KUALA LUMPUR: The High Court recently allowed the Inland Revenue Board (IRB) to recover RM7.4 million in unpaid income tax from a businessman for the period between 2018 and 2022.
Judge Datuk Ahmad Shahrir Mohd Salleh ruled in favor of the IRB by allowing its summary judgment application against Datuk Shafee Zaman Sikandar Batcha, finding no triable issues raised by the defendant.
A summary judgment is a court decision made without a trial, based on evidence, when no material facts are disputed, allowing the judge to resolve the case on legal grounds.
Ahmad Shahrir in his ruling said the defendant's argument of a lack of cause of action, claiming the assessments were based on company funds and assets rather than personal income, was fundamentally misconceived.
The IRB issued additional assessments to the defendant for the years 2018 to 2022, totaling RM2,454,926.27, RM1,818,439.57, RM558,108.48, RM959,386.24, and RM944,452.80, respectively, through Notices of Assessment (Additional) dated Dec 14, 2023.
The defendant failed to pay the tax within 30 days of service of the notices consequently a 10 per cent increase was imposed that amounted to RM245,492.62, RM181,843.95, RM55,810.84, RM95,938.62, and RM94,445.28, respectively for each year of assessment.
On Jan 3, last year, the defendant filed an appeal against the additional assessments to the Special Commissioners of Income Tax (SCIT) while IRB commenced these proceedings to recover the outstanding tax and increases.
The defendant submitted that there was no evidence that the Notices of Assessment were properly served by ordinary post and the tax-man failed to exhibit any documentary evidence of posting or specify the exact date of service by ordinary post.
The defendant also challenged the basis and accuracy of the additional assessments on multiple grounds, including alleged errors in the treatment of property ownership, company funds, and vehicle transactions.
However, the court disagreed with the defendant's contention, ruling that a tax notice sent by ordinary post is deemed to have been served on the person the day after it would have been received in the ordinary course of post, provided it is addressed to the person's last known address.
"The notices were sent to the defendant's address and were never returned undelivered.
"The defendant's conduct confirmed receipt of the notices, as the defendant filed an appeal on Jan 3, 2024, which was exactly within the 30-day appeal period from Dec 4, 2023.
"The defendant's argument that there was a lack of cause of action because the assessments were based on company funds and assets rather than personal income was fundamentally misconceived.
"The cause of action in tax recovery proceedings arises from the failure to pay tax that has become due and payable upon service of notices of assessment," he said in his ground of judgment uploaded on the Judicial Department website today.
The court said the notices of assessment have been property served and the tax has become due and payable.
The court added the defendant's various challenges to the basis and calculation of the assessments were matters that must be pursued before the SCIT and cannot be entertained in these proceedings.
The court also awarded RM5,000 in costs to the plaintiff.
The defendant is appealing the decision to the Court of Appeal.