THE INCOME TAX CASE.

West Coast Times, 4 August 1910, Page 4

THE INCOME TAX CASE.

THE APPEAL PROCEEDINGS.

[WR PMPB ASSOCIATION.—COPYRIGHT.]

CHRISTCHURCH, August 3,

The hearing of the appeal of Bowron Bros., against their conviction and fin,, of £IOO, plus the amount of the income tax alleged to have been evaded (£33,000) was resumed after lunch yesterday and continued all the afternoon and was again- continued this morning. . Mr Russell continued with the object of showing that the position of the firm in regard to the London transactions had not been revealed. Sir Robert Stout said that Mr Russell would have to show what was a correct statement for the year for which the return >vas made. It was not enough to show the possibility of an error in the balance sheets. He must show actual errors. Mr Russell continuing, indicated the outlines of the. case to he submitted in evidence.

C. M. Ollivier, accountant, stated that the business was converted into a company on July 31st, 1907, with a capital of £208,500. On October Ist, 1901, the capital was £87,407. There was, therefore, an accretion to capital or profit of £121,093. George Bowron, one : of the defendants, stated that £37,000 was a _ bad debt and had been absolutely written off. The, firm did not set off the £33,000 reclamation which they sent home as the London firm was so badly affected by the American,,commercial crisis that it might have gone . down without the money. Towards the end of 1907, owing to the American crisis, there was a big drop in prices and the firm lost about £50,000 on consignments. The firm always believed they rather overpaid, than underpaid income tax. On making up the return for 1905 they found the profits were £50,000 or £60,000 and deducted the bad debt of £37,500 leaving a net profit of about £IB,OOO. One reason for doing this was that he did not wish anyone to know his brothers were in a bad way. He had no desire to put any statutory difficulty ill the way of the Department getting all they were' entitled to, and the firm gave Mr Tyers every assistance to get all possible information.

George Bowron, in the course of cross-examination, said that he visited London in 1904 and concluded that Bowron Bros., of London were unfinancial and their debt to the Christchurch house a bad one.

Mr Stringer said that the prospects of the proposed company estimated the profits of tho London Arm at £SOOO in 1902, £24,000 in 1903 and

£16,000 in 1904. , Bowron suggested that these profits were what would have been made if there had been no interest and othercharges to pay. In making the return for 1905, he estimated the profits at £50,000 or £60,000 and deducted £37,000 for the bad debt of the London firm. George John Smith (a member of the Legislative Council) gave evidence that he had never kept the books. When employed by Bowron Bros., as clerk he had done work in the office and outside. Later he joined the firm. Bowron’s practice, in making a return of income, had been continued. Modlin, an accountant sent out from London in 1904, had said that the books of the firm were not properly kept, blit Smith said that he had not known himself till lately how bad they were. Mr Smith continuing, said that Modlin was engaged by a London firm, not a Christchurch firm and witness did not think it necessary to check his figures, He did not realise that they purported to be an accurate statement of the firm’s income and even now he did not believe them correct. He was quite satisfied from what Bowron saw that the London debt was bad, but he had not this information when the 1904 return was made up. He had no intention to try- and evade taxation. He thought that if the taxation paid on the full sum the spirit of law if not

letter had been complied with. In regard to Tyer’s figures he had been so upset by the charge of fraud that he

had assumed the figures were correct, and would have been prepared to pay whether he was in error or not rather than suffer tho agony he had experienced during the past few months, tie had never desired to deceive. Tyers had gone home to raise money on preferred stock and had then presented to tho financiers draft of the returns to show the firm’s income.