041-SLLR-SLLR-2002-3-PONNIAH-v.-COMMISSIONER-GENERAL-OF-INLAND-REVENUE-AND-OTHERS.pdf
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PONNIAH
v.
COMMISSIONER-GENERAL OF INLANDREVENUE AND OTHERS
COURT OF APPEALJAYASINGHE, J. (P/CA) ANDEDIRISURIYA, J.
CA NO. 1249/99
MC MINUWANGODA NO. P/18060JANUARY 22, ANDFEBRUARY 19. 2002
Inland Revenue Act, No. 28 of 1978, sections 115 (3) and 123 – Assessmentcancelled as reasons were not given for rejecting return of income – Reasonsgiven later – Fresh assessment served – Validity.
The respondent cancelled the assessment on appeal as the Inland RevenueDepartment had not given reasons for rejecting the petitioner’s return of assess-ment. Thereafter, upon stating a number of reasons for rejecting the appeal, afresh assessment was issued. It was contended that the appeal against the firstassessment was determined when the respondent cancelled the assessment, asthe assessment was ultra vires and invalid, and on the determination of the appealthe said assessment became final and conclusive as income assessed; and therespondent is debarred from reopening any matter determined on appeal.
Held :
(1) Issuance of an assessment without stating reasons is a curable defect inview of the fact that the Act does not preclude the assessor from makinga fresh assessment.
Per Edirisuriya, J.
“I am of the view that this court in exercising its discretionary power ofissuing a writ of certiorari should not in any way prevent the revenue cominginto state coffers purely on the ground that a public officer has failed to complywith a requirement of law.”
CA
Ponniah v. Commissioner-General of
Inland Revenue and Others (Edirisuriya, J.)
315
APPLICATION for a writ of certiorari.
Shibly Aziz, PC, with R. G. L. de Silva for petitioner.Farzana Jameel, Senior State Counsel for respondent.
Cur. adv. vult.
January 14, 2003EDIRISURIYA, J.
In his petition the petitioner states after he retired from service on14. 03. 1998 he received a gift of a motor car valued at Rs. 200,000and an ex gratia payment of Rs. 500,000 from Mr. V. T. V.Devanayagampillai, the Chairman of V. T. V. Holding & Limited (hisemployer) in recognition of his exceptional services.
According to the petitioner by Notice of Assessment dated
03. 1999 and bearing charge number 10/11/98/0688 (P1) the saidamounts totalling Rs. 700,000 were assessed for puffiness to incometax as compensation for the year of assessment 1997/1998 by the4th respondent Assessor Metro ‘H’ Branch of the Department of InlandRevenue. The petitioner aggrieved by this assessment appealed againstsame by his petition of appeal dated 17. 04. 1999 on the groundthat the said amount of Rs. 700,000 was received by him as a giftfrom his employer and thus not liable to tax. The petitioner statesthat consequent to the said appeal the 3rd respondent, the DeputyCommissioner of Inland Revenue Metro ‘H’ Branch, Department ofInland Revenue upon consideration of the grounds of appeal andattendant circumstances informed the petitioner by letter dated
07. 1999 that she has directed the 4th respondent to cancel theassessment appealed against as the 4th respondent had failed to givereasons for rejecting the petitioner’s return of income for the year ofassessment 1997/1998 as required by section 115 (3) of the InlandRevenue Act, No. 28 of 1978 as amended.
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The petitioner further states that accordingly the 4th respondentissued form No. 10/W dated 16. 09. 1999 cancelling the said assess-ment and thereafter the 4th respondent issued a letter dated
09. 1999 (P. 6) informing the petitioner that he had rejectedthe petitioner’s return of income for the year of assessment 1997/1998 for the reasons stated therein.
According to the petitioner the 4th respondent upon stating anumber of reasons proceeded to issue a fresh assessment dated
09. 1999 (P6) under the charge No. 10/H/99/0184 in respect ofthe said sum of Rs. 700,000 as income from any other source. Thetotal tax payable under this assessment inclusive of penalty beingRs. 274,858.
The petitioner also states that he being aggrieved by the saidassessment appealed against it by a petition of appeal dated15. 10. 1999.
