Kais Jewellery (Syd) Pty Ltd and Commissioner of Taxation (Taxation) - [2022] AATA 425

Kais Jewellery (Syd) Pty Ltd and Commissioner of Taxation (Taxation) [2022] AATA 425 (11 March 2022)

Division:TAXATION AND COMMERCIAL DIVISION
File Number: 2018/5853
Re:Kais Jewellery (Syd) Pty Ltd
APPLICANT

AndCommissioner of Taxation
RESPONDENT

File Number: 2018/5854
Re:Ali Kais
APPLICANT

AndCommissioner of Taxation
RESPONDENT

DECISION
Tribunal:Senior Member R J Olding
Date:11 March 2022
Place:Sydney

The decisions under review are affirmed.
.............................[SGD]...........................................
Senior Member R J Olding
CATCHWORDS
TAXATION – GOODS AND SERVICES TAX – whether applicant entitled to input tax credits on purported acquisitions of scrap gold – where neither purported supplier paid GST on purported supplies – where no evidence of how suppliers sourced scrap gold - whether acquisitions made – weight to be given to statement provided by witness who died before hearing – applicant’s burden of proof not discharged – decision affirmed
TAXATION – INCOME TAX - whether large cash withdrawals from company bank account income of director or consideration for acquisitions of scrap gold paid in cash – applicant’s burden of proof not discharged – decision affirmed
TAXATION – ADMINISTRATIVE PENALTY – where taxpayer sought to discharge burden of proving penalty assessments excessive only by proving there were no primary tax shortfalls – where taxpayer failed to prove primary tax assessments are excessive – where taxpayer made no submission that base penalty was otherwise incorrect or should be remitted – decision affirmed
LEGISLATION
A New Tax System (Goods and Services Tax) Act 1999 (Cth) Chapter 2, ss 9-5, Division 11
Corporations Act 2001 (Cth) s 1305(1)
Income Tax Assessment Act 1997 (Cth) ss 6-5
Taxation Administration Act 1953 (Cth) s 14ZZK
CASES
Bayconnection Property Developments Pty Ltd and Commissioner of Taxation [2013] AATA 90
Cash World Gold Buyers Pty Ltd and Commissioner of Taxation [2020] AATA 1546
Eastwind Trade Pty Ltd and Commissioner of Taxation [2017] AATA 140
Federal Commissioner of Taxation v Cassaniti [2018] FCAFC 212
Imperial Bottleshops Pty Ltd v Commissioner of Taxation (1991) 22 ATR 148
Kais and Commissioner of Taxation [2021] AATA 16
STNK and Commissioner of Taxation [2021] AATA 3399
REASONS FOR DECISION
Senior Member R J Olding
11 March 2022
WHAT ARE THESE CASES ABOUT?

The first application for review, by the applicant Kais Jewellery (Syd) Pty Ltd (‘Kais Jewellery’), concerns GST issues arising in respect of what is said to be trading in scrap gold.
As the case was conducted, the GST issues mainly come down to this: Did Kais Jewellery acquire scrap gold from two unrelated entities, as it maintains, or were the invoices purporting to record these transactions falsified, as the Commissioner of Taxation submits? If Kais Jewellery is unable to prove that it made these purported acquisitions it is not entitled to the GST input tax credits (‘ITCs’) it claimed.[1]
[1] A New Tax System (Goods and Services Tax) Act 1999 (Cth) (‘GST Act’), Chapter 2, Division 11.
A director of one of the purported suppliers of scrap gold gave evidence that he provided false ‘tax invoices’ and that his company never sold scrap gold to Kais Jewellery. A director of the other purported supplier provided a witness statement to the effect that his company did supply scrap gold to Kais Jewellery. However, this witness passed away before the hearing.
Neither of the two companies paid GST on the alleged taxable supplies for which Kais Jewellery claimed ITCs or lodged GST returns reporting such transactions.
There are also penalty assessments relating to the alleged GST shortfalls. However, the case was conducted on the basis that the fate of the penalty assessments would be determined by whether Kais Jewellery could prove it made the claimed creditable acquisitions of scrap gold from the two companies mentioned.
The second application concerns whether cash withdrawals from Kais Jewellery’s bank account were to pay for acquisitions of scrap gold, as Mr Ali Kais - the director of Kais Jewellery and the applicant in the second application for review (‘Mr Kais’)[2] - maintains, or were properly assessed as ordinary income[3] derived by Mr Kais who was the sole signatory to the account.
[2] Not to be mistaken with Mr Kais’ son, Mr Mehdi Kais, or Mr Anwar Kais, both of whom I refer to by their first and second names.
[3] Income Tax Assessment Act 1997 (Cth), ss 6-5.
DECISIONS UNDER REVIEW
The applicants have applied for review of decisions of the Commissioner disallowing (aside from some arithmetical adjustments) objections against the following assessments:
(a)assessments of Kais Jewellery’s net amounts for the quarterly tax periods ending 30 September 2016 and 31 December 2016, disallowing the contested ITCs;
(b)assessments of administrative penalties against Kais Jewellery at the base rate of 75% of the alleged GST shortfalls for the September 2016 and December 2016 tax periods relating to the contested ITCs, the latter penalty assessment uplifted by 20%; and
(c)an assessment of income tax for Mr Kais for the year ending 30 June 2017, in which the Commissioner treated cash withdrawals from Kais Jewellery’s bank account as part of his assessable income.
