CATCHWORDS Income tax - bankruptev petition founded on failure ta comply "wikth bankruptcy notice requiring payment of widoment debt for income tax - petition opposed or stav or oroceedings sought on wt J 1) $s nt 0) around debtor had arquable case on appeal against as3¢ assessments issued oursuant to s. 14° of Income Tax Assessment nt - a D Act 1336 - request for particulars of basis of assess whether appregr ata Pao meder such atl outa rc > awb rehye ft a) ye 'A u pm] fa oa a Tt _ Ww wd mw Si vi Pin yr st "I rw vv RE JEFFREY THOMAS DALCO, EX FARTR 'THE DEPULY COMMISSIONER OF TAXATION No. P1538 of 19286 "seam: Shevooard J. Flace: Svdnev Gate +: Ll Aeril 1387 —_ oe Legpm™ ee holy ~, ' <P. ox ~ IN_THE FEDEPAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY RE: JEFFREY THOMAS DALCO Debtor EX PAFTE: THE ___DEPYTY QOMMISSIONER JE TAXATION TGEAM: SHEPPARD J. DATE : 1 APRIL 1997 REASONS FOR JUDGMENT HIS HONOUR: This 1s an application in which the debtur seeks certain oarticulars of assessments of income tax wnich were nace by the Deputy Commissioner of Taxation scursuant to s. 1o7 of the Tncome Tax Assessment Act 1936, The particulars souqht are particulars of the basis upon which 1t 213s allevea thar the amounts included in terrain adiustment sheets attacned to the assessments formed rhe caxaple unmrzome cf rhe debtor for marLitular vars. pending in the Supreme Court of New South Walas. T understand they are fixed to be heard later this vear in the Administrative Law Division of that Court. The Denuty Commissioner seeks to proceed with his petition as he aus entitled to do. he having the qudament to which I have referred. However, the debtor says that I should dismiss the petition, or at least grant a stav of it, if he demonstrates that he has an arguable case on the appeals which are pending in the Supreme Court. That 1s the ultimate question which I shall need to trv. Tk 1s in those circumstances that he seeks the particulars 2 wnich T have referred. No arvument has been addressed te ve that if 4S inappropriate, because this 15 a bankruptcy marter, frr particulars "0 be sought and T would not chink that any fucn t2ing equal, che Zs B acmument could have succeeded. All oc os uw debtor would be entitled 9 particulars of the kind sought in his solicitor's letter. Canfrontina the debtor, however, 15 the difficultv that 1t was held in George's case that the Court will not order particulars to be furnished bv the 'Tommissioner in cases involving assessments of income tax pursuant to s. 167 2f the Act. Te is to be sobserved that there is a point 2f distinction betweer that case and this ome in that in George a mase the particulars which were scuaht were oarlicular source from which the respandent Commissioner allerea chat the appellant taxpayer derived the addirizral amount uecn whith tre io)mn oa . or respondent had arbitrarily assessed che avoeliia Income ir gyuestion. AaAditionally, particzulars were stugnt of tne WOenkity OF the cersen oy officer whe formea cr made aor damerc St ascertainment or tudaqment 1S excessive, he cannot succeed and 1t can be no part of the duty of the commissioner to establish affirmatively what qudament he formed. much less the grounds of it, and even less still the truth of the facts affording the araundis. Yet that is what is involved when the demand for particulars of the sources alleqed of the appellant s income 15 justified by reference to 5s. 157. Tt is an error fo treat the formation by the commissioner of a judgment as to the amount of the taxable income as if 1t were not the ascertainment of the taxable itncome which constitutes assessment or a necessarv part of that process andas if 1t were but the fulfilment of a condition precedent t9 the power or authoritv to assess". Tounsel for the debtor made two answers ta the reliance placed by the Deputy Commissioner ar said that che decision had been affected by whul pad ceon deliaed in the subsequent case of Barley v. The Commissioner (1977) 136 T.L.R. 214. That was a case in whirth it anwneared ir correspondence that the Commissioner was Llikeiy to reiv upan an arrangement under s. 260 of the Act. The Court thought 1 appropriate to order particulars. It 1s to be observed tnat it did not timit its order for ovoarticulars tc particulars of the arranvement under s. 260 but made a ceneral order requiring the Jommissroner to give aApproeriate oarticsulars if the basis cf nis assessment. The order had two subcaragraohs in it whith draw cas 'Tommissloner s attention narticularly cto the alledqed arranvemert 's a a wT rt bTT Oobe rTr HDp 1D Awo at By iy w s WW Qn it wnder $s. 260 and one othe a re) > the order was, nevertheless, a reaneral one. 43 in this case, " L Ur] 1D Tommissroner in Bailey's case reliea stranaly narticularly cuoon the vassaze whith I have rited from the judament. application farled rut Fhe ore onl case different from that and there 15 nothing case which Chrows any light on the ques particulars 1m cases where the Commissioner that the assessment 1s based ons. 260". Aickin J.'s tudament was agreed in bv Gibbs J. :as ne was) op. AMY ww 218). Mason J. fas he was) /p. 229\ ard Jacobs J. 'npn. Thus whatever the affect of Barley s case mav have beer, it fF did not overrule 1 ms Q i) wo) n p un iy n iD rs t iy wrawv + did not affect Ge It left 1t as a decision on the wpartizular circumstances of 1 a s own facts. As I have said. 1€ 18 oossibie to distinguisn tas case from George's case because of the different form cf request, but I do nok see, mvself, that point of dastinclion a. seing ore of substance: and subiect bo what I am about to sav cancernina s,. a4 of the Judiciary Act 1903, it seems tc me that this case 15 determined by George's case. ecand aw Section 654 of the Judiciary Act was the basis ftr the answer made by counsel for the debtcr ta the relianre ola-ed ty -ounsel for the Deoutv Commissioner on Geerme = TARe. To owas eaferred oarticularly ¢29 the decision cof the Yrgm Trurt in one Commonwealth sf Australia v7. Evars "eavin Industries Linrted (1986) 60 A.L.J.F. ALS. Tn that tase the Tourt vreferrad is Maguire vv. Simoson (1977) 2139 7.L.R. 352 and reireratea to, 421) that s. 94 did nor deal ooniy with matters of orocedure: 1h dealt also with substantive rights. Pe! 1T fal wLb py ry eference was made by rtounsel Hign Ccurt in which discovery was ordered in an income tax case: decision of the High Court in George 5 case which has been left undisturbed bv Bairley's case. In those 'tircumstances. the application for particulars must be refused. | certify that thi¢ andthe © preceding pages are atrue copy of the reasons for Judgment herein of The Honaurable Mr Justice Sheppard. j / , Associate Dated / PFRIL /987 Counsel for the Debtor/Applicant: P.M. Wocd Solicitors for the Debtor/Applicant: J.c. Behm & Associates Tounsel for the Petitioning Creditor Respondent: 7. Darvail., 0.70. witn BB McGovern Solicitors for the Petitioning Creditor/Respondent: Australian Government Soliciter Date of hearing: 1 April 1987