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ΠΑΓΚΥΠΡΙΟΣ ΔΙΚΗΓΟΡΙΚΟΣ ΣΥΛΛΟΓΟΣ
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Κυπριακή νομολογία στην οποία κάνει αναφορά η απόφαση αυτή:
DR. SOLON SOLOMONIDES ν. REPUBLIC (COMMISSIONER OF INCOME TAX). (1968) 3 CLR 105
GEORGHIADES ν. REPUBLIC (1982) 3 CLR 659
XIROS ν. REPUBLIC (1985) 3 CLR 971
Μεταγενέστερη νομολογία η οποία κάνει αναφορά στην απόφαση αυτή:
Δεν έχει εντοπιστεί απόφαση η οποία να κάνει αναφορά στην απόφαση αυτή
(1989) 3A CLR 655
1989 June 5
[A. LOIZOU. P.]
IN THE MATTER OF ARTICLE 146 OF THE CONSTITUTION
ANDREAS CHARALAMBOUS,
Applicant,
v.
THE REPUBLIC OF CYPRUS, THROUGH THE MINISTER OF
FINANCE AND/OR ANOTHER,
Respondents.
(Case No. 111/86)
Due inquiry-Income Tax-Information from United Kingdom Inland Revenue that applicant received £495.94 by way of interest from bank deposit in that country relating to a year ended on 5/4/80-Conclusion by respondent that applicant had in vested £5.000 and that he had received interest of £400 for each of the years 1975-1980- The only evidence to support such conclusion was the aforesaid information passed over on a slip of paper bearing a name and an address corresponding to the name and address of the applicant-Insufficiency of inquiry-Sub judice decision annulled.
Judicial control-Material produced for the first time at the hearing of the recourse-Should not be taken into consideration-The review by this Court is restricted to the evidence that was before the administrative organ in question.
Judicial control-Tax review-Fact finding process-The administration is the arbiter of such process-Principles governing interference by Court-Lillian Georgiades v. The Republic (1982) 3 C.L.R. 659 cited with approval.
The respondent Commissioner received under a bilateral agreement between the Republic and United Kingdom information passed over from the Inland Revenue Authorities that the applicant had received £495.94 by way of interest from bank deposits in that country relating to the year ended 5th April 1980.
The applicant was asked to account in respect of such information. The applicant strenuously denied that he had a bank account in England and that he received such an interest in 1980. However, the applicant did not produce any evidence to support his denial.
Relying simply on the slip of paper passed over by the Inland Revenue to the respondent Commissioner, which borne applicant's name and address and the information relating to the said amount of interest credited to the account for the year which ended on 5th April 1980, the respondent Commissioner proceeded and assessed, the applicant in respect of the years 1975-1980, both inclusive, with an amount of7.400, i.e. £5 .000 capital and £400 interest for each of the aforesaid years.
The ground on which the Court annulled the sub judice decision appears in the first of the hereinabove Headnotes.
Sub judice decision annulled. No order as
to costs.
Cases referred to:
Eliades v. Republic (1985) 3 C.L.R. 1904,
Georghiades v. Republic (1982) 3 CL.R. 659,
Xiros v. Republic (1985) 3 C.L.R. 971,
leronymides v. Republic (1988) 3 C.L.R. 2657,
Solomonides v. Republic (Commissioner of Income Tax) (1968) 3 C.L.R. 105.
Recourse.
Recourse against the assessments raised on applicant in respect of income tax and special contribution for the years 1976-1980.
P. Demetriou, for the Applicant.
Y. Lazarou, Counsel of the Republic B, for the Respondents.
Cur. adv. vult.
A. LOIZOU, P. read the following judgment. By this recourse the applicant challenges the validity of the income tax assessments for the years of assessment 1976 to 1980 and the special contribution assessments for the quarters of the years 1976 to 1980, the particulars of which are shown in the Schedules that are attached to the opposition as Appendices "A" and "B".
The applicant who derived his income at the material time from his coffee shop business at 9, Markou Drakou Street, Pallouriotissa and from investment income from abroad, submitted in time his income tax returns for the years 1975, 1976, 1977, 1979 and 1980 but did not submit any return of income for the year 1978. In the returns submitted he declared as his only source of income his coffee shop business and the annual value of his residence. No returns for special contribution were submitted for any of the quarters of the years 1975 to 1980.
His income tax and special contribution liability for the years of income 1975 to 1978, was determined by means of a "Capital Statement" submitted as a 31st December 1978. The assessments imposing income tax on the income received by the applicant during these years were issued on the 24th May 1979 and those imposing special contribution were issued on the 27th October 1979 for the quarters of the year 1976 and on the 9th February 1980 for the quarters of the year 1977 and for the first quarter of the year 1978.
On the 9th May 1980, and 4th May, 1981, the respondent Commissioner raised original income tax assessments on the applicant in respect of the years 1979 to 1980 against which he objected. These objections were determined by the respondent Commissioner on the 5th August 1980 and the 4th June 1981 respectively.
Soon after the determination of the above assessments the respondent Commissioner received certain confidential information from the United Kingdom Inland Revenue that the applicant had received £495.94 by way of interest from bank deposits in that country relating to the year ended 5th April 1980 (Appendix "C").
As the applicant had not declared such income in his income tax returns for the years 1979 to 1980, or for any other previous year, he was requested by the respondent Commissioner on the 6th September 1982, to give reasons why he did not declare his investment income arising abroad and to give details of such income for each relevant year. The applicant, however, failed to comply and so on the 5th April 1983, a reminder was sent to him by registered post but again there was no response. Hence he was prosecuted under Case No. 596/84 and he was fined £5 on the 10th September 1984, a surprisingly lenient, in my view, sentence as against which however, the prosecution filed no appeal.