The contested acquisitions
The entities which Kais Jewellery says supplied it with scrap gold are:
(a)Coin D’Or Pty Ltd (‘Coin D’Or’); and
(b)Too Nite Pty Ltd (‘Too Nite’).
Coin D’Or
Kais Jewellery claims to have acquired scrap gold from Coin D’Or for the aggregate amount of $1,031,834.58 in the two quarterly tax periods under review.
At relevant times, the sole director and shareholder of Coin D’Or was Mr Raimondo Cacciatore. Mr Cacciatore gave evidence for the Commissioner positively denying that Coin D’Or ever sold scrap gold to Kais Jewellery. He says he was put up to a process of providing what purported to be ‘tax invoices’ to Kais Jewellery but they were fabrications, prepared under direction from Mr Kais.
Too Nite
Kais Jewellery claims to have acquired scrap gold from Too Nite for the aggregate amount of $1,312,837.44 in the two quarterly tax periods under review.
At relevant times, the sole director and shareholder of Too Nite was the late Mr Antoine Ibrahim. A witness statement by Mr Ibrahim dated 16 May 2020 was filed in the Tribunal. In summary terms, although it is lacking in what would have been more helpful detail, the statement supports the applicants’ case that Too Nite sold scrap gold to Kais Jewellery.
Unfortunately, Mr Ibrahim passed away before the hearing of the applications for review. His witness statement was admitted into evidence, for the reasons set out in Kais and Commissioner of Taxation [2021] AATA 16, subject to consideration of submissions as to the weight it should be given.
I return to the evidence of Mr Cacciatore and Mr Ibrahim’s witness statement in more detail below.
The contested cash withdrawals
The amounts withdrawn from the bank account of Kais Jewellery which the Commissioner treated as assessable income of Mr Kais for the 2017 income year amounted in aggregate to $2,423,082.
BURDEN OF PROOF
The applicants bear the burden of proving on the balance of probabilities that the assessments are excessive and what the assessments should have been: Taxation Administration Act 1953 (Cth), s 14ZZK.
In determining whether the applicants have discharged the burden of proof, I apply the following principles:
(a)Facts may be found on the basis of oral evidence alone.
(b)There is no barrier to a fact being found on the uncorroborated evidence of a witness. There is no requirement that direct evidence by oral testimony may only be accepted if corroborated, for example, by documentary evidence.
(c)However, self-serving statements should be given close scrutiny.
(d)Nevertheless, evidence of a taxpayer is not to be regarded as prima facie unacceptable.[4]
(e)If the taxpayer succeeds in “weighing down [the] scales ever so slightly in [the taxpayer’s] favour then [the taxpayer] has discharged the burden [the taxpayer] carries”.[5]
[4] For this and the preceding propositions, see, for example: Imperial Bottleshops Pty Ltd v Commissioner of Taxation (1991) 22 ATR 148, 155; and Federal Commissioner of Taxation v Cassaniti [2018] FCAFC 212.
[5] Federal Commissioner of Taxation v Cassaniti [2018] FCAFC 212, [88].
In the context of the contested ITCs, discharge of the burden of proof requires Kais Jewellery to prove that it made the claimed creditable acquisitions of scrap gold from Coin D’Or and Too Nite and the value of such acquisitions in the tax periods under review. So far as appears to be controversial in this matter, that in turn requires Kais Jewellery to prove:[6]
(a)that Kais Jewellery acquired scrap gold from Coin D’Or and Too Nite;
(b)the consideration provided for such acquisitions;
(c)that Kais Jewellery provided the consideration for the acquisitions;
(d)that the consideration was paid in the tax periods to which Kais Jewellery claims the ITCs are attributed (since it accounted for GST on a cash basis);
(e)that Coin D’Or and Too Nite made taxable supplies[7] of scrap gold to Kais Jewellery and in that regard that Coin D’Or/Too Nite:
(i)supplied scrap gold to Kais Jewellery; and
(ii)such supplies were made in the course or furtherance of an enterprise that Coin D’Or/Too Nite carried on.
[6] GST Act, s 11-5.
[7] GST Act, ss 9-5.
As already noted, Kais Jewellery seeks to prove the penalty assessments are excessive by proving that there are no shortfalls to attract a penalty. Kais Jewellery did not argue that the penalty assessment was otherwise excessive, either by contesting the calculation of the base penalty amounts at 75% or the 20% uplift for the second period, or by arguing the base penalty amounts should be wholly or partly remitted.
In respect of the income tax assessment, discharge of the burden of proof requires Mr Kais to prove that the amounts withdrawn did not form part of his assessable income. This he might do by proving they were used to pay for acquisitions by Kais Jewellery.
Thus, the key issue is whether Kais Jewellery has discharged the burden of proving that it actually acquired scrap gold from Coin D’Or and Too Nite.
SOME UNCONTROVERSIAL BACKGROUND
Mr Kais and Kais Jewellery
Mr Kais was born in Lebanon[8] on 25 December 1958. He immigrated to Australia in 1986 and later became an Australian citizen. He has worked as a jeweller in Australia for more than 30 years, in part as a sole trader and, for the period under review, through Kais Jewellery.
[8] I mention Mr Kais’ place of birth only because of allegations another witness in the proceeding grew up with Mr Kais in Lebanon.
Kais Jewellery was incorporated in 2014. It traded from premises in central Sydney from then until it ceased trading in November 2016.
