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Cheng Hung Kit v The Commissioner Of Inland Revenue

Judgment Cited authorities 1 Cited in Precedent Map Related
Vincent
Judgment Date27 January 2021
Neutral Citation[2021] HKCFI 233
Judgement NumberHCIA4/2020
Subject MatterInland Revenue Appeal
CourtCourt of First Instance (Hong Kong)
HCIA4/2020 CHENG HUNG KIT v. THE COMMISSIONER OF INLAND REVENUE

HCIA 4/2020

[2021] HKCFI 233

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

INLAND REVENUE APPEAL NO 4 OF 2020

____________

BETWEEN
CHENG HUNG KIT Applicant (Appellant)

and
THE COMMISSIONER OF INLAND REVENUE Respondent

____________

Before: Hon Au-Yeung J in Chambers

Closing Date for Written Submission: 22 January 2021

Date of Decision: 27 January 2021

_____________

D E C I S I O N

_____________

Introduction

1. The audited accounts of Hang Heung Hop Kee (“Hop Kee”) stated that money payable to the appellant (“Mr Cheng”) as directors’ emoluments was applied towards discharge of debts owed by Hang Heung Cake Shop. The audited accounts were stated to be true and correct and were signed by Mr Cheng as a director. The respondent (“CIR”) charged Mr Cheng to salary tax. Mr Cheng said that no money had been received by him and the audited accounts merely reflected the set off of debts between the 2 companies. On appeal, the Board of Review (“the Board”) upheld the CIR’s decision. This is Mr Cheng’s application for leave to appeal to the Court of First Instance against the Board’s decision (“the Decision”). He puts forth 5 grounds of appeal.

Legal principles

2. Under section 69(3)(e), of the Inland Revenue Ordinance, Cap 112 (“IRO”), leave to appeal must not be granted unless the Court of First Instance is satisfied that a question of law is involved in the proposed appeal and that:

(a) the proposed appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the proposed appeal should be heard.

3. A proposed appeal has a reasonable prospect of success if it is reasonably arguable, although it is not necessary to show that the proposed appeal will probably succeed: China Mobile Hong Kong Co Ltd v Commissioner of Inland Revenue [2018] HKCFI 373, §16, Chow J.

4. The applicant must identity the point of law involved or any specific legal error or question: China Mobile, §27 and 30(4).

5. A finding of fact may only be challenged as an error of law if:

(1) The decision was based on a finding of fact or inference from facts which was perverse or irrational;

(2) There was no evidence to support the finding;

(3) The decision was made by reference to irrelevant factors; and

(4) The decision was made without regard to relevant factors.

See Kwong Mile Services Ltd v Commissioner of Inland Revenue (2004) 7 HKCFAR 275, §§31-34, Bokhary PJ.

6. The appellate court should not disturb the decision of the Board unless it regards that decision as contrary to the true and only reasonable one: Kwong Mile, §37, Bokhary PJ.

Ground 1

7. Under section 68(4) of IRO, the onus of proving that the assessment appealed against is excessive or incorrect shall be on the appellant. Mr Cheng submits that section 68(4) applies only to the taxpayer’s burden to adduce evidence to show that the CIR has erred in his assessment process but it does not impose a burden on the taxpayer to adduce evidence to prove that CIR has no jurisdiction to make any assessment.

8. In my view, the Board has correctly identified the burden of proof as being on Mr Cheng and correctly cited authorities in support (§3 on pages 7-10 and §5(12) on page 17 of the Decision). Section 68(4) does not deal with jurisdiction of the CIR and the Board has not applied section 68(4) to any jurisdiction issue. Ground 1 is unarguable.

Ground 2

9. Mr Cheng relied on several principles for appeal against findings of fact in Kwong Mile and asked if the Board’s fact-finding has been perverse or irrational.

10. Mr Cheng’s contentions were misconceived:

(1) He misquoted the Board when he stated that, at §(5)(11) on page 17 of...

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