Chairman Of The Board Of Inland Revenue Vs Joseph Rezcallah & Sons Ltd (1962)

LawGlobal-Hub Lead Judgment Report

UNSWORTH, F.J

This is an appeal from a decision of the High Court of the Northern Region of Nigeria dismissing a claim by the chairman of the Board of Inland Revenue for a sum of £2,520, being income tax and penalties for the years of assessment 1958-59 and 1959-60. The reason for the decision was that the two assessments upon which the claim was based were not made in accordance with law because:-

(a) In neither case did the plaintiff prove that the defendants were given notice requiring them, within the period limited by the notice, to deliver a return of income:

(b) The Chief Inspector of Taxes did not exercise his discretion to the best of his judgment in making the assessment under section 53(3) (section 55(3) of the revised edition) of the Income Tax Act.

The appellant appealed to this Court and filed and argued the following grounds of appeal:

(a) The learned trial Judge erred in Law in holding that the merit and/or legality of the assessments were matter which could be raised in a proceeding for recovery of the tax in the High Court.

(b) The learned trial Judge erred in law in the following passage of his judgment:

‘Accordingly I do not agree with the submission of Counsel for the plaintiff that it is entirely irrelevant how the Chief Inspector made the assessments under section 55(3) because if he did not exercise his discretion properly it follows that he did not make the assessments in accordance with law, and this claim, which is based upon those assessments, must fail’.

(c) That the learned trial Judge erred in law in that as there was no objection against the assessment and no appeal to the Appeal Commissioners on the assessment the amount of tax assessed (notwithstanding an omission to prove the service of a Return) became an absolute and conclusive debt due to the Government of Nigeria.

Counsel for the appellant, at the opening of the appeal, applied for the title of the case to be altered to the ‘Federal Board of Inland Revenue’ and this was not opposed by Counsel for the respondents. We granted this application in the exercise of our powers under section 22 of the federal Supreme Court Ordinance.

Council for the appellant then applied for leave to produce the assessments as additional evidence, and in so doing, asked the Court to waive the requirement of notice. This application was opposed by Counsel for the respondents. In reply to the court, Counsel for the appellant agreed that the evidence could have been adduced before the High Court. We did not grant this application and counsel for the appellant then withdrew an application for leave to argue additional grounds of appeal.

Counsel for the appellant said that the facts found by the trial Judge were not in dispute. The issue before us was whether the trial Judge was entitled to consider the validity of the assessment, having regard to the fact that the special procedure for appealing against an assessment had not been followed.

It is convenient at this stage to refer to the sections of the Income Tax Act which will be mentioned in this judgment. The Act is now contained in a revised edition of the Laws, and Counsel agreed that the provisions in this edition are the same as those in the old edition, which was referred to by the trial Judge, subject only to amendments which apply to both editions. I will therefore refer to the sections in the old edition, but insert after each section number the corresponding section number in the revised edition. Section 45 (47 revised) provides that every person chargeable with tax for any year of assessment, when required to do so by any notice in writing given by the Board in pursuance of the Act, shall, within the period limited by such notice, in the form of return containing such notice, prepare and deliver to the Board a true and correct statement in writing containing the particulars specified in the section. Section 53 (55 revised) provides in subsection (1) that the Board shall proceed to assess every person chargeable with the tax as soon as may be after the expiration of the time allowed to such person. The procedure for assessing a person after the expiration of that time is set out in subsections (2) and (3) of that section. Sections 59 and 60 (61 and 62 revised) provide for an appeal against an assessment to the appropriate appeal commissioners. There is a further appeal to the High Court except in cases in which the amount of tax assessed does not exceed £100. Section 61 (63 revised) provides that where no valid objection or appeal has been lodged within the prescribed times against an assessment as regards the amount of the chargeable income the assessment shall be final and conclusive for all purposes of the Act as regards the amount of such income.

Council for the appellant submitted that the Court had no inherent jurisdiction to declare the assessment invalid in the proceedings for the recovery of the tax. He said that if a statute creates new rights and duties and appoints a specific tribunal to decide disputes on matters under the statute, then the ordinary courts are not vested with any inherent jurisdiction to inquire into those matters: recourse must be had to that specific tribunal alone and this is particularly so where a right of appeal from the tribunal is still allowed to the aggrieved parties. Counsel submitted that the prescribed procedure was contained in section 59 (61revised) and 60 (62 revised) of the Act, and that the combined effect of these sections and section 61 (63 revised) is that as assessment to which there had been no objection and no appeal, becomes final and conclusive not only as to the amount of the tax in that assessment, but for all purposes of the Income Tax Act, and such assessment cannot be challenged in a suit in the High Court for the recovery of the tax so assessed. In support of this submission he referred to the case of Inland Revenue Commissioners v. Pearlberg, (1953) 1 A.E.R. 388, as page 389, and to the Nigerian case of Commissioner of Income Tax v. Rewance, (Lagos Court Suit No. 511/1952 and W.A.C.A. 127/1954). He also, very properly, drew our attention to the Privy Council decision in Mandavia v. Commissioner of Income Tax. (P,C, Appeal No.7 of 1957). Counsel also, in the course of argument raised two further matters, to which I will refer later in this judgment.