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The South-South Zone of the Tax Appeal Tribunal, Benin, has ordered Ecobank Nigeria to pay Akwa Ibom State Internal Revenue Service the sum of N5,309,000 (Five Million, Three Hundred and Nine Thousand Naira only) outstanding Urban Development and other sundry levies for the year 2020-2021 in accordance with the relevant tax laws.
However, the Tribunal declared the Akwa Ibom State Internal Revenue Service demand for the sum of ?28,357,381.48 (Twenty-Eight Million, Three Hundred and Fifty-Seven Thousand, Three Hundred and Eighty-One Naira, Forty-Eight Kobo Only) assessed as unremitted PAYE tax liability due from Ecobank Nigeria to the respondent as unfounded and unjustified in law.
The tribunal led by Hon. Anselm Ungwugwaye Unimna unanimously held that tax authorities must base assessments on credible evidence and proper legal foundation, and any assessment not tied to statutory provisions or supported by verifiable computation is liable to be set aside.
From facts, the Appellant- Ecobank Nigeria had initiated the appeal upon being dissatisfied with the Notice of Revised Assessment and Notice of Refusal to Amend issued by the Akwa Ibom State Internal Revenue Service assessing it to additional tax liability in the sum of N35.6m covering the years 2020 to 2021 years of assessment.
The Bank averred that the Akwa Ibom State Internal Revenue Service failed to provide a breakdown of the alleged “undisclosed income,” inflated its tax liabilities, disregarded its remittances, and unlawfully imposed levies on branches that were not operational, urging the tribunal to set aside the assessment.
In defense, the Respondent- Akwa Ibom State Internal Revenue Service argued that Ecobank Nigeria failed to provide complete records and made itself unavailable for a field audit, thereby compelling the Internal Revenue to rely on available documents and intelligence to arrive at its assessment.
Akwa Ibom State Internal Revenue Service maintained that discrepancies discovered from the bank’s statements justified the inclusion of “undisclosed income” and contended that Ecobank Nigeria failed to discharge the burden of proving that the assessment was excessive or incorrect.
In a well-considered judgment, the tribunal led by Hon. Anselm Ungwugwaye Unimna as Chairman, with Hon. Asoro Elvis Osariuyimen, Prof. Ofiafoh Eiya, Sunday A. Aborisade Esq., and Olayinka Tajudeen Adewale as members held that the Akwa Ibom State Internal Revenue Service failed to justify the basis upon which the alleged undisclosed income was computed and included in the PAYE assessment.
The tribunal stated that under the Personal Income Tax Act, PAYE tax must be strictly derived from employee emoluments, and any attempt to assess tax on income not connected to such emoluments is inconsistent with the law and therefore invalid.
The tribunal stated that the Internal Revenue’s reliance on figures described as undisclosed income without providing a clear breakdown or nexus to staff salaries rendered the PAYE assessment arbitrary and unsustainable.
The tribunal held that Ecobank Nigeria provided documentary evidence of its withholding tax remittances, which the Akwa Ibom State Internal Revenue Service failed to challenge, and such uncontroverted evidence must be accepted as proof of compliance with its withholding tax obligations.
On the Urban Development and other sundry levies, the tribunal held that Ecobank failed to provide credible and consistent evidence to support its claim that certain branches were not operational, and the contradictions in its witness testimony weakened its case on the issue of levies.
“Accordingly, the Tribunal finds that while the PAYE and Withholding Tax assessments are unfounded and are hereby set aside, the sum of N5.31m assessed as Urban Development and other sundry levies remains due and payable by the Appellant to the Respondent,” the tribunal ruled.
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