Commissioner of Taxation v Rigoli

REASONS FOR JUDGMENT 1 The Commissioner of Taxation appeals from a decision of the Administrative Appeals Tribunal setting aside the Commission's objection decisions to the extent that he had not allowed depreciation deductions for various items of capital equipment. The fundamental issue in dispute concerns whether the Tribunal was correct in concluding that the taxpayer, Mr Little Joe Rigoli, had discharged the burden of proving the Commissioner's assessments to be excessive by permitting Mr Rigoli to concede some of the elements upon which the assessments were made and allowing him to establish his claim for depreciation allowance for specified items. 2 The proceeding before the Tribunal concerned assessments made by the Commissioner against Mr Rigoli in respect of the income years between 1994 and 2001. Each of the assessments were made under s 167 of the Income Tax Assessment Act 1936 (Cth) ("the 1936 Act") following two audits by the Commissioner into the affairs of Mr Rigoli and his family. Mr Rigoli did not lodge partnership income tax returns or personal income tax returns except in respect of the year ended 30 June 1993 when he declared a net primary production income in the amount of $22,546. In late 1996 the Commissioner's office commenced its first investigation into a business apparently conducted in partnership between various members of the Rigoli family. On 11 March 1999 various assessments issued to Mr Rigoli under s 167 for the years ended 30 June 1992 to 30 June 1997, of which the assessment for the year ended 30 June 1993 was an amended assessment and the rest were original assessments. In June 2001 the Commissioner's office commenced a second audit of the business for the period 1 July 1990 to 30 June 2001. The Commissioner concluded during the second audit that a business was conducted in partnership between various members of the Rigoli family including Mr Rigoli. It is not necessary for present purposes to recite the various permutation and combinations of the partnership except to note that, based upon the documents and information available to the Commissioner's auditor, it was concluded by the Commissioner that certain amounts were the net income of the partnership for the years under audit and that specified amounts were Mr Rigoli's share of that partnership income as a partner. The Commissioner next took into account amounts for diesel fuel rebates, benefits received from Centrelink and taxable capital gains to arrive at particular amounts determined to be Mr Rigoli's taxable income for each of the years in question. On 13 December 2001 the Commissioner issued assessments for each of those years. Mr Rigoli objected against the assessments by letter dated 7 January 2002 and the Commissioner determined the objection on 19 December 2008 by fully allowing the objection for the year ended 30 June 1993, disallowing wholly the objection for the year ended 30 June 2001, but allowing the objections in part for each of the years ending 30 June 1994 to 30 June 2000. 3 Mr Rigoli's Notice of Objection was in a brief letter dated 7 January 2002 in which he stated simply that there was "no taxable income". The Commissioner's decision on the objection was dated 19 December 2008 and, in contrast, explained the Commissioner's methodology in arriving at the partnership net income or loss: The main income producing activity for the partnership was the manufacturing and sale of polystyrene boxes. Subsequent to the adjustments made to assessable income as a result of the 2nd audit the Tax Office has carried out further analysis of business's documents and information available in respect of the income years ended 30 June 1993 to 30 June 2001. Analysis for income years 30 June 1993 - 30 June 1997 Ferrier Hodgson, an accounting firm, was requested by the Tax Office to provide an analysis of: • the gross income derived by the partnership for each of the years ended 30 June 1991 to 30 June 1997; • the expenses incurred by the partnership for each of those years; • the change in net assets of the partnership for each of those years. The analysis was based on the documents and information provided by the Tax Office. Analysis for income years ended 30 June 1998 - 2001 For the objection purpose, the auditor was requested to use the same methodology as Ferrier Hodgson to provide an analysis of: • the gross income derived by the partnership for each of the years ended 30 June 1998 to 30 June 2001; • the expenses incurred by the partnership for each of those years; • the change in net assets of the partnership for each of those years. The Commissioner's reasons on the objection decision went on to say that the Commissioner's office had established specified amounts of net