THIRD CONVICTION.

Dominion, Volume 3, Issue 922, 15 September 1910, Page 5

THIRD CONVICTION.

'4.- THE BOWRON CASES. 1FALSE TAX > RETURN. ... ' • ' ■'■; ■ \ ■:'•'■', .-• "NO SHADOW OF DOUBT."v; (By Telegraph.—Presa Association.) • ; Christchurch, September ,'iii . : A further information 'against the firm :-' ofßowron Bros., in .connection with . -.'.' incomo. tax cases, was heard to-day, be- ' ' fore Mr..H. W.' Bishop, S.M.. The ;.de- ; ; : " ; V fendants, George Bow-:;':.; rpn, and Geo. John Smith, 1 were charged ' = ,/. with- knowingly making,"a- ; false .return in. writing oh .November 6, '. *•:/■ ■1908, with regard ; to their income 'for. .the '-.■ -V : ten "months ending July' 31,'1307, thereby; : evading full payment of income:tax..- ' .:; ' ■■■ Mr. T. W.. ■Stringer;. K.C.,. appeared r .: for the Department, and Mr...T. &.. Bus-'■:■■,• sell: for tho defendants.!'. Mr.. I-Stringer ..•:. ~• said that, .in:.the .return made- by .•'■• de-A" ■ • fendants, they showed a' loss ; of 'v and. they, claimed, that that should - be "■■' deducted from the profits of the-Clydevale';i-syndicate, in whichv they wore' concerned.. \ :'.'■• It ..was deducted, and -allowed. Invostiga- -.'■'■ tions,' however, showed ;that, 'instead of a-i ! \ I loss,for. the year, there had"been a- net '"'• ; income .'of •'.£8757:, ss. 9d., : .:and..ihat ;■ the ,'c returu was wrong , : 'to; the; extent''of'■:'..£14,000. : ,The ret'urn : was more -than others which had-■ been before 'the; ,'. Court; "as many.; of the items'agreed .'with'i '■"'. the .books. .'■-..;;, "Sales," however; - were : shown as. .£321,824 2s..sd.s'whereas .tUe'L'>. books showed £3iS,iiS Ks. S'd.-a' dit- : ference of-£25,000 odd.; Taking .'into ac- • ' count, the ■return of other income, ; the'3 : .lv gross, income shown .was ,£28,125 13s. lid.,7 '■■''.'. whereas defendants.returned .£20,083.'": Tho v ;.- deductions made by defendants amounted ' '-■"'' t0';£25;198. Is'.- 6d., hut the"' Department'- --- allowed' only.-,£19,368 'Bs.' 2d.' -The-return-: : •• "'- was really short 0r:,£15,000.'.■--?:':;■

■s''.';■•>;.' ;.V'v ; v H ';; ; William. Morris Tyers. said thai/defend-;/K; ants, showed a.loss, of-j .£5114. oh ■:■ their'' fe business on "the'year,' and/this ducted from .their prbfits'ihthe Clydevale ■~'■/ syndicate,/the Jamount. of : tas'on.'Vthose */* profits, being decided .after the deduction.:' • t of .that amount. 'Witness produced a ebm-C'/ : parative. statement ■'. between' .'• the ; returns '•■ X. and figures 'taken by him : frbin "the^bboks/^. : .Bqwroh Bros.. had ;sold '■ a■'. sharel' in•'. th« ?M% ■Jhfwn;:Extension .to%a'.cbm-,i^;. : pahy,. and should have returned the-pro- /"/;- iits;;on it (JESflOO).'as',,ineo'nie. ''There = were:- iiv also other profits which should have been'.":.': brought: in.-;. .;There was'; a -difference ■in vA ;;ne gross ■income,, of: V; He: consider-iA ed .that the. return/should '/have showed '//''•','• ,a. profit; of but/be' had-'allowed''. .':•" adjustments .amounting .-to- v£9295,-asy; on'// July 30, the'firm-were winding-up.-/This' was more than he should ■ strictly .harei ■ allowed ; under -the/Act. ~\i ■■*■ ;::''i=t :i^v

