WHETHER THE FILING OF TAX ASSESSMENT NOTICE IS A SINE QUA NON FOR ESTABLISHING LIABILITY FOR NON-PAYMENT OF INCOME TAX?

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WHETHER THE FILING OF TAX ASSESSMENT NOTICE IS A SINE QUA NON FOR ESTABLISHING LIABILITY FOR NON-PAYMENT OF INCOME TAX?

by Branham Chima.

✓ DEFINITION(S):
Tax assessment notice: is a formal communication sent by tax authorities to taxpayers to inform them of the amount of tax they owe based on the assessment of their taxable income. The notice of assessment provides details about the tax calculation, any deductions or exemptions applied, and the deadline for payment. It serves as an official document that establishes the taxpayer’s liability for the assessed tax amount.

Sine qua non: an essential, or indispensable element, condition, or ingredient.

Income Tax: refers to a tax imposed on an individual’s or entity’s income by the government. It is typically calculated based on the individual’s taxable income, which is the income after deducting allowable deductions and exemptions.

✓ ANSWER:
Yes.

The Personal Income Decree is a legislation that requires tax authorities to assess an individual’s income tax liability based on their taxable income. As part of this process, the tax authorities must serve the taxpayer a notice of assessment that communicates the tax amount owed based on the assessment. If the tax authorities fail to properly serve this notice as prescribed under section 56 of the legislation,  they cannot legally establish liability for non-payment of taxes by the taxpayer under the Decree. In short, the notice of assessment is a legally required step to prove an individual’s liability for unpaid income tax according to the personal income Decree.

In Access Bank v. Edo State BIR (CA/B/333/2015, 2018) per S.C. Oseji, JCA: ‘This leads me to the conclusion that assessment of tax payable on taxable income is an essential requirement of the personal income Decree and proof of service upon the tax payer of the notice of assessment as prescribed by Section 56 thereof is a sine qua non for establishing liability for non-payment of income tax under the Decree. See also Ukpong v. Commissioner of Finance (2006) 16 NWLR (Pt. 1013) 187 also relied on by the Appellant.’

‘In this regard, I agree with the submission of the Appellants counsel that the Respondent cannot fix arbitrary figure without giving the requisite breakdown of such figure on a yearly basis and having failed to carry out a valid tax assessment on the Appellant and notify the Appellant accordingly via a notice of assessment and then demand note before embarking on the enforcement of the sum of ₦42,184,790.16k constitutes non compliance with the provisions of the Personal Income Tax Act. This issue is also resolved in favour of the Appellant.’

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