income or loss of the partnership based upon the analysis described above. The reasons then explained that Mr Rigoli was liable as a partner to include in his assessable income his interest in the partnership net income and to claim a deduction for his share of the partnership loss for the income years 1994 to 2001. The reasons went on to consider an amount of capital gains which was also assessed to Mr Rigoli to the extent of his partnership interest in the 2001 income year. The reasons noted that Mr Rigoli "did not keep any accounting or financial records in relation to the business" and that he had "not established the amount of income derived or expenditure incurred by the partnership in relation to the relevant years". The reasons concluded by observing that Mr Rigoli had not discharged the burden of proof that the assessments against him were excessive as required under s 14ZZK of the Taxation Administration Act 1953 (Cth) ("the 1953 Act"). 4 The case which was conducted for Mr Rigoli at the Tribunal was on the basis of a "concession" he made at the commencement of the hearing that the amounts which had been identified by the Commissioner as income were not challenged by him but that he maintained that he was entitled to claim deductions by way of depreciation allowance for a variety of items which the Commissioner had not allowed. In other words, Mr Rigoli accepted the income components of the Commissioner's assessment and sought to challenge only the extent of the deductions which the Commission had allowed. Such a course would generally be available to a taxpayer for an assessment made under s 166 of the 1936 Act based upon a return lodged by the taxpayer. The Commissioner contended, however, that the excessiveness of an assessment based upon s 167 of the 1936 Act could not be established in that way. The Tribunal proceeded as the taxpayer had contended and contrary to the approach urged by the Commissioner. 5 The Commissioner's assessments under s 167 of the 1936 Act were not in this instance on the basis of asset betterment: cf Gashi v Commissioner of Taxation [2013] FCAFC 30 ("Gashi"). What the Commissioner had sought to do, and as explained in the reasons for objection decision, was to determine, first, the net income or loss of the partnership by reference to estimates of the gross income, expenses and changes in the net assets of the partnership, and next to determine what proportion of the partnership income or loss was to be included in the income of Mr Rigoli pursuant to s 92 of the 1936 Act. That process was explained to the Tribunal by the evidence of Mr George Kompos who prepared an affidavit on behalf of the Commissioner for the Tribunal proceeding. Mr Kompos is a chartered accountant and has been an executive director of Ferrier Hodgson since July 2007. He had been retained by the Commissioner to analyse "the gross income derived, expenses incurred and the change in the net assets of the partnership" for the years of income ending 30 June 1994 to 30 June 1997 inclusive. He had also been requested to provide an opinion on a paragraph of Mr Rigoli's Amended Statement of Facts and Contentions, and on various aspects of a witness statement of Mr Anthony Peter Xerri which had been filed on behalf of Mr Rigoli. Mr Kompos explained in his affidavit that he had prepared an analysis of "the gross income derived, expenses incurred and the change in the net assets of the partnership" for each of the years of income ended 30 June 1998 to 30 June 2001 and that he had reviewed and updated the analysis which had previously been done for the years of income ended 30 June 1994 to 30 June 1997. The affidavit by Mr Kompos went on to set out the methodology he had adopted in reaching his conclusions and the complex analysis which had been undertaken in an attempt to estimate receipts, payments and allowable depreciation for each of the years in dispute. A table included in his report (and supported by separate schedules) set out both traced and untraced customer receipts, traced and untraced capital receipts, allowances for private receipts, traced and untraced supplier payments, traced and untraced capital expenditure, added back private expenditure and, perhaps significantly, a separate line allowing for depreciation for each of the years in question. Much of this information was based upon professional judgments and estimates rather than upon financial data since Mr Rigoli did not keep records. The assessments thus had much of the appearance of assessments based upon a taxpayer's return under s 166 but were in fact not based upon such a return. 