Coin D’Or
Coin D’Or was incorporated on 22 October 2015. At all relevant times, Coin D’Or was registered for GST and Mr Cacciatore was its sole shareholder and director.
Coin D’Or did not lodge GST returns or otherwise bring to account or pay GST for the tax periods under review. No business records of Coin D’Or are in evidence. Nor is there any direct independent evidence of Coin D’Or purchasing or selling scrap gold.
Too Nite
Too Nite was incorporated on 20 April 2016. At all relevant times, Too Nite was registered for GST and the late Mr Ibrahim was its sole shareholder and director.
Too Nite did not file GST returns or otherwise bring to account or pay GST for the tax periods under review. No business records of Too Nite are in evidence. Nor is there any direct independent evidence, other than the witness statement of the late Mr Ibrahim, of Too Nite purchasing or selling scrap gold.
THE EVIDENCE
Before turning to consider the evidence in detail, it is appropriate that I start by apologising unreservedly to the parties for the delay in finalising these reviews. The cases involved some six days of oral testimony from seven witnesses, along with witness statements from a further four witnesses; a hearing book for which the index alone ran to 132 pages; and over 150 pages of closing submissions cross-referenced to hundreds of individual items of evidence including transcripts of multiple formal interviews conducted by the Australian Taxation Office (‘ATO’). That, and more particularly challenges of a personal nature that transpired in the period since the parties filed their final submissions after the close of evidence, provide some context but do not make the delay any more palatable to the parties.
I am, however, satisfied that I have been able to decide the matter in a manner that is fair to the parties. In that regard, I finished the hearing of oral evidence in this matter without a strong conviction that any of the witnesses, other than a witness for the respondent identified for confidentiality reasons as Mr M, were wholly truthful or complete in the evidence they gave or were not at least tailoring their evidence to suit the outcome sought. That perception arose, in part, because of previously undisclosed connections and other evidence that emerged in cross-examination.
In those circumstances, my conclusions are based primarily on the objective content of, and omissions from, the evidence, along with considerations of consistency, corroboration and probability of their accounts upon which I elaborate below, rather than their demeanour or other aspects of the manner in which the witnesses delivered their oral evidence.[9]
[9] As indicated in the text that follows, the following summaries of the evidence are largely drawn from witness statements filed by the parties. Both parties filed lengthy objections to the admission of particular parts of the witness statements. Rather than rule on each of these, my approach is to admit them into evidence and take the objections into account, where I rely on the evidence in reaching my decision, in determining the weight to be given to the evidence.
Evidence of Mr Kais
The following summary is drawn primarily from a witness statement dated 15 May 2019 filed by Mr Kais. Mr Kais filed a further three witness statements which I have also taken into account.
Mr Kais gave evidence that he purchased scrap gold materials from Too Nite and Coin D’Or.
In respect of the purported purchases from Too Nite, Mr Kais gave evidence that he had first dealt with Mr Ibrahim in his capacity as director of another company. Kais Jewellery purchased scrap gold from that company, Mr Kais said, and resold it to refiners.
Mr Kais said that when Kais Jewellery started purchasing scrap gold from Too Nite in July 2016, similar trading arrangements were adopted, which he described as follows:
50. Kais Jewellery (Syd) Pty Ltd dealt with Too Nite in the same way and terms as it did with Oneday Events and any other business selling scrap gold to Kais Jewellery (Syd) Pty Ltd. The metal was received, I made an estimate of its fine metal content, a price was agreed, and a tax invoice was obtained from Too Nite. When the invoice was received I would usually write a cheque from Kais Jewellery (Syd) Pty Ltd for the amount of the tax invoice. The cheque would be made payable to cash as Ibrahim wanted to be paid in cash. I would hold the cheque until I had received payment from the refiner. I would usually record on the tax invoice received from Too Nite the cheque number of the transaction to assist with my record keeping. I would write on the cheque stub the name of the company and the amount and usually the invoice number. The cheque stubs are referred to in this statement at paragraph 55 below.
51. Payment was usually made the following day by cash once the funds from the refiner had been received and cleared. I would usually take the cash cheque that I had to the bank and cash it and return to the shop and give Ibrahim the money. On a few occasions I gave the cash cheque to Ibrahim after the funds had cleared. On such occasions I would go to the bank with Ibrahim as I would need to be present at the bank when the cheque was cashed. Sometimes the payments would be made by the refiner and would clear on the same day as the supply and sometimes the payments would take a few days to be made and clear.[10]
[10] Witness statement of Ali Kais dated 15 May 2019, [50] – [51].
In respect of the purported purchases from Coin D’Or, Mr Kais gave evidence that he had not met Mr Cacciatore before being introduced to him at Kais Jewellery’s shop by Mr Ibrahim around October 2015. According to Mr Kais, Mr Cacciatore indicated that he could also sell scrap gold materials to Kais Jewellery.
Mr Kais said Coin D’Or commenced selling scrap gold to Kais Jewellery under similar arrangements to those adopted for Too Nite and other suppliers of scrap gold to Kais Jewellery. In particular, that Mr Cacciatore (and Mr Ibrahim on behalf of Too Nite) would physically bring the scrap gold to Mr Kais at the Kais Jewellery shop in central Sydney.