,:. 'To; Mr. Russell:.: The '■ surplus; oh - ship-■ •■ ; ■;: ments,'; he had; been" informedi-'by 'Mr/v-x:; :^odlin,:. were probably'clients' : surpluses. \'. ; '.:' He informed by Mr. ; Salter that; '■ they :.were.; the.; ; firm's-own': vgoods,. (It :'.••-. might ;be: ,that^;they.;;.were y- allfiVdien'tsf:£'.''"•>? shipments. .'.ln- acase, ; shown to withess;.. '--'i .clients,had:drawn ;d£2ooo:';oh'.a f '6hipme':it,.-•::?' and :.the-;firm had' : drawn: i2loo.^v ; He '' ; - : ; .thoughtVthat/this/showed;'.that'the-h ! Miid : drawn heavily, on clients'; shipments,j.- ;7 contrary;, to '■ statements'!. p'reViously^put'.%"-' : forward.;,-: Witness; couldvhot accept t the A* i? explanation 'that; >the. i'estra' eluded: freight..andC.o'ther;charges ,;■■ :Sur->::. ; :;; pauses'. were::credited,; tovthe firmi'iand.f ::H -nevwhole \treatment; in:, the;;bobks'rwas'o.-.■'•< that' surpluses belonged to : the :firm, and.'' "'■ not;:to-clients -, The-firhi"^made7^sooo-^ c out of the' : Clifton' Syndicate, -and were ■-.:■'. entiUed;to.ipay taxation on-that..- ; .Th'6:/ : v syndicate would deduct/,what it.paid out;;;.; .to;'Bowron'.'Brbs: when ; : : paying.' its,'own:;"; ■■- .taxation..' The return seemed; to him:'to -- ; be throughout, debts". ■-'-• •; 16,000), ; should not 'havfr-rbeen';' written ■;'• l', off, as tliey,;wer'e: not written'off till:four-: :<.. teem month's, later.--;,. He'.-regarded .It'h'e'';.; 1 last; return '.as': the/.concluding '.actJof'';' fraud extending; over-a series of years.-';- : v r.-.This concluded the; proseoution. v >•'" ■■■■■■' 'ii' 1 ■'" ',:;.'--;:,,,/ y..y s e ~., as.yy ;.:;:!:

J^:>;.:'/--' : .'.:'';The;.'DßfflnpßV'f-^^V> > MrV. v ßussell;/ sriidr/that-;"a ;different': method'of; compiling returns 'had beenU adoptedrby departments; for : the 'yea f un-f.' der;review, v.They;had : a competent ac-/ '.■ cbuntant ■'. in.. charge' •- p'f ■. the'.- books, and t ho : ; making '.up'. of. - the returns ; was left -::■ to Mm:;; ■ The .-return; :bf -' the .company ;' agreed .with thezbobkgentries. •: He: had'' : considered-'th'at.gbbds in; Engl and. (sent in,"-'; iau7, and ambunling to £li2fioS) should; not i be ..treated; as. ."sales," ,'■■ and, he- had '' reduced the. amount;;by ;>cfi2o,ooo,-; which"'-■■ was; a J proper.; thing to dbl,.-That was practically, the. whole difference' in/th<j \-, accounts..■:'.'. , -.'-': i : ;V--.;'^-;'■'-.'?■/■ ;:'v-'.;.''v .''.:':.'■'■'' '•'■■;■:■•",'!' "i ; George,; Bowron gave -evidence that,. in.'' 1907,; there was/ a.: cbmpetentr accountant y ilr.. M'Cutcheon) employed, and N; pre-: ; pared the :. return/: ]yila, was ;:in charge-;: ii ; the \books,; and;. in. due course,, her pre- •'; sented ;the;:i-eturh: to' witness,'--aiid.'/hs ' signed- it./: ;Mr. ;; M'Cutoheon in';-'England. : ;V;-i-; i . had .been .■: looked ; . ;,■ up, -~ and;!:;, "-as .-.■■■ far as,., witness;-coultt "eeej : |.thev^ ; » .agreed:.with' the'■' books. ■. In' 1907 • a:}large' - : "amoujit. of goods / (i£l42 ! ooo)was sent 'Home T on ..--their,; own -consignment to Bowxbii. : - 8r05.,, "London. They, were:;drawn;.'oh /atS full price, and wero entered itt'thfl|ibobks. ; "'; at.full;price., The return;was-made-up in-: 1908,; and;Mr.«-.M'Cutcheon.-deducted"':. as goods that had-.not been.sold.-. The deduction was": a reasonable one,' anid ■--•.■ defendants still "lost: money.-after-; it : had / been "made.,,;:: With .;,that:''.excepti.on .'the •'•■ figures -in : ;the:rehirhv:were;;taken/direct;;: from'the books. :The■ firm weriii/in tho;' Clifton, Syndicate- and,thought'.th'atj-.'as :',.- the income.:fcax, was C.paid' by -tWi ; ''eyiidiv-'; cafe, : the .firm should not pay'it..:As to> '• the sum: of >6620,' revived : from:'the.Blec-';' ti-ical Constructipn. Coinpany,/ the ;ihcomo.i'. : tai had already been paid by ;that 'coin-'-'-' made only: JS2OO on: cer-/ tainproportysold-in Gloucester Street-■■■'• :

