Income Tax Ordinance-Section 65: Offence of failure to pay tax-Section 76:. Effect of acquittal-Who may prosecute-Criminal Procedure Ordinance, section 59.

Sections 65 and 76 of the Income Tax Ordinance read as follows:-

" 65. (1) Subject to the provisions of sub-section (3), if any tax is not paid

within the periods prescribed in section 63-                      .

" (a) a sum equal to five per centum of the amount of the tax payable shall be added thereto, and the provisions of this Ordinance relating to the collection and recovery of tax shall apply to the collection and recovery of such sum;

"(b) the Commissioner shall serve a demand note upon the person assessed; and if payment is not made within one month from the date of the service of such demand note, the Commissioner may proceed to enforce payment as hereinafter provided;

" (c) a penalty imposed under this sub-section shall not be deemed to be part of the tax paid for the purpose of claiming relief under any of the provisions of this Ordinance.

" (2) Any person who without lawful justification or excuse, the proof whereof shall lie on· the person charged, fails to pay the tax within the period of one month prescribed in paragraph (b) of sub-section (1), shall be guilty of an offence against this Ordinance.

" (3) The Commissioner may, for any good cause shown remit the whole or any part of the penalty due under sub-section (1).

"76. The institution of proceedings for, or the imposition of, a penalty, fine or term 'of imprisonment under this Ordinance shall not relieve any person from liability to payment of any tax for which he is or may become liable. "

And section 59 of the Criminal Procedure Ordinance provides that:-

"59. (1) Any person may make a complaint against any other person alleged to have committed or to be committing an offence, unless it appears from the enactment on which the complaint is founded that any complaint for such offence shall be made only by a particular person or class of persons, in which case only the particular person or a person of the particular class may make such a complaint.

" (2) Notwithstanding anything to the contrary contained in any Ordinance a police officer may make a complaint in a case of assault even though the party aggrieved declines or refuses to make a complaint."

The appellant was charged as a defendant before the Magistrate on four counts under section 65 of the Income Tax Ordinance, for failing to pay assessments of tax made on him (including penalties) as follows:-

(1) £496 odd for 1941-42;

(2) £353'odd for 1942-43;

(3) £340 4s. 0d. for 1943-44;

(4) £427 13s. 9d. for 1948-49. [ pg 26 ]

Counts (1) and (2) were withdrawn and a verdict 'of acquittal was entered on them; counts (3) and (4) were amended, and the defendant was convicted thereon. He failed in his appeal to the Supreme Court and appealed further.

The assessments began with £473 for the year 1941-42. In 1947 the appellant offered £402 odd in full settlement for the years 1940 to 1945; he had paid £102 odd and he sent a cheque for £300. He was sent a receipt for the £102 odd" on account of Income Tax 1941-42 ", and another receipt for £300 " on account of Income Tax 1945-46 ", the latter receipt bearing an endorsement on the back by the Assistant Commissioner of Income Tax in these terms: " Receipt is for the years of assessment 1940-41, 1941-42, 1943-44 and 1944-45 and 1945-46."

For the appellant it was argued, in regard to this endorsement, that the tax of those years was settled: (the purport of the argument was that count 3 was wiped out). But he knew that his offer could not be accepted except by the Commissioner of Income Tax himself and that no such acceptance was made.

It was also argued for him that no part of the £402 odd paid by the. appellant could be referred to the tax of 1941-42 or the tax of 1942-43; that £402 was more than the £340 odd, tax for 1943-44 (for which he was convicted on count 3) and he must be deemed to have paid that £340 odd; and that counts (1) and (2) relating to the years 1941-42 anel1942-43 having been withdrawn and a verdict of acquittal entered, no part of the £402 odd paid could be referred to those two years.

With special reference to count (4)-the year 1948-49-it was argued that the Assistant Commissioner of Income Tax was not competent to prosecute.

Held: (1) In view of section 76 of the Income Tax Ordinance an acquittal on a charge under section 65 for failure to pay does not operate as a discharge of the debt unless the acquittal was on account of payment-which was not the case in regard to the counts relating to the tax for 1941-42 and the tax for 1942-43.

(2) The receipt for £300 was on the face of it a receipt on account, and according to the endorsement it was in respect of the years 1940-41, 1941-42, 1943-44, 1944-45, and 1945-46. The £300 Plus the £102 odd paid earlier, making up £402 odd, did not discharge the tax for 1940-41 even, which was £473. There was failure to pay the tax and penalty for 1943-44 of which the appellant was convicted.

Held also: The Income Tax Ordinance does not say who may make complaint for an offence thereunder. By virtue of section 59 of the Criminal Procedure Ordinance any person may make complaint.

Appeal by defendant in a criminal case from decision of Supreme Court

dismissing his appeal from the Magistrate: No. 3688.

