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ÐÁÃÊÕÐÑÉÏÓ ÄÉÊÇÃÏÑÉÊÏÓ ÓÕËËÏÃÏÓ
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(1983) 3 CLR 1113
1983 December 3
[A. LOIZOU J.]
IN THE MATTER OF ARTICLE 146 OF THE CONSTITUTION
ACHILLEAS NICOU,
Applicant,
v.
THE REPUBLIC OF CYPRUS, THROUGH
THE MINISTRY OF FINANCE AND/OR
THE COMMISSIONER OF INCOME TAX,
Respondents.
(Case No. 290/81).
Facts-Assessment of, by the Administration-Judicial control-Principles applicable.
Income-tax-Assessment-Judicial control-Principles applicable.
The applicant was a builder by profession and in February 1981 a file was started and he was asked to call at the Income-Tax Office for an examination of his income-tax liabilities. He called on the 30th March 1981 and in order to establish the assessable income for the aforesaid years a statement of his assets and liabilities, as at 1st January 1974 to 31st December 1980, was obtained from him. Upon the basis of the said statement of assets and liabilities, the total assessable income for the aforesaid period before the deduction of any special contribution payable by him was estimated at £13,000. Applicant was assessed to pay income-tax on this amount and hence this recourse.
Counsel for the applicant urged that the sub judice decisions should be annulled as on the one hand they offended Articles 24.1 and 28 of the Constitution and on the other hand they were wrong in Law as having been reached without due inquiry, they were not duly reasoned and they were reached under a misconception of fact.
There was disagreement between the two parties regarding the items considered in raising the assessment in question, and there was affidavit evidence from both sides.
Held, (1) that the administration's assessments of facts is not subject to judicial control by an administrative Court on a recourse for annulment; and that, therefore, the factual situation as stated on behalf of the respondents will be accepted.
(2) That in recourses against an assessment of income-tax under Article 146 of the Constitution, this Court will not interfere with the sub judice decision of the Income-Tax Authorities when it comes to the conclusion that such a decision was reasonably and properly open to them on the basis of the corrected facts and in the light of the correct application of the relevant legislation and principles of law; that the burden of proof to satisfy the Court that it should interfere with such a decision lies always on an applicant; that the applicant has not discharged the burden of satisfying this Court that it should interfere with the sub judice decisions which were reasonably and properly open to the respondent Commissioner.
(3) That nothing has been established to show any violation of Article 24.1 of the Constitution and that Article 28 has no relevance in the matter; accordingly the recourse should fail.
Application dismissed.
Cases referred to:
Republic v. Georghiades (1972) 3 C.LR. 594 at pp. 692-695;
Makrides v. Republic (1967) 3 C.L.R. 147;
Clift v. Republic (1965) 3 C.L.R. 285;
Christides v. Republic (1966) 3 C.L.R. 732;
Coussoumides v. Republic (1966) 3 C.L.R. 1;
Georghiades v. Republic (1980) 3 C.L.R. 524 at pp. 544-545; and on appeal (1982) 3 C.L.R. 659 at pp. 667-669;
Ionides v. Republic (1980) 3. C.L.R. 1;
Antoniades and Others v. Republic (1979) 3 C.L.R. 655.
Recourse.
Recourse against the income tax assessment raised on the applicant for the years 1975-1980.
A.S. Angelides, for the applicant.
M. Photiou, for the respondents.
Cur. adv. vult.
A. LOIZOU J. read the following judgment. By the present recourse the applicant challenges the validity of the decision of the respondent Commissioner to impose on him income-tax for the years of assessment 1975-1980 (years of income 1974 to 1980), which were raised and determined as follows:
Year of Assessment 1975 Amount £987 Tax Payable 12.075
Year of Assessment 1976 Amount 400 Tax Payable __
Year of Assessment 1977 Amount 1,307 Tax Payable 36.600
Year of Assessment 1978 Amount 1,771 Tax Payable 84.125
Year of Assessment 1979/78 Amount 2,343 Tax Payable 83.400
Year of Assessment 1979/79 Amount 2,800 Tax Payable 170.700
Year of Assessment 1980 Amount 3,100 Tax Payable 221.375
The applicant is a builder by profession and in February 1981 a file was started and he was asked to call at the Income-Tax Office for an examination of his income-tax liabilities. He called on the 30th March 1981 and in order to establish the assessable income for the aforesaid years a statement of his assets and liabilities, as at 1st January 1974 to 31st December 1980, was obtained from him, upon the basis of the said statement of assets and liabilities, the total assessable income for the aforesaid period before the deduction of any special contribution payable by him was estimated at £13,000. An offer to assess him for the aforesaid years of assessment at that figure made up year by year as set out in paragraph 4 of the opposition, was turned down by the applicant, who claimed that the costs of a house built by him during the period under examination was excessive. As the applicant failed to accept the proposed assessments, assessments were raised and notice to that effect was sent to the applicant on the 30th May 1981, to which assessments the applicant objected on the ground that they were excessive. The respondent Commissioner, after an examination of the case arrived at the conclusion that the assessments raised for the said years were fair and reasonable and his decisions on the matter were communicated to the applicant by letter dated the 15th July 1981, Appendix B. In so far as relevant it reads as follows:
"Capital (IS On 1.1.1974
Vehicles GC219 and GU743 £2,100
Residence at Dassoupolis £7,000
£9,100
Less: Creditors 600 8,500
Capital as on 3 1.12.1980.