: To Mr.: Stringer: ; The., .£20,000 was -deducted . because they- thought: that, as. they ■were - closing up -the affairs of Bowron Bros.; they had a right, to"deduct.it a- matter of : fact,■, they.' should ,i have ■ deV ducted-.more./.: 'V-V- ';■•'.--"■;-. :';<■"■- ■:.-:.■''-" ". '•..<

; George John Smith said that the sales for the.year, were.^34o,ooo;''The prices'^atwhich;the goods were entered in tie bookswere wrong; and it was open, to theni'to" have readjusted the - books.' Witness;-was.' -in. England;whcn the - retnrri was' made.' The."->deduction.,: of/;\ .£20,0(10 VJ-by l. : Mr:.. M'Cutcheon'really reduced."the : prices :at : : which the goods' were- entered. .The.return made ;by :Jlr.lM'Cutcheoii/agreed'"with the books; .-They did, riot .make ',£2152/ on the :Gloucester. Street \ property. ; Ho> .was still of opinion, that■-it, was unfair.,; and inequitable;that they should'pay/tax-,' -atioh twice, on the .Clifton' Syndicate, arid/ on the bonus received from; the. Electrical. ;' •Construction 'Company./ Before: the cases' commenced, he.had expressed his opinion, to 'Mr.;>Tyers';.t.hat the fiTniThad-.'rather;' overpaid than. /As/far as. he was concerned, he was still ..of .that opinion.' He would agree to.go back to .1901 when he joined the firm. 'That was be-', fore.proceedings started tit all. :'■ .-•;:'.:.; To Mr. Stringer: Witness admitted that - the books were. very/.incomplete;.', but the.; returns wereinade up. from, a/knowledge:. of the position;and- facta :, .of the business.: He/ did ; not use Mr. ' Modlin's/ halarioe-'/ sheet in making up the returns..'" •/.;• -.-.,.-

.'•'";'■ Finding*'bf the ;, ; .The magistrate'saids that 'he: ; was con-',:': corned only, with" the'legal aspect of. the'-v oase;" There couM be no shadow of donbt ; j :'■'■ that the: return, which'."wis.the "'subject'''.','■ .of-the.:information," .was.n'/false retum...v within the; meaning of,,the. Act.."■>. There.-'.-.': had been no attempt to prove otherwise. V ■•; . : Defendants were "convicted. /,:,V : ,''- 1; V- ■ : His Worship -then proceeded.to impose., a penalty: in the case, heard on",the previ-.' ■■ ons day. The fine :was fixed at. ,£2O and costs/and treble t.he aniount of.the tax. j On the casejust heartl,. henscd-the;nno; - at £V) and costs; and treble, the amount. of- thetax. V;. '■':.',-' ■'■'■;.•; J: '-.'*;'.■.■'■•'.■■•<';,, • The Court then adjourned, till 2 p.m. on: Friday,, when,.the magistrate will'fix'-\v tne assessments on which: the'income tax/ is.to be paid., ;.;i' : ; r'^-h