INCOME TAX CASE.

Taranaki Daily News, Volume LIII, Issue 98, 3 August 1910, Page 5

INCOME TAX CASE.

CASE FOR THE APPELLANTS.

By Telegraph. —Press Association. Christchurch, Tuesday.. ; Mr. Russell, in opening the case for the appellants in the income tax case Bowron Bros. v. Income Tax Commiasioripr. sr.id tile charge was a criminal one, and. the Crown had to show by convincing evidence that fraud had been committed. The members of the firm of Bowron Bros, held high positioiis in the city; consequently it would be a very serious matter to them if the charge upheld. Appellants might be guilty of bad book-keeping, but there was not a tittJ-e of evidence of dishonesty on their part. Mr. Geo. Bowron knew nothing of the science of hook-ket ping, attil Mir; Smith never kept a set of books in his life. The practice had been to make the income tax returns according to the surplus during the period covered, and this practice was never altered. Continuing in his address, Mr. Russell said that Bowron Bros., Christchurch, shipped goods to Bowron Bros., London. The Christchurch house estimated what it was likely to produce-at the sales, and drew against London for the amount, London keeping any surplus, virtually, as a loan. He said that while this wkß true, there was realiiy no debt of £lO%000 owing by London to Christchurch. Sir Robert Stout said that Mr. Russell was raising an entirely new defence. Christchurch, Last Night* ' Thornhill Cooper, accountant anS average adjuster, stated that he mai]n the total loss of the fire at the tanaierj £4310 not £14,000, as Tyers stated. The loss over the insurance was £1630. It was explained that Tyers had not] allowed for salvage in his statement. Witness stated he had examined tßto books, and found them mixed up Itr £ most extraordinary manner. Replying to the Chief Justice, Mr Russell said he could not direct evidence to the account of 1903. He wanted tH show defendants were honest, and palß every shilling of the duty on there profits. The Chief Justice said he could not 'lo that unless he showed they paid duty ••liargeable in. 1905; Robert Mmxlfa, accountant, siated that he made 1 tire debt of Bowron Bros. London, to the Christchurch firm in 1904 €17.000, not £74,000', as shown in the books in February, 1905. Witness showed the balance sheet to George Bowron, and they agreed to eliminate the debt altogether, and to .reduce the assets.

The Chief Justice : "This really did away with the £74,000. We have not had that before;" He asked witness:' "Don't you think it strange to send £33,000 to people who were owing £'74,000."

Witness: It does seem strange, if that amount were owing.

To Mr. Stringer: When taking out the balance sheets he did not bother about whether the firm were paying too little income tax, and never saw the return.

To Mr. Russell: He was never in instructed to -withold the balance sheets from Tyers, and gave him' every possible information.

C. M. Olliver, accountant, stated the business was converted into a company on July 3ist, 1907, with a capital of £208,500. On October Ist, 1901, the capital was £87,400. There was, therefore, an accreti9n to the capital or profit of £121,003. George Bowron, one of the defendants, stated the £37,000 bad debt iiad. been absolutely written off. The firm did not set off the £33,000 reclamation which they sent Home, as the London firm were so badly affected by the American commercial crisis that it might .have gone down without the money. Towards the end of 1&07, owing to the American crisis, there was a big drop in prices, and the firm lost about £30,000 on consignments. The firm -always believed it rather over-paid than* under-paid income tax. On making up the return for 1905 he found the profits £50,000 or £60,000, and deducted the bad debt of £37,500, making the total profit about £IB,OOO. One reason for doing this was that he did not wish anyone to know that his brothers were ift a bad way. He had no desire to put any 1 statutory difficulty in 1 the, way of the department getting all it was entitled to, and the firm gave Tyers every assistance to get all possible information. The case was adjourned till to-morrow.

HISTORY OP THE CASE.-., «-» „n ■ " "• 1 The,, prosecxitions of the''partners in the Christohurch firm of Bowron Bros, have, caused, considerable in te.vit. < The hearing took - place last Manh before Mr! H. W. Bishop, S.M., App'iijariojri v-as made to the Supreme Court to prohibit the magistrate adjudicating. Th':?*question was moved into the Court of Appeal, which refused an ord'jr of prohibition. •'

The prosecutions were' 1 aken on the information of Mr.- AV V.. Tvf.the Taxation Department's at Cliristchurch, who estimated that, the amount of taxationthathad been aet"s>llv fhort-paid was stated to beover £IO,OOO. • •

For the defence, it was urged by Mr< Skerrett, K.C., that a bad debt in Loth <lon, amounting to £108,900, had,to Sfi allowed for, but against this contention it was shown thsit.the sum named had not been written off the "company's books as bad. ■

Mr. Bishop delivered judgment on April 25tli. He said the only point he had to decide was -whether, in his opinion, the evidence was sufficiently complete and conclusive to call for ft, conviction. He had no doubt on the subject. The evidence proved beyond question that the defendants had made an "absolutely false return, and had done m knowingly and wilfully with the 'object of evading payment of a just share of taxation. . ' i

Defendants were convicted and, fined £100; and ordered, to pay costs of the proceedings. As required by the Act as additional fine would he inflicted of treble the amount of the tax of Whicfc payment had been evaded. The assessment of this amount was a matter for the Commissioner of Taxes.