On the 8th June 1984, the applicant, submitted a statement (Appendix "D") by which he stated that his only income for the years 1978, 1979 and 1980 was that declared, in his income tax returns. On the 12th November 1984, the applicant, at the request of the respondent Commissioner called at his office in Nicosia together with his son. Charalambos and in spite of the fact that he was shown the United Kingdom bank certificate he emphatically denied that he had such income or indeed a bank account with that bank. However, the son of the applicant undertook to communicate with the bank so as to clarify the" matter but he failed to do so.
Subsequently at various dates the respondent Commissioner proceeded and revised the income tax assessments in respect of the years of assessment 1976 to 1980 and the special contribution assessments for the years 1977 to 1980. The applicant objected against all the above assessments save the special contribution assessments for the quarters of the years 1979 to 1980.
On the 21st December 1985, the respondent Commissioner proceeded and determined the applicant's objections. His decision was communicated to the applicant on the same day by letter together with the relevant Notices of Tax payable wherein it was stated inter alia:
"I have decided to assess the amount you have invested at £5,000 and to consider that this was derived from your non declared profits prior to and after the date of the last examination and other taxation matters. I have also assessed the interest at the amount of £400 annually for the years 1975-1980."
It is apparent from the facts as set out hereinabove that the recourse against the original assessments for the years 1976 to 1980, and against the special contribution assessments for the quarters of the year 1976, 1977 and the first quarter of the year 1978 as well as the quarters of the years 1979 and 1980, is out of time as it has not been made within seventy - five days from the dates that such assessments were made, but this is of no significance in view of the re-examination that followed.
The question therefore for determination is whether it was reasonably open to the respondent Commissioner, to include in the applicant's chargeable income for the years of assessment 1976 to 1980, the amount of £7,400.-.
The respondent Commissioner received by virtue of the Convention, signed on the 20th June 1974, between the Republic of Cyprus and the Government of the United Kingdom of Great Britain and Northern Ireland, for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, as amended by a protocol signed on the 2nd April 1980, information from the Inland Revenue of the United Kingdom, attached to the opposition as Appendix "C", that a. person bearing the name of the applicant and with the same address as that which the applicant has been declaring on his returns and correspondence to the respondent Commissioner since 1970, had received in the fiscal year ended 5th April 1980, interest amounting to £495.94 sterling from an external account that he had with Midland Bank Ltd., in the United Kingdom which he had failed to declare in his returns.
Once the respondent Commissioner received such information he requested the applicant on several occasions to give full particulars as to the said external account but he failed to do so, just as he had failed to adduce evidence to substantiate his assertion that he had no such account to controvert the information in the hands of the respondent Commissioner.
Bearing in mind the applicant's failure to contradict such information despite being afforded ample opportunity to do so and considering its source as well as its nature, it was submitted on behalf of the respondent Commissioner that it was reasonably open to him to act upon such information and raise the additional assessments in question. (See Eliades v. The Republic (1985) 3 C.L.R. 1904).
Needless to say here that this Court in cases of tax review has the same jurisdiction as in any other field of administrative recourse. It is confined to a review of the legality of the action of the administration within the sphere of their lawful authority. Provided they operate within the framework of their powers the administration is the judge of the fact finding process. And if the inquiry into the facts is the due and proper in the circumstances and the decision one reasonably open to them, the Court will not interfere with such appreciation as a proper exercise of their powers. (See Lillian Georghiades v. The Republic (1982) C.L.R. 659).
As regards the conclusion of the respondent Commissioner that the account in question belonged to the applicant, I find that the assertions advanced by his counsel in his written address that the information in question was never passed over to the applicant so that he might adduce evidence to contradict same is untenable, as it is evident from the affidavit of Mr. P. Panayides and its attachments (Exhibit 2).
Nor can I accept the allegations contained in the affidavit of Mr J Karaviotis that the true owner of the account was the late Anna Charalambous for it is obvious from the information slip that the account in question belonged to Mr. A. Charalambous and not to Mrs or Miss A. Charalambous. An additional reason why this affidavit should be ignored is because its contents were never placed before the respondent Commissioner when the same assessments were made.
It may be said here that a review by this Court is restricted to the evidence that was before the administrative organ and does not extend to material which is produced for the first time at the hearing of the recourse (See Andreas Xiros v. The Republic (1985) 3 C.L.R. 971; Athinoulla Th. Ieronymides v. The Republic (1988) 3 C.L.R. 2657.
On the other hand as far as the actual assessment by the respondent Commissioner is concerned, I consider that the information received by him that the slip bearing the applicant's name, address and "amount of interest paid or credited during the year ended 5th April 1980", is not conclusive evidence that the applicant, as stated in the letter of the respondent Commissioner of the 21st December 1985, had an amount of £5,000 invested or that such account existed during the years 1975-1980 in respect of which he received £400 interest annually. As there does not appear that the respondent Commissioner conducted an inquiry to lead him to the above conclusion or to give any reasons for this, I consider that this part of his decision must be annulled for lack of due inquiry and insufficient reasoning the maximum that could safely be inferred would be that interest for that year had been earned, it might have given to the whole case a different context had there been slips with earned interest for more than one year. (For a somehow similar approach see Solomonides v. The Republic (Commissioner of Income Tax) (1968) 3 C.L.R. 105).
For the above reasons the recourse succeeds in respect of this ground, but I make no order as to costs.
Sub judice decision annulled. No
order as to costs.