Bath Ltd v ZIMRA (HH 552 of 2020; ITC 2 of 2018) [2020] ZWHHC 552 (28 August 2020)

Bath Ltd v ZIMRA (HH 552 of 2020; ITC 2 of 2018) [2020] ZWHHC 552 (28 August 2020)

The appellant misrepresented its expenses in the 2009 and 2010 self-assessments by failing to disclose the composition and nature of globular expenses, which constituted misrepresentation under the Income Tax Act, entitling the Commissioner to reopen the assessments after the prescription period. The statement of reasons provided by the respondent in the letter of 8 November 2016 satisfied the statutory requirement under s 37A (13).

Citation
[2020] ZWHHC 552
Parties
Appellant: BATH LTD; Respondent: ZIMBABWE REVENUE AUTHORITY
Court
Harare High Court
Jurisdiction
Zimbabwe
Judgment Date
28 August 2020
Case Number
HH 552 of 2020 ; ITC 2 of 2018
Procedural Posture
Income Tax Appeal / Judgment After Full Hearing
Outcome
Appeal dismissed as to principal tax and interest; penalty reduced by consent; amended assessments set aside; respondent to issue new assessments; each party to bear own costs.
Legal Topics
Income Tax, Self Assessment, Misrepresentation, Prescription of Tax Assessments, Penalties
Source Language
English
Tax Law Income Tax Self Assessment Misrepresentation Prescription of Tax Assessments Penalties

Case Brief

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Parties

BATH LTD

Appellant

ZIMBABWE REVENUE AUTHORITY

Respondent

Procedural Posture

Income Tax Appeal / Judgment After Full Hearing

Legal Issues

  1. 1 Whether there was any misrepresentation entitling the respondent to reassess the appellant after the expiry of the six year prescription period
  2. 2 At what stage is the respondent legally obliged to communicate to the appellant that it is reassessing the appellant on account of misrepresentation

Ratio Decidendi

The appellant misrepresented its expenses in the 2009 and 2010 self-assessments by failing to disclose the composition and nature of globular expenses, which constituted misrepresentation under the Income Tax Act, entitling the Commissioner to reopen the assessments after the prescription period. The statement of reasons provided by the respondent in the letter of 8 November 2016 satisfied the statutory requirement under s 37A (13).

Court Disposition

Appeal dismissed as to principal tax and interest; penalty reduced by consent; amended assessments set aside; respondent to issue new assessments; each party to bear own costs.

Orders

  • The appeal against the principal tax liability and interest for 2009, 2010, and 2014 is dismissed.
  • Penalty imposed on the amended assessments for 2009, 2010, and 2014 is reduced from 50% to 10%.