The Beginning
It began with a letter dated 13 October 2020. The taxpayer opened it cautiously, finding a stern request from the tax authorities: a response was required within 21 days regarding their financial records. Barely a day later, however, an assessment and additional assessments were issued, totaling significant sums for multiple years of assessment. The taxpayer was stunned.
“These numbers don’t make sense,” they exclaimed, reviewing the attached capital statement summary. It was vague and lacking in detail, providing no explanation of how the figures had been computed. Frustration mounted as the taxpayer realized they couldn’t even verify the accuracy of the assessments.
Determined to challenge what they viewed as an unfair and unreasonable action, the taxpayer sought judicial review, arguing that the assessments were rushed and lacked transparency, violating principles of natural justice.
The Judicial Hurdle
In the High Court, the taxpayer’s plea was dismissed at the leave stage. The court deemed that no exceptional circumstances warranted judicial review, emphasizing that the Income Tax Act provided an alternative remedy—a statutory right to appeal to the Special Commissioners of Income Tax (SCIT).
The taxpayer, undeterred, brought the matter to the Court of Appeal, seeking to overturn the High Court’s decision.
The Court of Appeal Showdown
The courtroom was tense as both sides presented their arguments. The taxpayer’s counsel stood firm, asserting, “Your Honours, the Revenue’s actions are not only unreasonable but procedurally flawed. How can my client be expected to respond to vague assessments issued hastily without proper reasoning? The absence of transparency undermines the taxpayer’s ability to exercise their rights effectively.”
The Revenue’s counsel countered, “This is a matter of fact, not law. The Income Tax Act is clear—the appropriate forum for resolving disputes over assessments is the SCIT. Judicial review is not the proper avenue for these grievances.”
The judges deliberated, scrutinizing the arguments and the statutory framework. In their unanimous judgment, they dismissed the taxpayer’s appeal, ruling that the SCIT was indeed the correct forum for resolving factual disputes arising from the capital statement. The taxpayer was ordered to pay RM5,000 in costs.
The Lesson Learned
This case serves as a critical reminder that the right forum matters in tax disputes. While judicial review is a powerful tool, it is not a substitute for statutory appeals, particularly when the issues involve questions of fact rather than law.
For taxpayers, the lesson is clear: always pursue the proper channels for resolving disputes, ensuring that evidence and arguments are presented to the right decision-makers. For tax professionals, the case highlights the importance of clear documentation and timely responses to avoid procedural pitfalls.
In the complex landscape of tax law, understanding the balance between rights and remedies is essential. Only by navigating these pathways correctly can taxpayers safeguard their interests while upholding the principles of fairness and justice.
Aturan 53, Kaedah-Kaedah Mahkamah 2012 dan Seksyen 99 Akta Cukai Pendapatan 1967
