Deputy Commissioner of Taxation v Jangadi

Judgment 1The plaintiff, by notice of motion filed on 19 October 2012, seeks orders as follows: (1)The plaintiff be granted summary judgment against the defendant pursuant to r 13.1 of the Uniform Civil Procedure Rules 2005 (NSW). (2)The defendant pay the plaintiff's costs of and incidental to this motion. (3)The defendant pay the plaintiff's costs of the proceedings generally. (4)Such further orders as the Court thinks fit. 2The plaintiff relies upon and reads the affidavits of Anastasios Dinos sworn 17 October 2012 and Suzanne Little-Owl sworn 25 October 2012. The amended statement of claim relied upon by the plaintiff was filed on 19 April 2012. 3A defence was filed on 16 December 2011. That defence is essentially one of non-admission and denial. The defendant retained a firm of solicitors who have since ceased to act. The defendant has not appeared today. As noted in the orders that form part of this judgment, the defendant has been called three times outside the Court here at 10.17am, as well as previously being called outside the Judicial Registrar's Court earlier this morning. 4These proceedings are brought by the plaintiff by way of amended statement of claim filed on 19 April 2012 arising from the defendant's failure to pay notices of assessment and an amended notice of assessment in relation to income tax for the years ending 2000 to 2002 and 2010, as well as the notices of assessment of shortfall penalty for the years ending 2001 and 2002 and subsequent general interest charges. As has been explained in the very helpful submissions of Ms Foda, the defendant does not have a defence to the plaintiff's claim. I note the defendant has however admitted service of the relevant notices and otherwise does not admit the balance which has the effect of putting the plaintiff to proof. 5The first matter I shall deal with is the summary judgment nature of this application. The defendant does not plead to the amended statement of claim in that the defence on the whole "does not admit" ever putting the plaintiff to proof. The defendant does not dispute the notices of assessment and amended notices of assessment. Any such challenge is not a defence, it could be agitated in this jurisdiction: Commissioner of Taxation v Futuris Corp Ltd (2008) 237 CLR 146 at [17] to [25]. 6The plaintiff relies upon s 177(1) Income Tax Assessment Act 1936 (Cth) ("the ITAA") to prove conclusively the amount of the taxable income and the tax payable on that taxable income. Subsection 177(1) was considered in F J Bloemen Pty Limited v Federal Commissioner of Taxation (1981) 147 CLR 360 and I note in particular the statements of Mason and Wilson JJ, (Stephen J concurring) at 378, noting of course Pt V has now been replaced by Pt IVC. 7I also note Deputy Commissioner of Taxation v Cameron (1991) ATC 4056 at 4058 where Kaye J states: "I have concluded that the Master's exercise of discretion adjourning the hearing of the Plaintiff's summons miscarried because it was based upon an error of law- The error was a failure by the Master to give proper effect to the operation of the provisions of s.177(1) [of the ITAA] which provides as follows: ... It is settled law that, by those provisions, a court is compelled to treat a notice of assessment as conclusive evidence that the Commissioner has made an assessment of the amount of tax due to be paid by the taxpayer, and that in making the assessment the Commissioner has complied with the formalities of the Income Tax Assessment Act. In F J Bloemen Pty Ltd v FCT (1981) 147 CLR 360 at 375; 11 ATR 914, Mason and Wilson JJ described as an explicit correct statement of the effect of s.177(1) made by Taylor J in McAndrew v FCT (1956) 98 CLR 263 at 281-2; 6 AITR 359 that the section "was intended to make it impossible for a taxpayer, in proceedings other than appeal against it, to challenge an assessment on any grounds"." 8I also note the statements of Gummow ACJ, Heydon J and Crennan and Kiefel JJ in Deputy Commissioner of Taxation v Broadbeach Properties Pty Limited [2008] HCA 41 at [43] to [45]. 9The plaintiff also relies upon ss 255-45 and 255-50 of Sch 1 to the Taxation Administration Act 1953 (Cth) ("the TAA"). These certificates are annexed to the affidavits of Mr Dinos sworn 17 October 2012 (annexure 1) and the affidavit of Suzanne Little-Owl sworn 25 October 2012 (annexure B) and are prima facie evidence of the elements of the cause of action, as are the statements in the amended statement of claim. These certificates specifically refer to the notices of assessment, the amended notices of assessment and the notices of assessment of administrative penalty. 10Accordingly, it is not open to the defendant to dispute in these proceedings the correctness of the taxable income and the tax on the taxable income as stated in the notices of assessment and amended notices of assessment issued in respect of the years of income entered 30 June 2000 to 2002 and 2010 and which are annexed to the affidavit of Mr Dinos (annexures A to E). In addition pursuant to s 298-30 of Sch 1 of the TAA the production of a notice of assessment of an administrative penalty is conclusive evidence of the making of the assessment and of the particulars in it. Accordingly, the defendant cannot dispute in these proceedings the correctness of the administrative penalties and the shortfall interest stated in the notice of assessment of shortfall penalty in respect of the additional amounts of income tax. 11The defendant's defence, as noted above, has not challenged the assessments. The plaintiff is simply put to proof and I am satisfied that that has been established. 12I shall briefly note the factual matrix of this case. There is no dispute the defendant was served with the relevant notices and amended notices of assessment for the taxation years stated above on or about the issue dates of the said notices, in accordance with the Income Tax Assessment Act 1936 (Cth) (the "ITAA 1936") and the income tax regulations. 13Nor is there any dispute that the notices of assessment of shortfall penalty for the years ending 2001 to 2002 and 2010 were served upon the defendant in accordance with s 298-10 of Sch 1 of the TAA on or about the issue date of these notices. Once these notices of assessment and amended notices of assessment for income tax and the notices of assessment of shortfall penalty were served upon the defendant they became due and payable. The defendant has failed to pay the income tax for the financial years ended 30 June 2001 to 2002 and 2010 on or before the relevant due dates. 14Accordingly, by the defendant's failure to pay the income tax by the relevant dates the defendant became liable to pay the general interest charged pursuant to s 204 of the ITAA 1936, Pt IIA of the TAA 1953, s 5-10 of the Income Tax (Transitional Provisions) Act 1997 (Cth) and s 515 of the Income Tax Assessment Act 1997 (Cth) (see amended statement of claim, paragraphs 6 to 8). 15The defendant also failed to pay the administrative penalties on or before the due date in the notices of assessment of shortfall penalty. Accordingly, the defendant is liable to pay the general interest charge pursuant to s 298-25 and Div 1 of the TAA 1953 (see amended statement of claim para 13). 16This brings me to the issue of the amount due and payable. As at 17 October 2012 the defendant's income tax liabilities were in the sum of $528,669.17 inclusive of the general interest charge (see the affidavit of Mr Dinos, annexures H and I). As at 25 October 2012 the defendant's income tax liabilities were in the sum of $529,897.57 inclusive of the general interest charge (see the affidavit of Ms Little-Owl annexures A and B). 17As the defendant has no defence, accordingly judgment should be entered forthwith.