Moreau v Federal Commissioner of Taxation [1926] HCA 28

ial Union 'ial Union lia

Australi ust Mortgage eer | ee Rler ieee, im

(1996) 69 FCR (1596) 69 FCR 31 31

39 C.L.R.] OF AUSTRALIA. 65

(HIGH COURT OF AUSTRALIA.]

MOREAU. = . P p a 5 . . APPELLANT;

AND

THE FEDERAL COMMISSIONER OF TAXA- TION ae : ResPonveENT.

Income Tax—Assessment—Alterations or additions after three years—Avoidance of H.C. or A. tax owing to fraud—Belief of Commissioner—Conelusiveness of reason for belief 1926, —Bvidence—Income—Purchase of goods abroad—Price payable in foreign — — money—Variation of rate of exchange—Notice of assessment—Burden of proof sypuv, cast on appellant—Weight of statutory evidence—Income Tax Assessment Act Aug. 31; 1915-1918 (No. 34 of 1915—No. 18 of 1918), secs. 33, 35—Income Tax Assess. Sept. 1. 'ment Act 1922-1925 (No. 37 of 1922—No. 28 of 1925), secs. 37, 39. Masoe

Sec. 37 of the Income Tax Assessment Act 1922-1925 provides that "(1) The Se?! 17. Commissioner may at any time make all such alterations in or additions to jgaacs 3 any assessment as he thinks necessary in order to insure its completeness and accuracy, notwithstanding that income tax may have been paid in respect of income included in the assessment : Provided . . . that an alteration or addition shall not be made in or to an assessment after the expiration of three years from the date when the tax payable on the assessment

was originally due and payable, unless the Commissioner has reason to believe that there has been an avoidance of tax owing to fraud or attempted evasion."

Held, that, for the purposes of that proviso, (1) the existence of fraud or attempted evasion is a matter for belief by the Commissioner and not for proof as a fact ; (2) unless the ground or material on which the belief of the Commissioner is based is so irrational as not to be worthy of being called a reason by any honest man, his conclusion that it constitutes a sufficient reason cannot be overridden; (3) the circumstances which induced his belief are examinable only for the purpose of ascertaining whether the alleged reason really existed and, if it did, whether it was so irrational as to be outside the limits of the administrative discretion with which the Commissioner is invested and really in disregard of the statutory condition.