The petitioner states that the appeal against the assessment dated25. 03. 1999 issued under charge number 10/H98/0699 was for allpurposes of the Inland Revenue Act, No. 28 of 1978, as amendeddetermined when the 4th respondent cancelled the said assessmenton the direction of the 3rd respondent as the assessment was ultravires and invalid; on determination of the said appeal the saidassessment became final and conclusive under section 123 asregards income assessed and other matters involving assessment; the4th respondent is therefore debarred from reopening any matterdetermined on appeal; the provision in section 115 (3) would havethe effect of fixing the 4th respondent to a definite position and notgive him latitude to change the reasons already given or to commu-nicate further reasons for the non-acceptance of a return of incomefurnished by an assessee after the assessment made by him hasbecome final and conclusive.
The petitioner prays for a writ in the nature of a writ of certiorariquashing the assessment dated 17. 09. 1999 under charge number10/H/99/0184. The question which arises for determination in this court
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Ponniah v. Commissioner-General of
Inland Revenue and Others (Edirisuriya, J.)
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is whether the assessor is vested with jurisdiction to make a freshassessment in place of an assessment annulled on appeal by theCommissioner on the ground that the assessment was ultra vires interms of section 115 (3) of the Inland Revenue Act, No. 28 of 1978.The learned counsel for the petitioner submitted that the Inland RevenueAct contains no express provisions to empower a further assessmentwhen an assessment becomes null and void by reason of the assessor’sfailure to comply with the requirements mandated by the provisionsof the Inland Revenue Act.
He submitted that in the absence of such provisions it is relevantto resort to legislative history to ascertain the legislative intent in thisregard. The learned counsel for the petitioner referred to the InlandRevenue (Amendment) Bill presented in Parliament in September,1994 wherein an amendment to section 115 (3) was included in orderto empower an assessor to make a fresh assessment in place of anassessment rendered null and void for the reason that the provisionsof proviso to section 115 (3) have not been complied with. It is hissubmission that the legislature in its wisdom did not confer suchpowers on an assessor and consequently did not enact the saidprovisions of the Bill into law. Therefore, he submitted the aforesaidabortive attempt to amend section 115 (3) confirms the statutoryposition that an assessor does not have the power to make afurther assessment in lieu of an assessment in terms of the provisoto section 115 (3).
The learned State Counsel on behalf of the respondent contendsthat for writ of certiorari to lie there should have been an act donein excess of the statutory powers. In the instant case the 4threspondent merely cancelled an assessment that had been issuedwithout complying with the mandatory requirement and issued anassessment together with the reasons for rejection of the return. Shestates what the petitioner is trying to do is to prevent the InlandRevenue Department from informing him of the reasons for rejectinghis return. It is her submission that the law has developed to theextent of making it mandatory to give reasons for decisions.
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She further contends that if a statutory authority in the exerciseof its statutory functions fails to comply with a mandatory requirementthe statutory authority is not deprived of the power to execute thatduty in compliance with the statute. The learned Senior State Counselsubmits that finality does not attach to P1 the original assessmentsince it is invalidated.
Therefore, the Inland Revenue Department is not precluded fromissuing a proper assessment in terms of the law.
Referring to the submission made by the learned counsel for thepetitioner that the proposed amendment to section 115 (3) was notenacted since the assessor does not have the power to make a furtherassessment in lieu of an assessment annulled in terms of the provisoto section 115 (3) the learned Senior State Counsel contends thatthe fact that the legislature did not enact the amendment is a clearindication that the assessor has a right to issue a fresh assessment.
Having regard to the submissions made on behalf of both partiesand all circumstances of the case I am of the view that the issuanceof an assessment without stating reasons is a curable defect in viewof the fact that the Inland Revenue Act does not preclude the Assessorfrom issuing a fresh assessment. I
I am also of the view that this court in exercising its discretionarypower of issuing a writ of certiorari should not in anyway prevent therevenue coming into state coffers purely on the ground that a publicofficer has failed to comply with a requirement of law.
Accordingly, I dismiss the application without costs.JAYASINGHE, J. (P/CA) – I agree.
Application dismissed.
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