Cash 100
Deposits 200
Furniture 300
Vehicles KX890 and GN455 4, 100
Concrete mixer and various tools 450
Residence at Strovolos (including 11, 500
cost of building-site £4,500)
£16, 650
Less: Creditors 3, 900 12, 750
Increase of capital during the 4, 250
period 1.1.1974 up to 31.12.1980
Plus: Expenses for the maintenance
of your family 9, 750
Capital loss for the vehicle
purchase price £1,400 sale price £1300 100
£14,100
Less: Capital provided for the vehicle
GU743 (purchase price £700 sale
price £800) 100
Amount earned from salaried employment
at Libya 1, 000
Income of period 141.1974 - 31.12.1980 £13, 000"
On the 28th August 1981, the applicant accompanied by his advocate called on Mr. K. Kyprianou, Principal Assessor in regard to the said assessments. Applicant's case was discussed against and the said officer for the sake of settlement agreed to reduce the said total assessable income of £13,000 by £1,000. The applicant and his counsel said that they would consider and inform Mr. Kyprianou accordingly, but there has been no response on behalf of the applicant and instead the present recourse was filed.
It is the case for the applicant that the assessments raised on the applicant for the payment of income-tax on an income of £13,000 are arbitrary and not based on the principle of contribution proportionate to his means. It is further claimed that there has been no due inquiry, there has been a misconception of fact and the sub judice decision is not duly reasoned.
The main points of disagreement regarding the items considered in raising the assessments in question are (a) that the house at Dassoupolis was sold at £7,680.- and not at £7,000; (b) the house that the applicant built after he sold the house of his. wife at Dassoupolis was not of a total cost of construction of £7,000 until the 31st December 1980, but it had only cost £2,940 plus the cost of the remuneration of the work of the applicant and that the building site was bought not for £4,500.- but £4,000; (c).the cost of maintenance of his family was not £9,750.-because he claims that he never had at his disposal such amount in order to dispose for the purpose; and (d) his income from his overseas employment was not £ 1 ,000 but £1,366.- as verified by his employer.
It was argued that the sub judice decisions should be annulled as on the one hand they offend Articles 24.1 and 28 of the Constitution and on the other hand they are wrong in Law as having been reached without due inquiry, they are not duly reasoned and they were reached under a misconception of fact.
There has been in this case affidavit evidence on both sides and I may briefly say that where there is a divergence I accept the factual situation as stated on behalf of the respondents whose judgment on the substance could not be questioned as there is ample authority with regard to the non reviewability of the determination on the merits in respect of which I dealt at length in the case of The Republic, through The Public Service Commission v. Lefkos Georghiades (1972) 3 C.L.R. 594, at pages 692-695. Suffice it to say that the administration's assessments of facts is not subject to judicial control by an administrative Court on a recourse for annulment. (See Zacharopoullos "Digest of Caselaw" (1935-1952), Vol. 1, at p. 41, para. 251 under the heading "Non-reviewability of the Determination on the Merits" and the numerous decisions of the Greek Council of State cited in support of the aforesaid proposition). See also The Digest of Decisions of the Greek Counci1 of State for the years 1961-1963, Vol. 'A'. (A-N) p. 77, which may be condensed as follows:
"The ground for annulment directed against the administration's determination of the facts is rejected as unacceptable or, questioning such determination on the merits, since same is not proved to be the product of a misconception of the facts or in excess of the extreme limits of the discretionary powers of the administration. Moreover, the ground for annulment referring to the inefficiency and misconception of the reasoning of the act against which the recourse is directed and attacking the determination of the facts made by the administration without exceeding the extreme limits of its discretionary powers is rejected as unacceptable".