After Kais Jewellery had been paid by bank transfer from the refiners to which Kais Jewellery on-sold the scrap gold, Mr Kais said he would hand over cash to Mr Cacciatore from money held in a safe in the shop. On other occasions, he would, in company with Mr Cacciatore, take a cash cheque to Kais Jewellery’s bank so he could be present when the cheque was cashed. In either case, Mr Kais said Mr Cacciatore would leave with the cash. If the purported purchases occurred, the bank notes and coins Mr Cacciatore left with would commonly have amounted to some tens of thousands of dollars.
Mr Kais said all the scrap gold that Kais Jewellery maintains it purchased from Coin D’Or and Too Nite was on-sold to refiners located in the same building as Kais Jewellery, usually on the same day it was purchased. He also gave evidence that he does not know where Too Nite or Coin D’Or sourced the scrap gold they purportedly sold to Kais Jewellery.
In respect of the income tax issue, Mr Kais said in his witness statement:
I did not personally receive the income as alleged in the Notice of Amended Assessment dated 25 September 2018 being $2,055,182.[11]
[11] Witness statement of Ali Kais dated 15 May 2019, [88].
Witness statement of Mr Ibrahim
The late Mr Ibrahim’s witness statement dated 16 May 2020 asserts that Mr Ibrahim, through Too Nite, sold scrap metal to Kais Jewellery and identified copies of many but not all of the ‘tax invoices’ said to have issued by Too Nite to Kais Jewellery for such transactions.
I deal with Mr Ibrahim’s statement in more detail below.
Evidence of Mr Cacciatore
The following summary is based on Mr Cacciatore’s witness statement dated 19 August 2020.
Mr Cacciatore gave evidence that he became close friends with Mr Ibrahim as they lived in the same Department of Housing complex. Mr Cacciatore, who had formerly been a professional chef, said he would often cook a meal to share with Mr Ibrahim at his unit.
Mr Cacciatore said he had seen Mr Ibrahim with large sums of cash. He questioned Mr Ibrahim about this which he said led to Mr Ibrahim taking him to see Mr Kais; Mr Cacciatore setting up Coin D’Or with the assistance of Mr Kais; and, as Mr Cacciatore maintains, travelling regularly to Kais Jewellery to fill out and sign ‘tax invoices’ addressed to Kais Jewellery as directed by Mr Kais, and later to other purported purchasers.
In return, Mr Kais would, Mr Cacciatore said, pay for his lunch and the cost of his train travel to the city. Additionally, Mr Cacciatore said he hoped to be able to take over Mr Ibrahim’s activities in the future to make money in the same way as Mr Ibrahim appeared to be doing from his dealings with Mr Kais and Kais Jewellery.
Mr Cacciatore was adamant that neither he nor Coin D’Or ever actually acquired any gold or supplied it to Kais Jewellery or other purported purchasers. He was also adamant that he never received any money from Kais Jewellery for the purchase of scrap gold.

Additionally, Mr Cacciatore said that, because he was entering GST amounts into the invoices, he queried this with Mr Kais and was assured that the GST was taken care of and what he was doing was not illegal. Because he trusted Mr Ibrahim, who he understood was engaged in similar activities with Kais Jewellery, Mr Cacciatore said he accepted the assurances about GST.
Mr Cacciatore also said that he was introduced to a gold trading company (‘Gold Trading Co’) by Mr Kais who accompanied him to the company’s premises. He said he recalled Mr Kais saying to staff at the company that he, Mr Kais, might purchase gold ‘for Ray’ from time to time.
Mr Cacciatore said that later, in December 2016, he became aware that gold bullion to a value of over $1M had been purchased in his name and in the name of Coin D’Or by Mr Kais without his permission. Mr Cacciatore said he never purchased gold from Gold Trading Co and nor did Coin D’Or. Mr Cacciatore confronted Gold Trading Co about this. He was, he said, incensed that Mr Kais had purchased gold in his name and this led to a parting of the ways with Mr Kais.
Evidence of Mr Mehdi Kais
The following summary is drawn from a witness statement of Mr Mehdi Kais dated 13 May 2019.
Mr Mehdi Kais is the son of Mr Kais, the applicant. Mehdi gave evidence that:
(a)He is a jeweller and at relevant times conducted a business through his company from the same premises as Kais Jewellery, although he had previously conducted business as a scrap metal dealer.
(b)The shop from which his company and Kais Jewellery operated has a waiting area at the front which is separated from the rest of the shop by security glass and a security door. Inside the security door, there is an open area with a desk and an office on the right side with a sliding door. There is also further room which contains a safe. Another safe is located in the office.
(c)Mehdi worked from a desk in the open area. For security reasons, the door to the office would usually be open when his father was working there.
In relation to Mr Ibrahim, Mr Mehdi Kais gave evidence that:
(a)In mid-2015, Mr Ibrahim came to the shop and asked whether Kais Jewellery purchased gold, indicating that he would have large amounts of gold available for sale. Mr Kais referred Mr Ibrahim to his father who he heard arrange for Mr Ibrahim to return at a later time for further discussions.
(b)After that first meeting, Mr Kais saw Mr Ibrahim with his father in the store almost daily in the afternoon.
(c)Because he had his own business to take care of, Medhi would not be paying attention all the time to what was happening in the office. On occasions when he was watching, he saw Mr Ibrahim take from a bag he carried what Mehdi assumed, because of its colour, to be gold. His father would test each piece individually.
(d)After his father finished meeting with Mr Ibrahim, he would leave the shop for about half an hour. Mr Kais would take a black laptop bag and normally would tell Mehdi where he was going which would be upstairs to gold refiners located in the same building and to the bank.