J. I. C. Taylor for Appellant.

E. N. Egbuna, Crown Counsel, for Respondent.

The following judgment was delivered:

Verity, C.]. This is an appeal from a decision of the Supreme Court affirming on appeal convictions in a Magistrate's Court for offences contrary to section 65 of the Income Tax Ordinance (Cap. 92).

The first count charges that the appellant failed to pay the sum of £340 4s. 0d. by way of tax and penalty for the year 1943-44 and the second count with a like failure in respect of £427 13s. 9d. for the year 1948-49.

When the matter first came before the Magistrate there were also two counts charging the appellant with failure to pay £496 19s. 3d. and £353 3s. 4d~ respec­tively for the years 1941-42 and '1.942-43. Certain objections were taken in regard to these counts and leave to make certain amendments thereto was granted, but subsequently the complainant withdrew these counts and a verdict of acquittal was recorded in respect thereof. [pg 27]

Counts 3 and 4 were subsequently amended and the hearing proceeded.

It is clear that the appellant has been assessed for tax for the year 1941-42 at £473 6s. 0d., for 1942-43 at £336 7s. 0d. and for 1943-44 at £324, a total for these three years alone of £l,13313s. 0d., a sum which does not appear to include penalties for non-payment within the prescribed time,

On the 9th May, 1947, the appellant offered to pay £402 ls. 6d. in full settlement of his tax including penalties for the years 1940-41 to 1944-45 and, having previously paid £102 ls. 6d., forwarded a cheque for £300. A receipt had been issued in respect of the payment of £102 ls. 6d. " on account of Income Tax 1941-42 " and a further receipt was issued on 10th May, 1947, for £300 "~n account of Income Tax 1945-46 ". On the 13th May, 1947, the Assistant Com­missioner of Income Tax endorsed on the back of this latter receipt the words " Receipt is for the years of assessment 1940-41, 1941-42,1942"43, 1943-44 and 1944-45 and 1945-46 ".              '

Although nowhere upon the face of the receipt or this endorsement is there any indication whatever that the sum of £300 was received by the Assistant Commissioner of Income Tax in full settlement or as final payment and it is to us perfectly clear that the whole document read together can have no other interpretation than that it is a receipt for £300 paid on account of Income Tax for the years referred to in the endorsement the appellant seems to have conceived the idea and his Counsel to have persuaded the learned Judge in the Supreme Court that it can be interpreted as being an acknowledgment of full settlement of tax for those years and this in spite of the clear meaning of the words" on account of" and in spite of the fact that the appellant knew, as appeared from his letter of 9th May, that his offer could only be accepted by the Commissioner of Income Tax, which acceptance was at no time made.

It is quite clear, therefore, that in so far as the ground of appeal alleging payment rests upon this receipt it must fail. It was further submitted by Counsel, however, that the sum of £402 ls. 6d. not having been specifically allocated to the payment of tax for any particular year and it being in excess of the amount which the appellant is charged with having failed to pay in count 3 the appellant must be deemed to have paid the latter sum. In support of this contention Counsel urged that counts 1 and 2 which relate to non-payment of the tax for years 1941-42 and 1942-43 having been withdrawn and a verdict of acquittal recorded no part of the £402 ls. 6d. can be referable to the tax for those years.

It is sufficient to observe that the offence of failure to pay and prosecution in respect of such an offence are not under the Ordinance related in any way to the recovery of the tax nor does acquittal of such an offence necessarily dis­charge the obligation to pay, as is modified (? indicated) by section 76 of the Ordinance. Only if acquittal made clear from proof of payment would it so operate and there is no such suggestion in the present case,. It is abundantly clear that the only sums paid in respect of the whole period from 1941-42 to 1945-46 are the sums of £102 ls. 6d. and £300 paid on account thereof. It having been made clear by the endorsement on the back of the receipt for £300 that this payment was accepted on account of the years of assessment from 1941-42 on­wards it is equally clear that it did not suffice to cover the tax even for the first of those years which, with penalty, amounted to £496 19s. 3d.

It is established by the evidence that the appellant has failed to pay the tax and penalty to which each count relates and was rightly convicted, unless the second ground of appeal argued before us avails.

This "ground alleges that the proceedings are a nullity in that the Assistant Commissioner of Income Tax is not competent to prosecute. Counsel suggested in reply to a question from the Court, that the Commissioner of Income Tax himself alone is competent to institute proceedings. If it be that the Commis­sioner is empowered to do so, then it is apparent -:'hat his deputy or an Assistant [pg 28] Commissioner are also· competent for by section 2·of the Ordinance references to the Commissioner include a deputy or Assistant Commissioner~ for all purposes except the exercise of powers conferred by sections 72, 73 and 77 which are not involved in the present proceedings.