The NSW Supreme Court has granted a Deputy Commissioner’s application to strike out amended defences of various taxpayers and enter judgment for the Commissioner for debt recovery action in relation to the issuing of amended assessments to them in connection with their tax affairs, which also involved the Commissioner obtaining information from the Cayman Islands.
The taxpayers argued that the assessments were invalid on the basis that the acts of ATO officers in seeking and obtaining the information were unlawful, done in bad faith and constituted both “conscious maladministration” and a contempt of court. In addition, they argued that the officers acted in breach of the code of conduct in s13 of the Public Service Act 1999 (which requires an Australian Public Service officer to behave honestly and with integrity in relation to their employment).
The Commissioner, on the other hand, argued that in terms of s175 of the ITAA 1936, the validity of an assessment shall not be affected by reason that any of the provisions of this Act has not been complied with and that the production of a notice of assessment was conclusive evidence that the assessment was properly made and that the amounts of the assessment are correct (except as challenged in Pt IVC appeal proceedings).
In granting the application and entering judgment for the Commissioner, the Court found that taken, at its highest, the contention of the taxpayers that there was “conscious maladministration” in the process of assessment by the ATO officers (by way of unlawful investigations leading up to the issuing of the notice of assessments) was doomed to failure – especially in terms of what the Full Federal Court in Denlay v FCT [2011] FCAFC 63 said constituted “conscious maladministration in the process of assessment”. The Court also found that the taxpayers’ claim of an alleged breach of the Public Service Act 1999 and an alleged contempt of court would not assist them in the circumstances.
(DCT v Anglo American Investments Pty Ltd & Ors [2016] NSWSC 975, NSW Supreme Court, Button J, 14 July 2016.)
[LTN 136, 18/7/16]