6 At the commencement of the hearing before the Tribunal Mr Rigoli informed the Tribunal that the figures appearing in the Commissioner's material for gross income for the years in question were no longer in dispute. The Tribunal's reasons said at [7]: In his opening submissions on the first day of hearing this matter, Mr D Clough of counsel, who appeared on behalf of Mr Rigoli, informed me that the questions regarding Mr Rigoli's gross income for the years in question was no longer in issue. Mr Rigoli had accepted the Commissioner's estimate of his income in the relevant income years. The only issues remaining were the depreciation expenses which ought to have been taken into account in assessing Mr Rigoli's taxable income in the relevant years and the assessment of a capital gain by the Commissioner following the disposal of a capital item of equipment. On the fourth day of the hearing, 17 April 2012, Mr Clough informed the Tribunal that Mr Rigoli was no longer proceeding with the capital gains claim. The Tribunal accepted Mr Rigoli's "concession" (rejecting the Commissioner's objection) and concluded that the first issue to be determined by the Tribunal was whether Mr Rigoli's claim for depreciation expenses in the relevant income years should be allowed and, if some should be allowed, whether "in those circumstances" Mr Rigoli had satisfied the onus of proving on the balance of probabilities that the assessments finally issued by the Commissioner were excessive. It is that course taken by the Tribunal which the Commissioner contended was not open to the Tribunal as a matter of law in the context of an assessment made under s 167 of the 1936 Act. 7 The Commissioner submitted that the approach taken by the Tribunal revealed five errors of law concerning the construction and application of ss 167 and 177(1) of the 1936 Act, of s 14ZZK of the 1953 Act and of the obligation upon the taxpayer to discharge the burden of proof. The submissions depend upon general considerations about the content of a taxpayer's legal burden of proof in tax appeals and how a taxpayer may discharge the burden of proof in a proceeding under Part IVC of the 1953 Act in the context of an assessment under s 167. 8 Counsel for Mr Rigoli accepted that the approach adopted by the Tribunal would not have been possible if the assessments in question which were made under s 167 had been made on the basis of the asset betterments method of calculation. In Gashi, the Court had held that a taxpayer wanting to challenge an assessment made under s 167 upon the asset betterment method of calculation could only do so by establishing the actual taxable income for the period in dispute saying at [63]: A taxpayer who seeks to establish that a s 167 assessment based on the asset betterment method of calculation is excessive must positively prove his or her "actual taxable income" and, in doing so, must show that the amount of money for which tax is levied by the assessment exceeds the actual substantive liability of the taxpayer: Dalco at 623-5 and Trautwein at 88. The taxpayer must show that the unexplained accumulated wealth was from non-income sources. The manner in which a taxpayer discharges that burden is not defined or specified - it varies with the circumstances: Dalco at 624. The reason for this conclusion lay in the difference between assessments made under s 166 and those made under s 167 which at [53]-[55] the Court had explained: The s 167 power is necessarily different to that in s 166. Under s 166, the power is to "make an assessment of the amount of the taxable income". The phrase "taxable income" is defined to mean "assessable income" minus "deductions": s 4-15 of the 1997 Act and s 6(1) of the 1936 Act. Under s 167, that process of calculating taxable income as assessable income minus deductions is not possible (in whole or in part) because of one of the preconditions to the exercise of the power in sub-paras (a) to (c) of s 167 - a failure by a person to lodge a tax return, the tax return is deficient or the Commissioner has reason to believe that a person who has not lodged a return has derived taxable income. It is for those reasons that the balance of s 167 empowers the Commissioner to make an assessment of the amount upon which income tax ought to be levied and for that amount to be deemed to be the taxpayer's taxable income for the purposes of s 166. The third part of the section - the deeming provision - would be futile if it was necessary for the Commissioner to undertake a process of the kind referred to in s 166. As the Commissioner submitted, the assessment of the "amount" in s 167 is not constrained by a process of subtracting "deductions" from "assessable income". Instead, in making his judgment of the "amount" that becomes taxable, the Commissioner may use what is known as the "asset betterment" method: Trautwein at 87, 99-100 and 105. The asset betterment method, and the