PUTRAJAYA: The Federal Court seven-member bench today dismissed the Inland Revenue Board's (IRB) appeal against the High Court's decision on its right to access and audit a client's account maintained by a law firm.
Chief Justice Tun Tengku Maimun Tuan Mat who chaired the panel, said the contents of the client's account related to the monies belonging to the client were covered by solicitor-client privilege.
"Therefore, it is not open to the solicitor to divulge or make available the contents of the client's account to the IRB by reason of Section 126 of the Evidence Act 1950.
"That privilege belongs to the client and not the solicitor. It requires the client to waive the privilege in order that the solicitor may make available the content of the client's account to the IRB," she said.
Justice Tengku Maimun said the IRB had failed to comprehend that the contents of a client's account comprised monies and documents belonging to the client and made or given in the course of employing a solicitor for services.
COURT-IRB 2 PUTRAJAYA
She said that there had been no credible reason accorded to the IRB to seek viewing a third party's account in order to impose tax on the solicitor or the firm.
In the court's unanimous decision, the judiciary's top judge (Justice Tengku Maimun) said the court was of the view that Section 142(5) of the Income Tax Act 1967 did not oust Section 126 of the Evidence Act, which states that money belonging to a client is covered by solicitor-client privilege.
"There is an exception to Section 126 which confers the privilege where a solicitor is allowed to report the commission of illegal activity involving his client to the authorities.
"This provides sufficient safeguard against persons trying to illegally evade the imposition of tax," she said.
Justice Tengku Maimun said the IRB should be prevented from embarking on a "fishing expedition" to go through all the accounts of taxpayers with a view to imposing tax.
COURT-IRB 3 PUTRAJAYA
The other judges presiding on the bench were Federal Court judges Datuk Nallini Pathmanathan, Datuk Vernon Ong Lam Kiat, Datuk Harmindar Singh Dhaliwal, Datuk Rhodariah Bujang, Datuk Mohamad Zabidin Mohd Diah and Court of Appeal judge, Datuk Hanipah Farikullah.
In 2016, the Malaysian Bar wrote a letter to the IRB director-general, stating that it received complaints from its members that the IRB had been carrying out raids on law firms to conduct audits on their clients' accounts and insisted on seeing the accounting books and records of those accounts.
The Bar claimed that the documents and information sought by the IRB were protected by solicitor-client privilege and might not be made available to the IRB.
On Dec 7, the same year, the IRB director-general responded by saying that the audits on clients' accounts were necessary to ensure tax compliance by taxpayers.
The IRB director-general contended that the audits were not in breach of any solicitor-client privilege as Section 142 (5) of the Income Tax Act 1967 overrode the provisions of the Evidence Act 1950 and the Legal Profession Act 1976.
COURT-IRB 4 (LAST) PUTRAJAYA
The Malaysian Bar then filed a judicial review in the Kuala Lumpur High Court, seeking several declarations pertaining to the issue. It named the director-general of the IRB as respondent.
On April 2, 2018, the High Court ruled in favour of the Bar and held that Section 142 (5) did not override Section 126 of the Evidence Act.
As such, the privilege provided under Section 126 of the Evidence Act precluded the IRB director-general from insisting on documents or information relating to the clients' accounts.
The Court of Appeal three-member panel upheld the decision of the High Court on Oct 27, last year prompting the IRB director-general to bring the matter to the Federal Court.
Head of the Revenue Solicitor, Dr Hazlina Hussain appeared for the IRB director-general while lawyer Anand Raj acted for the Bar. Sabah Law Society and Advocates Association of Sarawak appeared as amici curiae (friends of the court).
-- BERNAMA
Bernama
Wed Jul 20 2022
Chief Justice Tun Tengku Maimun Tuan Mat who chaired the panel, said the contents of the client's account related to the monies belonging to the client were covered by solicitor-client privilege. - BERNAMA
Who is Prabowo Subianto, incoming president of Indonesia?
A wealthy ex-general with ties to Indonesia's popular outgoing president and its dictatorial past, looks set to be its next leader.
Iran's supreme leader says Hamas leader's death will not halt 'Axis of Resistance'
The "Axis of Resistance", built up with years of Iranian support, includes Hamas, the Lebanese Hezbollah group, the Houthi movement in Yemen, and various Shi'ite groups in Iraq and Syria.
Putin says Russia willing to seek compromises between Iran and Israel
Russia is ready to help seek compromises between arch-foes Israel and Iran, President Vladimir Putin said on Friday, saying these would be difficult but possible.
What proposals will Russia push at the BRICS summit?
The proposal is also to establish a BRICS reinsurance company to allow uninterrupted shipment of goods and key commodities between members.
Indonesia's free meals plan in the spotlight as Prabowo readies for office
Prabowo calls the programme one of the main drivers of economic growth, eventually set to add an estimated 2.5 million jobs.
Astro AWANI's revamped English news website, AWANI International, launches on Oct 21
Astro AWANI's revamped English platform delivers in-depth global news and expert analysis to keep you informed on key developments.
Israeli strikes kill 33 people in Jabalia refugee camp in Gaza, medics say
Residents of Jabalia said Israeli tanks had reached the heart of the camp after pushing through suburbs and residential districts.
Liam Payne's ex-partner calls for media restraint after 'painful' death
Cheryl Tweedy used her statement to urge the media to remember they had a seven-year-old son, Bear, who could read the reports.
Analysts: Indonesia's strong MoF leadership team to boost investor confidence
Sri Mulyani Indrawati as head of Indonesia's Ministry of Finance is expected to instil confidence among investors.
Biden offers both a carrot and a stick to Israel as his term nears an end
Israel has frequently resisted US advice and has caused political difficulties for the Biden administration.
Putin says BRICS will generate most of global economic growth
Russian President Vladimir Putin will host a summit of the group in the city of Kazan on Oct. 22-24.
ISIS Malaysia's perspective of Budget 2025
An excellent rakyat-centric budget under the overarching principle of a caring and humane economy.
Budget 2025: Record increase in STR, SARA aid initiatives
The government will provide a significant boost to the Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) initiatives next year.
Budget 2025: EPF contributions to be made mandatory for foreign workers – PM Anwar
The government plans to make it compulsory for all non-citizen workers to contribute to the Employees Provident Fund (EPF).
What policies to expect from Indonesia's new President Prabowo
Prabowo will be open to foreign investment, his aide has said, such as by offering investors management of airports and sea ports.
Budget 2025: Govt allocates RM470 mil to empower women's participation in PMKS
The Women's Leadership Apprenticeship Program will be intensified as an effort to produce more female corporate personalities.
Israel sends more troops into north Gaza, deepens raid
Residents of Jabalia in northern Gaza said Israeli tanks had reached the heart of the camp, using heavy air and ground fire.
Indonesia ramps up security ahead of Prabowo's inauguration
Prabowo Subianto will be sworn in as Indonesia's president on Sunday with Vice President-elect, Gibran Rakabuming Raka, also taking office.
Immediate allocation of RM150 mil for local authorities, DID to tackle flash floods
Datuk Seri Anwar Ibrahim said this allocation is intended to address the recent flash floods that hit the capital and several major towns.
Budget 2025: Sabah, Sarawak to continue receiving among highest allocations - PM
Sabah and Sarawak continues to be prioritised under Budget 2025, with allocations of RM6.7 billion and RM5.9 billion respectively.