Supreme Court DISMISSAL OF TAX CHARGES UPHELD

Press, Volume CII, Issue 30173, 3 July 1963, Page 21

Supreme Court DISMISSAL OF TAX CHARGES UPHELD

An appeal by the Commissioner of Inland Revenue against the dismissal in the Magistrate’s Court of four aharges against George David Hungerford, a Ministry of Works employee, of wnlftilly falsifying income returns was rejected by Mr Justice Wilson in the Supreme Court yesterday. Mr C. M. Roper appeared for the appellant, and Mr R. W. Edgley for Hungerford. Mr Roper said that Hungerford owned and let as flats a number of properties. To assist in the purchase at some of these properties Hungerford borrowed money from Mrs Annette Clifford. In return, Hungerford assigned to Mrs Clifford the right to collect the rents from two properties until the parties should agree that the debt was extinguished. The Crown claimed, and this was not disputed by the defendant, that this abatement of advances represented income in Hungerford’s hands. The question was whether Hungerford should have realised that this was income in his hands, and should have disclosed it in his returns. This abatement of advances, Mr Roper said, accounted for £1435 of the £2357 deficiency claimed by the department in Hungerford's returns of income. The other £922 referred to understatements of rents received in 1954, 1955. and 1956, the Crown claimed. “Misdirected Himself” The Crown claimed that the magistrate had misdirected himself as to the nature of the Crown case, and that he wrongly rejected evidence and allowed himself to be influenced by matters that were not in evidence.

The magistrate’s decision and comments suggested that he thought the Crown was alleging that Hungerford should have returned as in-

come the whole of the rents received by Mrs Clifford from the two properties. The Crown had in fact claimed only that he should have returned that amount that was considered an abatement of the loans. “I am satisfied that the learned magistrate did misunderstand the nature of the commissioner’s case in this regard,” his Honour said in his decision.

In dismissing the appeal insofar as it referred to the abatement of loans, his Honour said that he was not entitled to reject the magistrate’s conclusion, even though it now appeared as though he had reached it by a wrong route. "Conclusion Correct”

“Having found that the learned magistrate has in some degree misunderstood the charges, I am still satisfied that the conclusion at which he arrived was the correct one,” his Honour said. "He had the advantage of seeing the taxpayer in the box and of assessing his honesty as a witness.” A layman such as Hungerford would not necessarily have known that he was obliged to return as income the amounts of yearly abatement of the loans made to him by Mrs Clifford, his Honour said. On the matter of the alleged understatement of income received by rents, Mr Edgley submitted that the figures had been arrived at by the department’s overestimating Hungerford’s living expenses when it was trying to estimate his income on the assets-accretion basis. Although the taxpayer’s evidence was not satisfactory it was not established to his satisfaction that the deficiency which was shown in the department’s accounts was attributable to wilful failure to disclose income, said his Honour.