INCOME TAX CASE.

Wairarapa Age, Volume XXXII, Issue 986, 4 March 1910, Page 5

INCOME TAX CASE.

JUDGMENT RESERVED.

By Telegraph—Press Association. CHRISTCHURCH, March 3. The hearing of the charges against Bowron Bros, was resumed to-day before Mr H. vV. Bishop, S.M. Mr Skerrett, before commencing his address in referred to the first charge. He pointed out that it was most general in terms, and he claimed that the charge that defendants ."evaded full taxation" should specify particulars of the alleged offence, which should be included in the information. He read a letter written by Mr Stringer to counsel for the defence stating that the charges were based on an alleged false return for the year ei.ded 31st March, 1906, and stating that the income aas £18,836, whereas in fact >it should have been £52,418 or £62,755, for that particular year after certain adjustmeijts had been made. The Magistrate said he had no power to alter tne information, but it was agreed between counsel, that the letter should be put in. When the Magistrate announced that he considered there was a case to anwser, Mr Skerrett said he would { not call evidence, tut would simply I

address th 9 court. He said no suggestion had been made that defendants' books had not been honestly kept. It was admitted that defendants had made mistakes against themselves. Ihe whole controversy as to the alleged short payment of tax for three years depended on whether allowance should be made in respect to the bad debt of £IOB,OOO which it had been admitted had been

incurred. Mr Stringer: I never admitted that, nur did Tyers, Mr Skerrett: Tyers said he had no reason to believe the debt was not honestly incurred. Mr Stringer: Tyers said the £IOB,OOO did not affect the question one way or the other. Mr Skerrett: I am dealing with his evidence, not with his conten- [ tioris. Continuing, Mr Skerrett submitted the return put in for 1906 by the firm was for the year ended 31st March, 1906, and not to 30th September. He read a letter dated 6th November, 1906,, to the Commissioner of Taxes by the defendants, stating: "Enclosed please find our income tax return for year ended 31st March last, which we trust you will find correct. We have to thank you for your indulgence in this matter, and will endeavour to be more prompt

in the coming year." Counsel claimed that defendant had power to accept returns made up to a date other than 31st March. In this case the return tor 1907 was plainly made up to 31st July. Seeing that tor 1903 the return was plair.ly made up to 31st March, how coqld Tyer's statement that Smith had informed him all the returns had been made up to 30th Septemher be correct? It must be a mistake, and in any event it was not evidence, against the partners, though it might be evidence against Smith Evidence had been given that stock was taken by certain departments of the firm's business at 30th September, but no evidence whatever that the stock sheets were extended at the time. Counsel read a printed declaration at the foot of the return that it was up to 31st March. Further, he said there was no evidence that the defendants had made application to the Commissioner of Taxes to permit the returns to go to any other date. Again the court had positive evidence in the letter previously read that one return was to 31st March. The prosecution wouH refer to the prospectus for proof of the allegations, but there was no proof that the prospectus was ever issued. In point of fact it never was. He added that there was no evidence that the Crown had suffered from the evasion of duty. The prosecution claimed that duty had been short paid on a sum of £II,OOO over three years. Mr Skerrett referred to the debt in London of £IOB,OOO. As to the contention that it could not be allowed because it had not been writ- j ten off tbe books he quoted section 87 of the Land and Income Assessment Act to show that it said that "in the asssesment of the tax the commissioner shall allow only such bad debts as are proved to be such 1 and are written off." The section did not deal with returns, but with assessment by the commissioner. Mr Stringer would say it had not been proved that the debt was bad. Very well, that difficulty existed on the part of the Crown. It might be said that the bad debt should have been shown in the column for bad debts in the return, but the circumstances were exceptional. The debt consisted of consignments to London by Bowron Bros., and by their clients and also consisted in part of moneys which ought never to have gone into sales. Sales on behalf of clients should never have been included in the firm's oases, Surpluses belonged to clients; all that belonged to the firm was the commission paid to them. He claimed therefore, that the defendants were reasonably justified in leaving tbe debt out of the return. How 'many, knew the intricacies of the law in regard to this matter, and how many fully appreciated

the complexities of the form submitted by the department? He submitted that the bad debt had been established, and that it had been also established that it was irrecoverable. In conclusion, Mr Skerrett, who spoke for an hour and a-half* claimed that a case had not been made out. Replying, Mr Stringer asked how could the Commissioner of Taxes adjudicate on the bad debts under section 87, as Mr Skerrett said he was obliged to do, unless the bad debt was included in the return. Plainly it was the duty of defendants to include the bad debts in the return, and prove to the satisfaction of the Commissioner that it was such. Then as to the contention that the returns were made up to 31st March, how was it that many items in them talied exactly with entries m the books at 30th September? He mentioned various items and said it would further be quite impossible to make up a return as required by the printed form at a period other than a stock-taking one (30th Sepember). It was arranged that a decision should be given on the first information, the second and third being held over by consent, as they did not involve taxatation. His Worship reserved his decision.