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TMI Blog1958 (12) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... fore coming to the facts. Section 40 of the Act provided: (1) Any person who--(a) makes default in furnishing a return, or fails to give notice to the commissioner as required by the provisions of section 59, in respect of any year of income shall be chargeable for such year of income with treble the amount of tax for which he is liable for that year under the provisions of sections 36 to 39 inclusive; or (b) omits from his return for any year of income any amount which should have been included therein shall be chargeable with an amount of tax equal to treble the difference between the tax as calculated in respect of the total income returned by him and the tax properly chargeable in respect of his total income as determined after including the amounts omitted, and shall be required to pay such amount of tax in addition to the tax properly chargeable in respect of his true total income. (2) If the commissioner is satisfied that the default in rendering the return or any such omission was not due to any fraud, or gross or wilful neglect, he shall remit the whole of the said treble tax an in any other case may remit such part or all of the said treble tax as he may think fit. (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n charged, and the provisions of this Act as to notice of assessment, appeal and other proceedings under this Act shall apply to such assessment or additional assessment and to the tax charged thereunder:--Provided that (a) where any fraud or wilful default has been committed by or on behalf of any person in connexion with or in relation to tax for any year of income, the commissioner may, for the purpose of making good to the revenue of the Territories any loss of tax attributable to the fraud or wilful default, assess that person at any time; (b) an objection to the making of such assessment or additional assessment on the ground that the time limited for the making thereof has expired shall only be made on object or appeal as provided for under the provisions of this Act. On the view which the Board took in this appeal no question as to penalties arose at present. It was therefore undesirable to deal with facts which on that issue might hereafter require consideration. The appellant had been resident in Kenya since 1921. According to his own statement he approached the Revenue authorities in 1943. This was disputed, but it was not disputed that prior to 1953 he was not se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be issued to your Nairobi address and you will presumably be advised of their receipt and be able to give formal notice of appeal if you so desire. I am unable to agree that you are not in a position to pay any deposit. On your own showing you have substantial properties in Nairobi, from which presumably you could obtain funds. In these circumstances I would repeat my request for a payment on account of 2,000. If this is sent to me at this address, it will be brought to account against the estimated assessments which it is proposed to raise, and final payment will be adjusted at a later date. Yours faithfully, REGIONAL COMMISSIONER.', The assessments referred to were made on or before June 18. They were post-dated June 26, but nothing turned on that. Assessments were often post-dated to allow the taxpayer more time. The taxpayer submitted that these assessments were ultra vires and void in that they were made before the time allowed by section 71 had expired. This was admitted by the respondent if the power to make these assessments had to be found under that section. The respondent justified the assessments under the words of section 72, Where it appears ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alternatives, and the commissioner may use one or the other, but he cannot use both at the same time, and here the appellant was served with a notice under section 59(1), and section 71 operates. On the point that the two sections cannot be operated at the same time, see Gould v. Bacup Local Board [1881] 50 L.J.M.C. 44, 47 and Bedford and Cambridge Railway Co. v. Stanley [1862] 2 J. H. 746. The correct way of looking at the matter, however, is the first way, and the machinery of section 71 must operate in every case before the commissioner can use section 72. Section 71 is all-embracing; the assessee either makes a return or he does not, and, if not, he is assessed under subsection (3) of section 71. [Reference was also made to Drummond v. Collins [1915] A.C. 1011, 1017; 31 T.L.R. 482 , Astor v. Perry; Duncan v. Adamson [1935] A.C. 398, 417; 51 T.L.R. 325 and Russell (Inspector of Taxes) v. Scott. [1948] A.C. 422, 433; 64 T.L.R. 297; [1948] 2 All E.R. 1. ] Peter Rowland following. Section 72 is supplementary to section 71 and is of very limited application; it fills a gap. If the commissioner though that the appellant might not return to the country, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 71 is the normal section which has to be put into operation in every case. Section 72 must be read in the light of section 71, and is qualified by it. December 1. The judgment of their Lordships was delivered by LORD SOMERVELL OF HARROW, who stated the facts set out above and continued: The question of ultra vires is a difficult one and their Lordships have been much assisted by counsel on each side. The appellant before the Board submitted that: (1) section 72 did not apply until the machinery under section 71 had been put into operation and that the assessments were therefore ultra vires; (2) alternatively, that if sections 71 and 72 were alternatives, the respondent had elected to give notice under section 59 and could not then operate section 72 during the currency of the time allowed ; (3) that the Court of Appeal had not judicial considered the question of wilful default or neglect under sections 40 and 72, or, alternatively, that in any event the whole sum assessed as penalties should be remitted to the Supreme Court. If he succeeds on his first submission points (2) and (3) do not arise. the arguments on the first point may be summarized as follows. The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment, or other statutory authority, are capable of being, through perversity, misused, it does not follow that they are likely to be misused, and much less does it follow that they should be construed in an unnaturally restricted sense merely because of the theoretical danger of misuse. Their Lordships have come to the conclusion that the construction submitted by the appellant is right for the following reasons. If the power to make an assessment under section 72 applies to the making of an original assessment their Lordships are unable to simply a term restricting it to back cases or making it ultra vires to operate it at any time. One would expect an opportunity to make a return to be a condition precedent to assessment. This is supported by the provisions for personal allowances in Part VI of the Act. If the respondent is right any person can be assessed without having any such opportunity. There would be two concurrent jurisdictions, one providing reasonable protection for the taxpayer and the other providing no protection quote the original assessment, apart from a right to appeal. Such a construction seems to their Lordships inconsistent with the general and mandatory ..... X X X X Extracts X X X X X X X X Extracts X X X X
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