In Government of Malaysia v Inoapps Sdn Bhd [2022] MLJU 2280, a taxpayer had not filed its required tax returns, leading the Director General of Internal Revenue ("DGIR") to issue Estimated Notices of Assessment based on his "best judgment". The Government then commenced legal proceedings and applied for summary judgment against the taxpayer under sections 103 and 106 of the Income Tax Act 1967 ("ITA").
The High Court granted a stay of execution of the summary judgment pending the outcome of the appeal before the Special Commissioner of Income Tax ("SCIT").
The High Court held that while it was bound to enter summary judgment against the taxpayer under the ITA, its discretionary power to grant a stay of execution pending the disposal of the appeal before the SCIT should be exercised in view of the special circumstances, namely, the lack of explanation for the substantial increase in the income chargeable to tax against the taxpayer.
The High Court observed that if the DGIR had offered a reasonable explanation, the summary judgment – on an unconditional basis – could have been entered, but this was not the case.
The decision underscores the importance for public decision-making bodies to provide reasons for their decisions. This decision aligns with the judicial trend that giving reasons is fundamental to good administration as it demonstrates transparency and accountability in public decision-making process.
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