOME TAX
ARGUED 08, 2013

In the matter of a case stated by the Board of Review for the opinion of the Court of Appeal

Cases referred to:-

1. S. C. Special Determination No. 26/2004 (Inland Revenue, Regulation of Amnesty Bill)

2. Silva vs. Singam 71 NLR 308 at 311

3. New Portman Case - application 2367/80

4. Sangapala Vs. Urban Counsil Gampaha and others - 1990 - 2 SLR 289 at 298

Dr. Shivaji Felix for the Appellant

Suren Gnanaraj S.S.C. for the Respondent.

Cur.adv.vult.

January 16, 1013
ANIL GOONERATNE J.

This is an Income Tax stated case on the question of law where the Appellant being dissatisfied of the determination of the Board of Review dated 21.6.2006, required the Board of Review to state a case for the opinion of this court. The case stated referred 9 questions of law, and the first question of law was decided earlier by this court as a preliminary issue, and

by order of this court dated 27.8.2009, decision pronounced in favour of the Respondent Commissioner General of Inland Revenue.

It is important to understand as to how the case stated was referred to this court. Very briefly the main issue seems to be the Appellants failure to declare in the income Tax returns for the year of Assessment 91/92,92/93,93/94 & 94/ 95, the lease rental income based on a lease agreement the Appellant had with M/s. Topical Seed company (Pvt.) limited. However the appeal as regards the Year of Assessment for the year 91/92 had been upheld by the Board of Review itself, and what remained is the balance three assessments for the years 92/93,93/94 & 94/95. The Assessor had issued notices of assessment on the Appellant on 20.5.1996, based on the Appellant's failure to declare the lease rental and on an appeal to the Commissioner of Inland Revenue the Commissioner made his determination on 25.06.1999.

The Appellant being dissatisfied with the Commissioner Generals determination appealed to the Board of Review. The Board allowed the Appellant's appeal for the year of Assessment 1991/92 but dismissed the appeal for the balance Year of Assessment. The eight questions of law that concerns this court are as follows (as in document V which was considered by this court at the hearing).

(i) Has the Board of Review erred in law by coming to the conclusion that it was not prevented from reopening this case since section 4(3) of the Inland Revenue (Special Provisions) Act, No. 10 of 2003 (read with Section 4(4) of the Inland Revenue (Regulation of Amnesty) makes it clear that amount specified by the Appellant must be treated as his final tax liability?

(ii) Has the Board of Review erred in law by violating the" spirit and intention" of the first proviso to Section 140(10) of the Inland Revenue Act, No. 38 of 2000 (as amended by Section 52 of Inland Revenue (Amendment) Act, No. 38 of 2003), which makes it imperative that the Board of Review arrives at its determination within two years of the commencement of the hearing of this appeal?

(iii) Has the Board of Review erred in law by coming to the conclusion that the Assessor had sufficiently complied with the mandatory requirements of law under and in terms of Section 115(3) of the Inland Revenue Act, No.28 of 1979, for the year of assessment 1992/1993,1993/1994 and 1994/1995?

(iv) Has the Board of Review erred in law by not considering whether the Assessor has provided sufficient justification for treating charges and services as rental income?

(v) Has the Board of Review erred in law by not drawing an adverse inference from the fact that the statement made by the Assessor in this communication of reasons for rejecting the return was palpably false?

(vi) Has the Board of review erred in law by condoning conduct of the Department of Inland Revenue by not drawing an a