resulting assessment, is necessarily a guess to some extent and "almost certainly inaccurate in fact": Trautwein at 87. It is therefore "no part of the duty of the commissioner to establish affirmatively what judgment he formed [under s 167 of the 1936 Act], much less the grounds of it, and even less still the truth of the facts affording the grounds": George v Federal Commissioner of Taxation at 204. The need, therefore, for a taxpayer to prove the "actual taxable income" in order to establish the excessiveness of an assessment made under s 167 was not so much that the assessment in Gashi was based upon the asset betterment basis of calculation as that it was made under s 167 where the "process of calculating taxable income as assessable income minus deductions is not possible (in whole or in part)". The figure arrived at by the Commissioner under s 167 may in any given case be based upon calculations similar to those where the taxpayer has furnished a return under s 166, but an assessment under s 167 is fundamentally different from one under s 166. A taxpayer seeking to establish that an assessment under s 167 is excessive needs to establish not that some element in the assessment is wrong but that "the amount upon which in [the Commissioner's judgment] income tax ought to be levied" was the taxpayer's actual taxable income. The primary obligation of a taxpayer is to furnish a return of income under s 166 and an assessment under s 167 does not provide a means by which taxpayers may be relieved of their obligation to establish their actual taxable income. It is, rather, a means by which the Commissioner may impose a liability where the taxpayer has failed to furnish a return. 9 The issue in Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 ("Dalco") is analogous to that which was faced by the Tribunal in this case. In Dalco the Commissioner had made an assessment under s 167 of the 1936 Act which the taxpayer sought to challenge by seeking "to show that the Commissioner had wrongly treated the income of companies or trusts which the taxpayer or his family company acquired or controlled as assessable income of the taxpayer": per Brennan J at 618. The question for determination by the High Court was posed by Brennan J at 619 in that context as being: In proceeding on appeal to a court pursuant to Div 2 of Pt V of the Act against an assessment made under s 167(b), does the taxpayer discharge the burden of proving that the assessment is excessive where (a) he does not prove that the amount assessed as his taxable income in fact exceeds his taxable income, but (b) he shows that the Commissioner formed a judgment as to the amount of his taxable income on a wrong basis? That question, in essence, was the same as that which Mr Rigoli posed for the Tribunal. Mr Rigoli did not seek to prove that the amount which had been assessed against him as his taxable income "in fact" exceeded his actual taxable income but, rather, sought to show that the amount judged by the Commissioner to be that upon which he was to be assessed was wrong by attempting to establish that the Commissioner had failed to make appropriate allowance for depreciation within the assessment. The High Court in Dalco dealt with a similar challenge by saying that a taxpayer will fail to discharge the burden of proof where the taxpayer does not show that the amount assessed under s 167 "in fact exceeds his taxable income" but merely challenges the basis upon which the Commissioner's judgment was based. Brennan J said at 624-6: The manner in which a taxpayer can discharge that burden varies with the circumstances. If the Commissioner and a taxpayer agree to confine an appeal to a specific point of law or fact on which the amount of the assessment depends, it will suffice for the taxpayer to show that he is entitled to succeed on that point. Absent such a confining of the issues for determination, the Commissioner is entitled to rely upon any deficiency in proof of the excessiveness of the amount assessed to uphold the assessment, though the taxpayer is limited to the grounds of his objection. In Gauci v Federal Commissioner of Taxation, Mason J said: "The Act does not place any onus on the Commissioner to show that the assessments were correctly made. Nor is there any statutory requirement that the assessments should be sustained or supported by evidence. The implication of such a requirement would be inconsistent with s 190(b) for it is a consequence of that provision that unless the appellant shows by evidence that the assessment is incorrect, it will prevail." That view, expressed in a dissenting judgment, now prevails: Macmine Pty Ltd. v Commissioner of Taxation; McCormack's Case. Although the Commissioner is entitled to rely on any deficiency in