Needless to say that one should not lose sight of the fact that the applicant himself failed to submit at the appropriate time his returns of income which would inevitably contain matters that would have been within his exclusive knowledge and which could be duly, investigated by the respondent Commissioner A tax-payer that fails or neglects to submit the income tax returns takes upon himself the risk of having his assessable income, arrived at by n inquiry, which in the present case could not but have been the best possible.
Moreover under section 13(3) of the Assessment and Collection of Taxes Law 1978-1979, in cases where a person has not delivered a return and the Director is of the opinion that such person is liable to pay tax to the best of his judgment, the Director may determine the object of the tax and assess such person according to the nature and extent of his business. Hence the legal foundation for the sub judice acts and the manner in which they were arrived at.
With regard to the four factual points disputed by the applicant counsel for the respondent has dealt extensively in his written address and in respect of the house at Dassoupolis accepts the contention of the applicant that the said house was sold at £7,680.-and not £7,000.-as assessed by them and therefore undertakes to reduce the taxable income of the applicant by £680.- i.e. the difference. As far as the income which the applicant has earned in Lybia the respondents accept the certificate of the applicant's employer as correct to the effect that the applicant earned £1,366 but this is not automatically deductible. What is deductible is the 90% of the money imported to the Republic as provided by section 8 paragraph (X) of the Income-Tax Laws 1961-1981 and it is claimed by them that it is improbable that the applicant remitted all that amount to Cyprus, the £1,000 deducted by the respondent having been found to be favourable to the applicant. They have conceded, however, that if he insists that he remitted all £1,366 and brought to that effect all necessary proof, then the respondents undertake to allow the difference. This has not as yet been done and therefore I cannot interfere with this amount.
It is clear from the aforesaid exposition of the facts that the respondent has carried out a due and proper inquiry into the factual aspects of the case, that the sub judice decision is duly reasoned and that there is neither misconception of law or fact. It is well settled that in recourses against an assessment of income-tax under Article 146 of the Constitution, this Court will not interfere with the sub judice decision of the Income-Tax Authorities when it comes to the conclusion that such a decision was reasonably and properly open to them on the basis of the corrected facts and in the light of the correct application of the relevant legislation and principles of law. The burden of proof to satisfy the Court that it should interfere with such a decision lying always on an applicant. (See Rallis Makrides v. The Republic (1967) 3 C.L.R. 147; Clift v. The Republic (1965) 3 CL.R. 285; Christides v. The Republic (1966) 3 C.L.R. 732; Coussoumides v. The Republic (1966) 3 C.L.R. 1, adopted and followed in Lilian Georghiades v. The Republic (1980) 3 C.LR. p. 525 at pp. 544-545, which latter case was approved on appeal by the Full Bench of this Court, its judgment reported under the same name in (1982) 3 C.L.R. p. 659 and where at pp. 667-669 it is inter alia stated:
"Unlike the powers vested in the District Court before independence to adjudicate upon a taxation assessment by s. 43-Cap. 233-and earlier by virtue of s. 39 of Cap. 297 (of the old edition of the Statute Laws of Cyprus), the Supreme Court has no jurisdiction to go into, the merits of the taxation and substitute, where necessary, its own decision. The power of the Supreme Court is limited, as indicated, to the scrutiny of the legality of the action, and to ascertain whether the administration has exceeded the outer limits of its powers. Provided they confine their action within the ambit of their power, an organ .of public administration remains the arbiter of the decision necessary to give effect to the law; and so long as they make a correct assessment of the factual background and act in accordance with the notions of sound administration, their decision will not be faulted. In the end, the Courts must sustain their decision if it was reasonably open to them."
In the present case, I have no difficulty in concluding that the applicant has not discharged the burden of satisfying me that I should interfere with the sub judice decision which were reasonably and properly open to the respondent Commissioner.
On the question of the alleged violation of Articles 24.1 and 28 of the Constitution, nothing has been established to show any violation of Article 24.1 which provides that every person is bound to contribute according to his means towards the public burdens, could not in the circumstances of this case be invoked as the tax imposed is fully justified as being a contribution according to ones means (see Matsis v. The. Republic (1969) 3 C.LR. 245; lonides v. The Republic (1980) 3 C.L.R. 1).
Article 28 which deals with the question of discrimination and unequal treatment has no relevance in the matter. (See Antoniades and others v. The Republic (1979) 3 at p.655 et seq).
For all the above reasons and subject only to the respondent making adjustments by reducing the taxable income of the applicant by £680 as conceded by him, this recourse fails and is dismissed with no order as to costs.
Recourse dismissed with no order as to costs.