1% [tak] iF) IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) BANKRUPTCY DISTRICT OF THE STATE ) ) OF VICTORIA No. 194 of 1985 RE: ALAN TERENCE TRIPP A Bankrupt EX PARTE: DEPUTY COMMISSIONER OF TAXATION Applicant AND: JOHN CRAV:IN BARNES Respondent CORAM: Jenkinson J. PLACE: Melbourne DATE: 1 September, 1987 REASONS FOR JUDGMENT In my opinion the reasoning of Lush J. in The Commonwealth v. Duncan 81 A.T.C. 4228 answers the questions which have been raised and discussed in this case. The circumstance that Lush J. was concerned with the significance of s.177 of the Income Tax Assessment Act 1936 in relation to proofs of debt under the Companies Act 1961, a State Act, whereas I am concerned of course with the application of s.177 in relation to a Commonwealth Act, the Bankruptcy Act 1966, and one expressed, as Mr. Barnes has pointed out, to bind the Crown, is not for these purposes a material distinction, in my opinion. In any legal proceeding in this country in which the liability of a person to a debt arising 2. by way of assessment under the Income Tax Assessment Act is in issue proof of the liability will be governed by the provisions of s.177 of the Income Tax Assessment Act 1936 if the Commissioner chooses to make use of that provision, and it matters not whether the question of the liability arises under State law or Federal law. The question before me is just such a question and I follow respectfully the reasoning of Lush J. in The Commonwealth v. Duncan to hold that the adduction of evidence before the Court of certified extracts of the relevant notices of assessment compel me to uphold the appeal and to accept the proof of debt. It is unnecessary for me to decide whether or not a trustee exercising the function conferred by s.102 of the Bankruptcy Act 1966 to determine whether or not to admit a proof of debt is also constrained by the operation of s.177, but I point out for what it is worth that Lush J. specifically dealt with that question in his reasons for judgment, and I have no reason whatever to doubt that what he said in that case would apply equally and without any distinction of substance toa trustee exercising the function conferred by s.102. The orders that I make disposing of the appeal are that the decision of the trustee upon the proof of debt lodged by the Deputy Commissioner of Taxation of the Commonwealth of Australia which was notified by notice of rejection of proof of debt dated 10 December 1966 be reversed, and that the said proof of debt be admitted in whole. As to costs, I think that the Commissioner should pay all the costs of the appeal. I am not to be taken as accepting as 3. correct by any means all of the criticisms which Mr. Barnes very properly in discharge of his role advanced against the Commissioner, and in particular I am not to be taken as accepting his submissions that the circumstances suggest an irresponsible process of assessment and variation of assessment. Leaving aside circumstances in which in cases involving asset betterment assessment the Commissioner may quite properly compromise with the taxpayer in the interests of the efficient discharge of his functions, there are no doubt often circumstances in which after an assets betterment assessment has been made the Commissioner receives further information or, as perhaps in this case, has the benefit of sworn testimony by the taxpayer which he decides it would be proper for him to accept, whereas he was not prepared to accept the unsworn assertions of the taxpayer. There are all sorts of circumstances in addition to those I have mentioned as possible circumstances in which the Commissioner may no doubt with entire propriety vary his assessment of income tax liability. But in this case, as has been admitted in Mr. Smooker's affidavit, there was an error on the face of a notice of assessment. What has been said during the course of the hearing of this case makes it obvious how very, very important it is that notices of assessment should not contain errors. Furthermore, perhaps as a result of that error, the hearing of this case has had to be extended over several days because those assisting and instructing became, I think, probably confused when questions were asked on the first hearing day, perhaps confused because they were conscious of some inconsistency in the figures that they were referring to, connected with the error that is to be found on one 4. of the notices of assessment. Whatever the cause, the appellant has been responsible for the extension of the hearing and is by reason of that error in a position where he simply cannot be heard to say that if the trustee had acted with complete and God-like mastery of the facts and the law upon his consideration of the procf of debt, he must have come to admit the proof. He cannot say that because of his own confession of the error in one of the figures. In those circumstances it seems to be that the proper erder to make is that the applicant, the Deputy Commissioner of Taxation of the Commonwealth of Australia pay the costs of - what is this proceeding called; it is called an appeal, is it? No, it is an applicatipn to review. What was the originating - - - MR. BOADEN: It is an application, your Honour, pursuant to s.184. HIS HONOUR: The application instituted by written application filed 23 December 1986. I will make an order that the costs of the trustee of the application instituted by the written application filed 23 December 1986 be taxed and paid by the applicant, the Deputy Commissioner of Taxation of the Commonwealth of Australia. I certify that this and the 3 preceding pages are a true copy of the Reasons for Judgment of Mr. Justice Jenkinson Associate Dated: 1 September, 1987