proof of the excessiveness of the amount assessed, the exigencies of litigation may justify on occasions an order that the Commissioner furnish particulars of the basis on which he proposes to support an assessment: Bailey v Federal Commissioner of Taxation. In that case, the assessment was based on s 260. Although the Commissioner was ordered to furnish particulars of the application of s 260 on which he proposed to support the assessment, Aickin J (with whom the other Justices agreed) that if, in the course of evidence, facts emerged which were not previously known to the Commissioner and which suggested a different or additional application of s 260 from the application of which particulars had been given, the Commissioner would be permitted to amend the particulars. The majority of the Full Federal Court in the present case treated the error which they held to infect the Commissioner's assessment of the amount of the taxpayer's taxable income as concluding the question whether that amount was excessive. It did not. If this were a case where all the material facts were known and the amount of taxable income depended on the legal complexion of those facts, the taxpayer would succeed upon establishing that the Commissioner erroneously included in the assessed taxable income an amount which, on those facts, ought not to have been included. But where, as here, the taxpayer has not proved that his actual taxable income is less than the amount assessed, the Court does not know all the material facts and it cannot find that the amount assessed is wrong. A taxpayer who shows on the facts that are known a mere error by the Commissioner in assessing the amount of the taxpayer's taxable income does not show that his objection should have been allowed or that the appeal against the assessment must be allowed. If it were not for s 190(b), the process of assessment might have to be repeated whenever on appeal an error affecting the amount assessed were found. But s 190(b), coupled with s.200, brings to finality the ascertainment of the taxpayer's liability in respect of the income period to which the assessment relates. Unless the amount of the assessment is found to be excessive in the sense of being greater than the taxable income on which tax ought to have been levied, the taxpayer fails on his appeal. A contrary view derives some support from an observation by Barwick CJ in Bailey v Federal Commissioner of Taxation. His Honour said: "It is that process of assessment which, by virtue of s 190(b), an appellant taxpayer must satisfy the Board of Review or an appellate court is 'excessive'. If some step in that process which affects the amount of tax lacks the authority of the Act the assessment is 'excessive': and the powers of s 195 or of s 199, as the case may be, become available." It may be that his Honour had in mind a case where all the material facts were known and the only question was the legal complexion to be attributed to them: cf. his observations in Henderson v Federal Commissioner of Taxation. But if his Honour did not intend the cited passage to be so understood, I must respectfully disagree with it. Since McAndrew's Case it has been generally accepted that "excessive" refers to the amount of the assessment, not to any unauthorized step in the process of its calculation. In this case, as the taxpayer failed to discharge the burden of proving that his taxable income was in truth less than the amount assessed, his appeals were rightly dismissed by Yeldham J. These appeals must therefore be allowed, the orders of the Full Court of the Federal Court set aside and the orders of Yeldham J restored. (Citations omitted) Toohey J delivered a separate judgment to the same effect saying at 634: For this taxpayer to demonstrate that in some respects, indeed it may be in a number of respects, the Commissioner erred in the way in which he attributed income to the taxpayer or otherwise dealt with the material available to him does not prove that an assessment was excessive. It does not prove that the taxable income of the taxpayer was less than the amount of taxable income shown in any of the assessments. It was necessary for the taxpayer to make good the proposition that his income was less; this he failed to do in respect of any of the assessments. It is clear from these passages that the combined effect of s 167 and the legal burden of proof falling upon the taxpayer is that for a taxpayer to succeed in establishing the excessiveness of an assessment under s 167 (absent agreement between the Commissioner and the taxpayer concerning the conduct of the proceeding) requires the taxpayer to establish not that the amount assessed by the Commissioner under s 167 of the 1936 Act was wrong but, rather, by establishing what the actual amount was. How that may be achieved will no doubt vary from case to case but it cannot be done as the Tribunal proceeded, namely, by assuming that what was in contention in the proceeding before the Tribunal was only part of the Commissioner's assessment. 