(e)When his father returned to his office, he would often see him take cash out of the bag and place it on the table. Mr Ibrahim would join Mr Kais in the office.
(f)When Mehdi saw what was occurring, he would observe Mr Ibrahim counting cash in bundles of $5,000 or $10,000. Mr Ibrahim would give Mr (Ali) Kais an invoice and Mr Kais would give Mr Ibrahim a receipt.
(g)Mr Ibrahim would place the bundles of cash in his bag and leave the shop.
In relation to Mr Cacciatore, Mehdi gave evidence that:
(a)He first met Mr Cacciatore a few months after he met Mr Ibrahim, when Mr Cacciatore came to the shop with Mr Ibrahim.
(b)Mr Cacciatore and Mr Ibrahim met with Mr (Ali) Kais on that occasion.
(c)Subsequently, Mr Cacciatore came to the shop on his own on most days from Monday to Friday, usually between 2:00pm and 3:00pm. He brought a bag with him.
(d)Mehdi would observe Mr Cacciatore take items of jewellery out of his bag which Mr Kais would then examine individually. Mehdi said his father would then leave the office, indicating that he was going to the gold traders upstairs and to the bank.
(e)Upon his return, Mr Kais would take Mr Cacciatore back into the office with him, fill out some paperwork and from time-to-time Mehdi said he would see them exchange documents and see his father give cash to Mr Cacciatore which he would then count.
Medhi also gave evidence that, subsequently, his father started photographing the gold supplied by Mr Ibrahim and Mr Cacciatore by placing it on photocopier and printing off a piece of paper with an image of the gold which Mr Ibrahim or Mr Cacciatore would sign.
Evidence of Mr Corne
Mr David Rhys Corne gave evidence for the applicants. The following summary is drawn from his witness statement dated 30 April 2019.
Mr Corne stated that until late 2016 he was employed as a sales manager at Australian Gual Metals Pty Limited trading as Goldtrex (‘Goldtrex’).
Mr Corne stated that Goldtrex had dealings with Mr Cacciatore for approximately three months from around August 2016 to October 2016. According to Mr Corne, Mr Cacciatore would attend the premises of Goldtrex on average twice per week in this period, to purchase gold bullion which he paid for with large quantities of cash ranging from $50,000 to $100,000 or more.
Invoices for this bullion were initially issued in Mr Cacciatore’s name, Mr Corne said, and later, at Mr Cacciatore’s request, in the name of his company, Coin D’Or.
Surprisingly, what did not appear in Mr Corne’s statement but emerged in cross-examination was that he was in a business relationship with Mr (Ali) Kais and Mr Mehdi Kais which involved Mr Corne operating from the premises of Kais Jewellery. Further, numerous purchases said to have been made by Mr Cacciatore or Coin D’Or from Goldtrex, to a value in excess of $1M, could not have been conducted by Mr Cacciatore in person as he was overseas at the time.[12] Mr Corne asserted in oral evidence that a Mr Anwar Kais (with whom Mr Kais had a connection from his early life in Lebanon and may have been a distant relative according to Mr Mehdi Kais) purchased gold in the name of Mr Cacciatore or Coin D’Or. I do not accept this late evidence which, inexplicably, was not mentioned in Mr Corne’s witness statement.
[12] Listed in Appendix C to the Respondent’s Submissions.
Evidence of Mr Townsend
Mr Jeffrey Robert Townsend gave evidence for the applicants. The following summary is drawn from Mr Townsend’s witness statement dated 19 December 2018.
Mr Townsend stated that he had been employed since May 2015 as Senior Representative Purchasing and Sales for Morris and Watson Australia Pty Ltd (‘Morris and Watson’), a gold refiner with premises on the fourth floor of same building in which Kais Jewellery’s shop was located. Morris and Watson is one of two refiners located in that building to which Kais Jewellery sold valuable scrap metal.
Mr Townsend described how Morris and Watson would purchase scrap gold from business suppliers. The scrap gold would then be transported to one of the company’s refineries for refining.
Suppliers, including Kais Jewellery, would deliver scrap gold to Morris and Watson. Morris and Watson would pay an advance (in the case of Kais Jewellery amounting to 90% of the estimated value of the gold) with the balance payable after a more accurate assay was conducted at the refinery.
Morris and Watson would photograph the gold at the refinery and later, from November 2016, upon receipt of the gold at their Sydney premises.
Evidence of Mr M
The following summary is drawn from Mr M’s witness statement dated 27 September 2019.
Mr M was the chief executive of Gold Trading Co at relevant times. Gold Trading Co was based in Sydney and sold gold and silver products to retail investors and collectors and to wholesalers such as jewellers.
Mr M gave evidence that he first met Mr Cacciatore in around late 2016 when Mr Cacciatore attended the premises of Gold Trading Co to complain that Mr (Ali) Kais had been purchasing gold worth over $1 million in Mr Cacciatore’s name without his permission.
Mr M said he consulted a customer service representative, who I shall call Ms N, who advised that she was working when Mr Cacciatore came in with Mr Kais and a third person to open an account. Mr M said that Ms N told him that Mr Kais said he was authorised to buy gold on behalf of Mr Cacciatore and that Mr Cacciatore confirmed this.
