Guillain V. Commissioner Of Income Tax

1949 present: Dias J. and Gunasekara J.

GUILLAIN, Appellant, and COMMISSIONER OF INCOME TAX,
Respondent

S. C. 431-Income Tax Case Stated, 35/69-BRA, 202.
 

Income Tax-Additional assessment-Appeal by assessee-Burden of proof-Income from undisclosed source-Non-disclosure of information by assessee-Effect on assessment-Evidence-Rules of evidence-How far binding on Assessor- Income Tax Ordinance (Cap. 188), sections 64 (3), 65, 73 (4).

(i) The burden of proof in an income tax appeal, whether to the Commissioner under section 69 of the Income Tax Ordinance or to the Board of Review under section 73 (4), lies on the assessee.

(ii) It came to the knowledge of the income tax authorities that the assessee-appellant, although his declared source of income was his salary as the manager of an hotel, had to his credit in two banks a large sum of nearly two lakhs of rupees. The assessee, although called upon to furnish returns and to give information, failed to do so. Thereupon, the assessor, acting under section 65 of the Income Tax Ordinance, proceeded to assess him " at the amount of additional amount at which according to his judgment such person ought to have been assessed ".

Held, that, inasmuch as the onus was upon the assessee to displace the assessment, the assessee took grave responsibility in not producing materials which would undoubtedly have been of great value for the purpose of forming the assessor's opinion. In the circumstances the assessor was not bound by the strict rules of evidence and was entitled to make an assessment according to his judgment.

CASE stated by the Board of Review under section 74 of the Income Tax Ordinance.

N. E. Weerasooria, K.C., with G. T. Samerawickrame, for assessee-appellant.-

The findings of the Commissioner are based on conjecture and suspicion only and not on facts. The question whether there is any evidence to support the findings apart from the adequacy of evidence is a question of law and one fit for determination in a case stated. See American Thread Co. v. Joyce[ (1912) 106 L. T. 171].

The initial onus has been cast on the assessee without any proof being adduced against him. It is not open to the taxing authorities to do this and then to disbelieve the assessee's assertion that he received no profits and impose a tax without any affirmative proof. See In re Bishnu Priya Chowdhurani [ 50 Cal 507].

The appellant gave evidence to the effect that there were no undisclosed profits liable to taxation in his hands and stated categorically the sources from which he received sums of money. This is the only evidence in the case. The Commissioner has suggested in his order that the appellant was engaged in Black Market operations in liquor. That would amount to a criminal offence. There is no evidence at all to support that suggestion. It is submitted that the Commissioner was not entitled to speculate in that way or to assume conduct amounting to a criminal offence without evidence.

One Of the documents relied on by the Commissioner is R 23 which is said to be a comparative statement of profits from other Bars as appearing in departmental files. The names of the Bars are not given. These are altogether res inter alios actae and not binding on the appellant. Apart from that, if the Commissioner had material which he wished to use, he should have put it to appellant to enable the latter to show the true effect of that evidence and its applicability or otherwise to the case. Where the names and identity of the Bars are withheld this cannot be done. It is submitted that the evidence is worthless and should not have beers considered.

The document R 23 is a letter written on behalf of the appellant to. the assessor for the purpose of a settlement and is marked " without prejudice". It is referred to several times in the order as containing admissions which are used to support the findings if they

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