10 A taxpayer seeking to challenge an assessment under s 167 will not succeed merely by proving error by the Commissioner: George v Federal Commissioner of Taxation (1952) 86 CLR 183; Dalco. The task for the taxpayer on objection is not to prove that the Commissioner erred but to prove, albeit on the balance of probabilities (see Ma v Commissioner of Taxation (1992) 37 FCR 225), the correct amount upon which tax should be levied. The subject matter of challenge to an assessment under s 167 of the 1936 Act is "the amount" upon which the Commissioner has determined tax ought to be levied. The subject matter of challenge in such cases is not to the individual elements of assessable income and deductions which together would have made up taxable income to the assessment if it had been made under s 166. 11 The first error of law identified by the Commissioner said to have been made by the Tribunal in proceeding as it did was to have assumed that a challenge to the assessment under s 167 "necessarily involved a calculation of Mr Rigoli's assessable income and deductions". This was said to be revealed by what the Tribunal had said at [63] and [81]: Once again, it should be self evident that a taxpayer's taxable income is comprised of two components, the first dealing with income and the second dealing with deductions. It should also be apparent that the taxable income assessed by the Commissioner will be excessive if he has included in assessable income amounts which were not assessable income; or has disallowed deductions which ought to have been allowed. All of the cases dealing with the onus of proof to which I have been referred are cases where the assessable income was in dispute. The deductions were either not in dispute or no objection was lodged in respect of that item of the equation. […] In my opinion, s 177 has an important role in cases such as this where one of the two elements will go to make up taxable income is not in dispute. In reality, it is no different to all of the cases where the taxpayer has argued that the Commissioner's calculation of assessable income was incorrect. It will be recalled that the assessment made by the Commissioner is an assessment of taxable income. In arriving at that assessment, the Commissioner must calculate both the assessable income and the deductions claimed. There is no suggestion in any of the cases where the Commissioner's calculation of assessable income was in issue and the deductions were not, the taxpayer, in order to show that the assessment was excessive, was also required to prove the correctness of the deductions. It is clear from these passages that the Tribunal had assumed that the assessment which had been made by the Commissioner was of "the taxable income" rather than "of the amount upon which in his judgment income tax ought to be levied". The learned Member was, in my view, incorrect in that analysis. Section 167 provides: If: (a) any person makes default in furnishing a return; or (b) the Commissioner is not satisfied with the return furnished by any person; or (c) the Commissioner has reason to believe that any person who has not furnished a return has derived taxable income; the Commissioner may make an assessment of the amount upon which in his or her judgment income tax ought to be levied, and that amount shall be the taxable income of that person for the purpose of section 166. This provision is to be contrasted with s 166 which describes an assessment as follows: From the returns, and from any other information in his possession, or from any one or more resources, the Commissioner shall make an assessment of the amount of the taxable income (or that there is no taxable income) of any taxpayer, and of the tax payable thereon (or that no tax is payable). It is not surprising that there should be a fundamental difference between the subject matter of assessment as between the two provisions. Section 166 is concerned with assessments based upon returns filed by the taxpayer whilst s 167 is not. In Trautwein v Federal Commissioner of Taxation (1936) 56 CLR 63 Latham CJ said at [87] of assessments made by the Commissioner where the taxpayer kept no records: In the absence of some record in the mind or in the books of the taxpayer, it would often be quite impossible to make a correct assessment. The assessment would necessarily be a guess to some extent, and almost certainly inaccurate in fact. There is every reason to assume that the legislature did not intend to confer upon a potential taxpayer the valuable privilege of disqualifying himself in that capacity by the simple and relatively unskilled method of losing either his memory or his books. Section 167 does not in terms require the Commissioner to make an assessment of a taxpayer's "taxable income" but, in contrast to s 166, has the effect of deeming as the taxpayer's "taxable income" the amount which upon his judgment income tax ought to be levied: see also Gashi at [53]. 