In a subsequent telephone call, Mr Cacciatore said ‘[t]he ATO is chasing me for tax’ and asked Mr M to provide a statement that Mr Kais was purchasing gold in Mr Cacciatore’s name without his permission. Mr M replied that he would only provide a statement in response to a formal government request.
The ATO duly issued a formal notice to Gold Trading Co requiring information concerning Mr Cacciatore. Mr M and his wife discussed the ATO’s questions with Ms N and another staff member and prepared a response. Mr M appended a copy of the notice and the response to his witness statement. The response included statements to the effect that:
(a)Mr Cacciatore purchased gold bullion from Gold Trading Co a few times.
(b)The first time Mr Cacciatore came to Gold Trading Co was on 29 October 2015. He was accompanied by a male person named Ali, who was a longstanding regular customer.
(c)They told Gold Trading Co that Ali was authorised to purchase and collect gold on behalf of Mr Cacciatore.
(d)Gold Trading Co stopped all orders placed on behalf of Mr Cacciatore when he made a complaint in 2016 regarding Ali purchasing gold bullion in his name.
HAS KAIS JEWELLERY PROVED THAT IT MADE THE PURPORTED ACQUISITIONS?
In the discussion that follows, I make some preliminary observations regarding the evidence, including the evidentiary status of the ‘tax invoices’ issued by Too Nite and Coin D’Or, and Mr Ibrahim’s witness statement, then consider whether the competing evidence discharges the applicants’ burden of proof.
Evidentiary status of ‘tax invoices’
The applicants submitted that, as business records under s 1305(1) of the Corporations Act 2001 (Cth), the ‘tax invoices’ are prima facie evidence of their contents; that is, of the occurrence of the transactions they describe. The Commissioner submitted that this prima facie presumption was displaced by the evidence.
For the reasons I set out in STNK and Commissioner of Taxation,[13] I do not accept that it is appropriate for the Tribunal to take, as its starting point in a tax case, that ‘tax invoices’ are prima facie evidence that the transactions described in them occurred. The ‘tax invoices’ and the records of Kais Jewellery purporting to reflect the transactions described in them, are plainly significant evidence. Accordingly, I give them substantial weight. But in my view, they should not be regarded as prima facie evidence that the transactions occurred.
[13] [2021] AATA 3399, [31] – [48].
This is consistent with the decision of a Deputy President and Senior Member of this Tribunal in Bayconnection Property Developments Pty Ltd and Commissioner of Taxation,[14] which has been followed in subsequent cases.[15] The Tribunal noted that tax invoices are documents of considerable importance in the GST system, but went on to observe:
However, the reality is that a tax invoice does not create a taxable supply; it records one. If a taxable supply does not take place, then a “tax invoice” is meaningless. In other words, documents that are so called “tax invoices” cannot substantiate a creditable acquisition, if in fact there was no supply or acquisition.[16]
[14] [2013] AATA 90.
[15] See, for example, Cash World Gold Buyers Pty Ltd and Commissioner of Taxation [2020] AATA 1546, [194].
[16] [2013] AATA 90, [86].
The same observation applies in respect of a taxpayer’s own accounting records.[17]
[17] Eastwind Trade Pty Ltd and Commissioner of Taxation [2017] AATA 140, [24] and the authorities cited there.
What weight should be given to Mr Ibrahim’s witness statement?
That Mr Ibrahim was not available for cross-examination would not necessarily lead me to the view that his statement should be given little weight. If, for example, it was corroborated as to key details by other independent evidence, that might well be relevant to the weight it should be given.
There are, however, several aspects of this statement, and the surrounding circumstances, that I consider to be relevant to the weight it should be given.
One is that Mr Ibrahim does not, at least on the face of matters, appear to have respected compliance with taxation laws. I say this for several reasons:
(a)Although he maintained that Too Nite was undertaking substantial transactions trading in scrap gold, Too Nite did not pay GST or lodge GST returns bringing GST to account on these sales. Nor did it lodge income tax returns.
(b)Further, another company controlled by Mr Ibrahim was in receipt of substantial sums through its bank account but lodged neither GST nor income tax returns.
(c)Although he was sent a formal notice requiring him to do so, Mr Ibrahim failed to attend a compulsory interview with the Commissioner’s officers notice of which issued before he departed overseas.
(d)Additionally, he failed to respond to a notice requiring production of relevant business records.
None of this gives me confidence that Mr Ibrahim’s statement provided in connection with taxation issues is truthful. Of course, there may be explanations for Mr Ibrahim’s non-compliance, but he was not available to be asked.
More broadly, as outlined in the Commissioner’s closing submissions, there are just too many unexplained shortcomings in Mr Ibrahim’s statement.
For example, Mr Ibrahim did not refer to any contemporaneous business records maintained by Too Nite. He did not produce copies of tax invoices that he is said to have issued. Rather, he merely stated that certain invoices, amounting to less than half of the impugned tax invoices, were shown to him. From notations appearing on them, those invoices appear to be copies extracted from the records of Kais Jewellery rather than from Too Nite’s own records.
Additionally, Mr Ibrahim’s statement, while supporting the applicants’ position, failed to disclose his personal relationship with Mr Kais. He did not mention that he had lived in the same street as Mr Kais in a residence made available to him by Mr Kais and his partner.
