In the matter of an application for a writ of mandamus against Sir Edward Cain (Commissioner of Taxation): ex parte Evatt.

Members: Barwick CJ
McTiernan J

Gibbs J
Stephen J
Mason J

Tribunal:
High Court of Australia (Full Court)

Decision date: 1975

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Gibbs J.: This is an application for a writ of mandamus directed to the Commissioner of Taxation. The prosecutor - the taxpayer - lodged objections to amended assessments to income tax made by the Commissioner for each of the years of income ended 30th June 1968, 30th June 1970 and 30th June 1971. The objections were disallowed and the taxpayer requested the Commissioner to refer the decision to a Board of Review. The Commissioner thereupon forwarded to the Board a statement made in intended compliance with reg. 35(1) of the Income Tax Regulations. The material parts of the statement read as follows -

``(b) FULL DETAILS OF TAXPAYER'S CLAIM AS MADE TO THE COMMISSIONER

As per notices of objection dated 13 April 1973 copies of which are attached.

(c) THE COMMISSIONER'S REASONS FOR DISALLO FING THE TAXPAYER'S CLAIM

• (i) The taxable incomes derived by the taxpayer during the undermentioned years of income, determined pursuant to sec. 167(b) of the abovenamed Acts were not less than: -

        Year ended 30 June Taxable Income
  
                       $
  
        1968        23,254
  
        1970         4,219
  
        1971       105,266
              

• (ii) The taxpayer omitted from his returns of income for the years ended 30 June 1968, 1970 and 1971 assessable income and became liable under sec. 226(2) of the abovenamed Acts to pay as additional tax amounts equal to double the difference between the tax properly payable and the tax payable upon the basis of the returns furnished.
• (iii) Of such additional tax, the Commissioner remitted, in terms of sec. 226(3) of the said Acts, three quarters and the circumstances do not warrant any further remission in respect of the years of income ended 30 June 1968, 1970 and 1971.''

Copies of the notices of objection were forwarded with the statement.

Regulation 35 is in the following terms -

``Reg. 35. Particulars to be supplied by Commissioner.

(1) The Commissioner, in referring a decision to a Board of Review in accordance with sub-section (1) of sec. 188 of the Act or sec. 189 of the Act, shall furnish the Board with a printed or typewritten statement, in quadruplicate, containing -

• (a) the name and address of the taxpayer;
• (b) full details of the taxpayer's claim as made to the Commissioner; and
• (c) the Commissioner's reasons for disallowing the taxpayer's claim.

(2) The Commissioner shall at the same time furnish the taxpayer with a copy of the statements referred to in sub-paragraphs (b) and (c) of the last preceding subregulation.''

The taxpayer complained that the brief and general statement made by the Commissioner did not satisfy the requirements of reg. 35(1)(c). The assessments were default assessments and were made on a ``betterment'' basis, that is the Commissioner calculated the taxpayer's income by having regard to the apparent increase in his assets. Details of the Commissioner's calculations were furnished to the Board and to the taxpayer. In the course of correspondence with the Commissioner, and in conversations with his officers, the taxpayer elaborated in some detail his contentions that the assessments were erroneous. The Commissioner did not furnish copies of that correspondence, or information concerning those conversations, to the Board. It was submitted that ``full details of the taxpayer's claim as made to the Commissioner'' could only be discovered by considering all the communications, oral and written, made by the taxpayer to the Commissioner. If this were correct it would seem to follow that there had been a failure to comply with reg. 35(1)(b), but counsel for the taxpayer did not seek to rely on any such failure. The argument put forward on

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behalf of the taxpayer was that whether the ``full details of the taxpayer's claim'' are to be found in the objection alone, or in that together with additional material, the Commissioner, to discharge his duty under reg. 35(1)(c), must deal with all the substantial questions of law and fact raised by the taxpayer in his ``claim'', and give his reasons for rejecting the taxpayer's objections and assertions.

If the matter were free from authority I might have doubted whether a statement of the Commissioner's ultimate conclusions, which did not reveal the steps in the reasoning by which those conclusions were reached, would satisfy reg. 35(1)(c). But it has been decided by this Court that such a statement is sufficient:
Sutton v. F.C. of T. (1958) 100 C.L.R. 518 . Counsel for the taxpayer conceded that unless we distinguish or overrule that decision his application must fail. In that case the Commissioner had furnished to the Board a statement of his reasons which, as appears from the report in 7 A.N.Z.I.T.R. at pp. 391-2, was very similar in form to that in the present case. It was no more informative than the present statement. Counsel asked the Board to rule that the statement did not comply with reg. 35(1)(c) and to require the Commissioner to furnish particulars (see at p.520). A case stated by the Board to this Court asked three questions one of which was as follows:

``Whether par. (c) of [the statement furnished to the board by the commissioner] constitutes a compliance by the commissioner with reg. 35(1)(c) of the Income Tax and Social Services Contribution Regulations''

(see at p. 521).

The Court answered that question in the affirmative. In the course of their judgment the members of the Court said (at p. 524) -

``The reasons which the commissioner in this case forwarded in his statement have the merit of brevity, and the taxpayer complains that they are so concise that they amount to nothing. What they do is to give ultimate conclusions and figures justifying the assessments, and not the steps in reasoning by which they were reached. It is not possible to say that this amounts to nothing, even if it provides less than the author of reg. 35(1)(c) might have hoped. But again the board has no authority to impose on the commissioner a legal obligation to give more reasons. It is to be observed that reg. 35(1)(c) is directed not to ensuring that the taxpayer is informed of the commissioner's reasons but to supplying the board with them. It is not the board that appears to be dissatisfied with the commissioner's statement of reasons.''

I can see no ground on which that decision can be distinguished form the present case. It is true that there the powers of the Board were discussed, but the Court was called upon to decide, and did decide, whether a statement indistinguishable from that furnished in the present case was sufficient compliance with reg. 35(1)(c).

This Court has power to overrule its own decisions, but will do so only ``with great caution and in clear cases'':
Perpetual Executors and Trustees Association of Australia Limited v. F.C. of T. (Thomas' case) (1949) 77 C.L.R. 493 . It is not enough to overrule an earlier decision that an opposite conclusion is preferred:
Attorney-General for New South Wales v. The Perpetual Trustee Company (Limited) & Ors. (1951) 85 C.L.R. 237 at p. 244 . The decision in Sutton v. F.C. of T. was unanimously given by five members of the Court. It is impossible to say that it is manifestly wrong. It was submitted that the remark that reg. 35(1)(c) is directed not to informing the taxpayer of the Commissioner's reasons but to supplying the Board with them suggests that possibly the Court did not advert to reg. 35(2). It may be that, having considered that the purpose of the statement was to inform the Board, and that reg. 35(2) was designed to ensure that the taxpayer was, in fairness, apprised of the contents of any statement furnished to the Board. However even if the Court did overlook the provisions of reg. 35(2), that would not appear to affect in any way the reasoning by which it reached its conclusion as to the meaning of reg. 35(1)(c). Furthermore, and if it is thought desirable that the Commissioner should supply the Board and the taxpayer with a statement that reveals what view he has formed on the various matters raised by the taxpayer in support of his objection - and without in any way reflecting on what has been done in the present case I would think that it would be desirable that more useful and illuminating statements should be required - that result can readily be

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achieved by amending the Regulations. In my opinion the decision in Sutton v. F.C. of T. should be treated as a binding authority and it governs the decision in the present case.

The order nisi should be discharged.