12 The Tribunal's reasoning depended upon the proposition that what was in dispute before the Tribunal was only that part of the Commissioner's assessment which was challenged in the proceeding on objection. The Tribunal said at [82]-[83]: A review by this Tribunal, and an appeal to the Federal Court for that matter, is only concerned with an objection decision (leaving aside review of extension of time refusal decisions and Administrative Appeals Tribunal extension applications). Furthermore, as is set out in s 14ZZK of the Administration Act, unless otherwise ordered by the Tribunal, an applicant is limited to the grounds stated in the taxation objection to which the decision relates. Although Mr Rigoli's objection was taken to be an objection against the Commissioner's default determination of his assessable income and deductions, at the commencement of this hearing, Mr Clough clearly submitted that the assessable income element was no longer in dispute. By that statement, I understood Mr Clough to be saying that Mr Rigoli no longer objected to that element of the Commissioner's assessment, or that the objection was withdrawn. Therefore, not only did Mr Rigoli's assessable income no longer form part of the objection decision made by the Commissioner, but, because it formed one of the particulars of the assessment made by the Commissioner, and it was no longer an element of Mr Rigoli's proceeding under Part IVC of the Administration Act, the Commissioner's assessment of that particular must be taken to be correct irrespective of the basis upon which the Commissioner arrived at the amount of assessable income. It follows, in my opinion, that if Mr Rigoli is able to prove on the balance of probabilities that one or more of the deductions which he claimed and which were disallowed by the Commissioner, should have been allowed, he will necessarily prove that the amount of the Commissioner's assessment was excessive. This part of the reasoning by the learned Member was influenced by the mistaken assumption that what was assessed under s 167 was the "taxable income" of Mr Rigoli in the same way as would ordinarily be required under s 166. 13 It may not be necessary for me to deal with the other questions of law which the Commissioner contends were erroneously answered by the Tribunal, however it may be desirable for me to say something about them. The second error identified by the Commissioner was said to be in the Tribunal's application of s 177(1). The relevant question posed by the Commissioner in the Notice of Appeal was put in these terms: Whether s 177(1) of the 1936 Act has the effect that the production, in accordance with that Section, of a notice of assessment for a year of income in a proceeding under Division IV of Part IVC of the Tax Administration Act 1953 (TAA) (Part IV C proceeding) is conclusive evidence in the Part IVC proceeding of a particular of the assessment if the particular is not disputed by the taxpayer in the Part IV C proceedings. The Tribunal considered that s 177(1) was of evidentiary significance in proceedings under Part IVC. However, the effect of the production of a notice under s 177(1) of the 1936 Act does not confer evidentiary conclusiveness over the amount and of all of the particulars of an assessment in proceeding under Part IVC of the kind before the Tribunal. The production of a notice under s 177(1) does not limit the burden of proof imposed by s14ZZK in proceedings under Part IVC of the 1953 Act. Section 177(1) expressly excludes the production of a notice of assessment in Part IVC proceedings having any evidentiary effect in those proceedings concerning the amount of the particulars of an assessment. 