That personal relationship, and that the applicants or their representatives had obviously engaged with Mr Ibrahim to obtain a statement supporting their case, makes it all the more curious that the statement obtained should be so deficient and, in particular, neither refer to Too Nite’s own records nor explain their absence. It must have been clear from the outset of these proceedings that whether Too Nite made taxable supplies to Kais Jewellery would be a central issue. Yet the statement deals with this only by way of bald statements and reference to copies of invoices said to have been shown to Mr Ibrahim, without any attempt reference its claims to Too Nite’s records. Nor is there any explanation of why some of the ‘tax invoices’ were shown to Mr Ibrahim but not others. The Commissioner suggests that those which were not produced were invoices that contained irregularities in handwriting but that too was unable to be explored with Mr Ibrahim.
Further, the statement makes no attempt to explain how or from whom Too Nite acquired the scrap gold said to have been sold to Kais Jewellery nor how it funded these acquisitions. It does not name a single supplier or even location of a supplier or how potential suppliers were identified or approached. Again, one would expect a statement from Mr Ibrahim, obtained for the purpose of supporting the applicants’ case, to address at least some of these matters.
Mr Ibrahim’s statement purports to confirm that Too Nite made various specified supplies – 41 in total - of scrap gold to Kais Jewellery. For example, paragraph 18 states:
On 25 July 2016 I sold scrap valuable metal to Kais Jewellery for the agreed price of $34,065.90 inclusive of GST. I issued to Kais Jewellery invoice ZB7802689 that I signed and gave to Kais Jewellery at the time of the transaction. I received from Kais Jewellery the amount of $34,065.90.
The paragraphs referring to the other 40 transactions follow the same structure. The lowest value of the purported transactions listed in the statement is $2,781.30 inclusive of GST, but most are in the $20,000 to $45,000 range. Some are round numbers, such as $15,000 for 6 September 2016 (listed in paragraph 42) and $29,000 for 12 September 2016 (paragraph 44). The largest is for $49,766.10, listed in paragraph 34 of the statement as the purported value of a transaction on 21 August 2016. That purported transaction is repeated word-for-word in paragraph 35; although I do not give this substantial weight, it does cast some doubt on how carefully Mr Ibrahim checked the statement before signing it.
It is highly improbable that Mr Ibrahim could depose to these matters with such precision from his own memory. Mr Ibrahim’s statement contains no explanation of how he was able to state that these specific transactions occurred.
Further, there is no explanation from, or context provided by, those who procured the statement from Mr Ibrahim. There was ample time, and in any case further time could have been sought from the Tribunal, for the applicants’ representatives to endeavour to contact Mr Ibrahim’s legal personal representative after his death or the then controller of Too Nite to ascertain if records supporting the assertions in Mr Ibrahim’s statement were available. There is no evidence that this occurred or explanation of why it did not.
Having regard to these factors, I am, on balance, not prepared to give significant weight to Mr Ibrahim’s statement. It is true that aspects of the statement are corroborated – for example, by Mr Cacciatore’s evidence – but not, other than by the applicants, the central issue of whether the acquisitions actually occurred. The lack of obvious evidence of key matters that one would expect to appear in such a statement, in particular evidence from Too Nite’s own records; the unexplained reference to copies of some but not all of the purported ‘tax invoices’; the issues concerning Mr Ibrahim’s attitude to tax compliance; and the regrettable lack of an opportunity for cross-examination mean that, in my view, it is inappropriate to give significant weight to this statement as corroboration that the contested acquisitions occurred.
Analysis of the remaining evidence
A startling feature of this case is the evidence that transactions in very substantial values are said to have been transacted on a daily basis in cash, with key players walking around Sydney and using public transport with tens of thousands of dollars in cash or gold bullion in values ranging up to in excess of $100,000 on their persons. It is, I understand, not illegal to transact in large amounts of cash. But the price for those who do may be a greater difficulty in proving that payments said to have been made in cash actually occurred.
That task is not made easier when a convincing rationale for conducting such high value transactions in cash is not immediately obvious nor offered by the applicants. The applicants maintain that Mr Ibrahim and Mr Cacciatore wished to be paid in cash rather than by bank transfer. The logic rationale for this would have been more compelling if they had received cash simultaneously with handing over highly valuable scrap gold. But the applicants’ case is that the cash was not paid until after Kais Jewellery received cleared funds from the gold refiners. Of course, Mr Ibrahim may have been able to cast further light on this, but he was, regrettably, not available to give oral evidence. According to the applicants, Mr Cacciatore followed the same practice, but Mr Cacciatore denies receiving the cash at all. Neither witness mentioned that, as Mr Kais asserted, they attended with him at his bank to cash cheques drawn upon Kais Jewellery’s account.

It was submitted on the applicants’ behalf that the GST case mainly comes down to a contest between the evidence of Mr Kais and the evidence of Mr Cacciatore, assessed against the background of the evidence of the other witnesses and the documentary evidence.[18] But, of course, the ultimate issue is whether Kais Jewellery has discharged the burden of proving the assessments are excessive.
[18] Applicants’ Opening Address, [46].
If I conclude that Mr Cacciatore’s evidence is to be preferred, it must follow that I am persuaded that the ‘tax invoices’ issued by Coin D’Or were fabricated to the knowledge and at the direction of Mr Kais. Given the assessment of the truth of Mr Kais’ evidence that would be implicit in such a conclusion, and the absence of any significant weight being given to Mr Ibrahim’s statement, it would also follow that Kais Jewellery would not have discharged the burden of proving it made the purported acquisitions from Too Nite. However, if I conclude that I am not satisfied that Mr Cacciatore’s account is truthful, I still need to determine whether I am positively satisfied – even if the scales are tipped only ‘ever so slightly’ in the applicants’ favour – that the assessments are excessive.
