De Jong V. Commissioner Of Income Tax

1955 Present : Weerasooriya, J.

DE JONG, Appellant, and COMMISSIONER OF INCOME TAX,
Respondent

S. C. 6 (with Application 159)-M. C. Colombo South, 38,322

Income Tax Ordinance (Cap. 188)-Proceedings under s. 80 (1)-Omission of Magistrate to order imprisonment in default of payment of tax-Effect thereof- Insolvency of assessee-Sections 78 (2), 81-Criminal Procedure Code, s. 312 (1) (b)-Payment of Fines (Courts of Summary Jurisdiction) Ordinance No. 49 of 1938, s. 12 (2).

In proceedings under Section 80 (1) of the Income Tax Ordinance, where the defaulter appears in Court in answer to the summons and has no cause to show why further proceedings for the recovery of the tax should not be taken against him, but the Magistrate makes no direction at the time that the defaulter should suffer a term of imprisonment in default of payment of the tax due, it is not open to the Magistrate to make such a direction subsequently.

APPEAL from a judgment of the Magistrate's Court, Colombo South.

G. E. Chitty, with J. V. C. Nathaniel and Daya Perera, for the appellant.

Shiva Pasupati, Crown Counsel, for the Attorney-General.

Cur. adv. vult.

December 13, 1955. WEERASOORIYA, J.-

On the 25th January, 1952, the appellant appeared before the Colombo South Magistrate's Court in obedience to a summons issued on him in Case No. 38,322 to show cause why further proceedings should not be taken against him for the recovery of a sum of Rs. 9,993 certified by the Commissioner of Income Tax in terms of s. 80 (1) of the Income Tax Ordinance to be due from him as income tax. On the appellant admitting that this amount was due from him the Magistrate made the following order: "I fine the accused Rs. 9,993. Time till 1.2 for fine". The time given under this order to pay the " fine " was further extended as a result of instalments paid by the appellant on various subsequent occasions in liquidation of the amount due. On the 27th November, 1954, the original liability had been reduced to Rs. 4,645 and the Court was informed that the appellant had been adjudicated an insolvent.

It appears from the copy of the proceedings (R1) in the insolvency case that the adjudication took place on the 2nd July, 1952. On the 10th December, 1952, the Commissioner of Income Tax filed in those proceedings a notice under s. 81 of the Income Tax Ordinance claiming

payment of a sum of Rs. 6,445 as tax due from the appellant for the year 1949/1950. S. 78 (2) of the Income Tax Ordinance provides that a receiver shall pay out of the assets of the insolvent under his control the tax charged or chargeable for one complete year of assessment prior to the date of the insolvency, to be selected by the Commissioner of Income Tax, as a first charge on such assets and that any other tax charged or chargeable for periods prior to such date shall be an unsecured debt. The claim of the Commissioner of Income Tax was, however, not satisfied, even in part, as there were no assets of the insolvent in the receiver's hands.

On the 23rd June, 1953, the appellant was granted a certificate of conformity of the third class under the Insolvency Ordinance.

On the ground of the appellant's adjudication as an insolvent and the issue to him of the certificate of conformity an application was made to the Magistrate on the 11th December, 1954, for an order of discharge of the appellant from the proceedings in Case No. 38,322. After inquiry the learned Magistrate rejected the application and ordered the appellant to pay the balance sum of Rs. 4,645 giving him time to do so until the 31st December, 1954. The present appeal has been filed from that order.

S. 80 (1) of the Income Tax Ordinance provides that if a person who has been summoned to show cause fails to do so the amount of the tax in default shall be deemed to be a fine imposed by a sentence of a Magistrate on such defaulter for an offence punishable with fine

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