14 The third question of law identified by the Commissioner which was contended the Tribunal had answered erroneously was: Whether a taxpayer in a Part IVC proceeding involving a review of an assessment for a year of income made under s 166 in conjunction with a s 167 of 1936 Act has discharged the burden imposed by s 14ZZK(b)(i) of the TAA by relying on the assessment to establish the taxable income of the taxpayer for the year of income except to the extent that the taxpayer adduces evidence of amounts which may, or may not, have been allowed by the Applicant in making the assessment of the amount upon which the income tax ought to be levied under s 167 of the 1936 Act. In dealing with the burden of proof to be discharged by the taxpayer the Tribunal said that "how an applicant goes about proving that an assessment is excessive is solely for the applicant". In Gashi the Court said at [63] that the "manner in which a taxpayer discharges [the] burden [of showing that an assessment is excessive] is not defined or specified [and] it varies with the circumstances"; but however much it may vary, the task remains that of establishing the "actual taxable income" for the period in dispute for the taxpayer to prove that the amount brought to tax under s 167 was excessive. Indeed, the Court observed in Gashi at [78] that "[a]s [was] self evident, Mrs Gashi was not entitled to pick and choose which part or parts of her increased wealth" in the Commissioner's asset betterment calculation she would seek to explain. 15 There will, no doubt, be many cases where proceedings to challenge an assessment under s 167 may effectively be limited to some aspect of the total calculation undertaken by the Commissioner in forming a judgment about the amount upon which tax is to be levied. Agreement between the Commissioner and the taxpayer may be one example. Another may, conceivably, be where a taxpayer gives evidence from which a Tribunal may properly determine that amounts included in the Commissioner's calculations were sufficiently proven by evidence upon the balance of probabilities. It is, for example, conceivable that a taxpayer may give probative evidence to the effect that amounts found in computations by the Commissioner were, in the taxpayer's testimony, likely to be correct. That, however, is not what Mr Rigoli did nor is it the way the Tribunal understood what Mr Rigoli did. Mr Rigoli's "concession" did not amount to probative evidence on his part, or on his behalf, on the balance of probabilities that the income amounts adopted by the Commissioner were correct as a matter of evidence. Nor did the Tribunal understand the "concession" to be an evidentiary matter about which Mr Rigoli was giving the Tribunal a probative foundation upon which factual conclusions could be based; rather, the "concession" given on Mr Rigoli's behalf was understood by the Tribunal to be the abandonment of part of his objection against the Commissioner's assessment. It was that which was not open for him as the means by which to discharge the onus of establishing not whether the Commissioner's calculations were wrong but that the assessment was excessive by positively proving his actual taxable income. 16 The fourth and fifth questions of law may be considered together. The questions raised were expressed in the notice of appeal as follows: Whether a taxpayer in a Part IVC proceeding has discharged the burden imposed by s 14ZZK(1)(i) of the TAA if the taxpayer has demonstrated that amounts were allowable in calculating the net income or partnership loss of a partnership under s 92(1) or s 92(2) of the 1936 Act for a year of income, but has not established the actual amount of the taxpayer's taxable for the year of income. Whether a taxpayer in a Part IVC proceeding has discharged the burden imposed by s 14ZZK(b)(i) of the TAA if the taxpayer has not established the individual interest of the taxpayer in the net income or partnership loss of a partnership under s 92(1) or s 92(2) of the 1936 Act. The Commissioner contended that both questions were answered erroneously by the Tribunal. The first of the last two questions depends in part upon the issues raised by the first and third questions considered above. It also depended upon what the Commissioner said had been the Tribunal's failure to have specifically determined the specific partnership interest of Mr Rigoli. The last question is specifically directed to what was said to be that failure and is raised as an independent ground. In my view neither question was answered erroneously by the Tribunal in light of what the Tribunal said in the last paragraph of the reasons and in the actual orders made. It is clear that the Tribunal was directing the Commissioner to reassess in light of the conclusions reached in respect of the depreciation claims. The Tribunal was not otherwise seeking to vary in any way the Commissioner's finding concerning the partnership interest of Mr Rigoli as determined by the Commissioner; nor had Mr Rigoli sought to challenge those interests. 17 It otherwise follows that Mr Rigoli had failed to discharge the burden of proof that the assessment was excessive, and therefore that the decision of the Tribunal should be set aside, the Commissioner's appeal shall be allowed and the proceeding shall be remitted to the Tribunal. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Pagone.