In reaching a decision on this matter, the feature I have found most challenging is that both case theories would have the Tribunal accept an account that strikes me as not impossible but, at the risk of understatement, somewhat improbable.
For the applicants, I am asked to accept that Mr Cacciatore, a pensioner of advancing years, with no previous background in the gold industry, would:
(a)source on an ongoing basis from unidentified suppliers scrap gold to an aggregate value of over $1M over a six-month period;
(b)find the funds to pay for that scrap gold, including the first acquisition or acquisitions after embarking upon this purported venture;
(c)travel to the Sydney CBD on public transport multiple times each week with that valuable scrap gold in his possession;
(d)leave Kais Jewellery, or the bank, with tens of thousands of dollars in bank notes and coins on his person, returning home on public transport;
(e)for at least part of the period under review, find time between these almost daily trips to purchase, also in cash, gold bullion in lots valued at $50,000 to $100,000 or more, on average twice per week, and presumably also returning to his home in possession of highly valuable gold bars.
For the respondent’s positive case, I am asked to accept that Mr Cacciatore travelled to the Sydney CBD by public transport, day after day over an extended period, and falsified over $1M in ‘tax invoices’, in return for nothing more than his fares and lunch, and the hope of taking over Mr Ibrahim’s business at some indeterminate future time. And I am asked to do so in circumstances where, if Mr Cacciatore’s evidence is not truthful, he would have a clear and substantial self-interest in inventing an account to explain the failure to pay GST on the purported supplies and income tax on the profit on such transactions, and potentially avoid significant penalties and, for that matter, the risk of prosecution for offences that on conviction would potentially attract significant periods of imprisonment.
I commence my analysis with the evidence of Mr Cacciatore because, if I were to accept that evidence, it must follow that I would not accept the evidence of Mr Kais.
Several factors support the view that Mr Cacciatore’s fundamental evidence that Coin D’Or never supplied scrap gold or received consideration for such supplies should be accepted. In particular, Mr Cacciatore steadfastly maintained this position through three compulsory interviews conducted under oath by ATO officers and in his witness statement which he confirmed in oral evidence before the Tribunal. He never wavered from this position throughout an exhaustive cross-examination.
Further, Mr Cacciatore had no previous background in the gold industry. He was a chef by profession and at relevant times living on welfare payments in social housing. He did not present as a sophisticated witness. Other than the evidence of his interactions with Mr Ibrahim – of which there was minimal detail relating to the gold industry - there is no evidence to suggest how he might have gained sufficient industry knowledge to source and acquire scrap gold in the volumes and with the regularity that would have been required for the purported sales to Kais Jewellery by Coin D’Or.
There was not, for example, evidence from an industry participant who could explain how the sourcing of such volumes of scrap gold could occur. Or even whether it would have been feasible for a company with a single director, and so far as the evidence indicates, no employees or contractors, or infrastructure such as a store front, website or other apparent means of identifying and connecting with potential sellers, to source significant values of scrap gold on a regular basis. And to do so while finding time to travel to Kais Jewellery regularly, almost daily, to transact with that company and, on at least some occasions according to Mr Kais, attend at the company’s bank, and regularly attend gold traders’ premises to purchase gold bullion.
Nor was there any evidence to suggest how Mr Cacciatore could have funded these regular acquisitions of scrap gold, particularly the initial transactions before there could have been any or sufficient net cash flow from dealings with Kais Jewellery. In that regard, it will also be recalled that evidence from Mr Corne on behalf of the applicants was to the effect that for several months Mr Cacciatore or Coin D’Or was purchasing $50,000 to $100,000 or more in gold bullion on a twice-weekly basis.
Nor is there any other persuasive independent evidence of Mr Cacciatore otherwise dealing in large sums of cash or enjoying the fruits of transactions said to involve receipts exceeding over a million dollars in a six-month period. The matters to which the applicants point (as outlined below) come nowhere near suggesting the degree of wealth required for Mr Cacciatore to be expending $100,000 to $200,000 or more per week in acquiring gold bullion. Even on the most favourable margin Coin D’Or could have enjoyed from the purchase and sale of scrap gold, that value of bullion purchases would imply a very significant turnover indeed.
There is no evidence of an extravagant lifestyle or substantial ongoing change in spending patterns upon Mr Cacciatore commencing the dealings with Kais Jewellery. Nor have the respondent’s inquiries revealed any bank accounts through which amounts of the order required by the applicants’ case were passing. There is Mr Corne’s evidence of Mr Cacciatore regularly purchasing gold bullion, but it is improbable on the evidence before the Tribunal that Mr Cacciatore could access the amount of cash required to fund gold bullion purchases in the values and with the regularity Mr Corne asserted. Further, the weight that might otherwise have been given to that evidence is undermined by the failure of Mr Corne or the applicants, or Mr Mehdi Kais, to disclose their business relationship.
Mr Cacciatore’s account of confronting the Gold Trading Co regarding sales transacted in the name of Coin D’Or is corroborated by Mr M whose evidence I accept (subject to the further remarks below regarding the hearsay evidence relating to a staff member). Additionally, that gold bullion purchases were made by another person in the name of Mr Cacciatore is corroborated by the fact that such purchases are recorded as made by Mr Cacciatore on occasions when he was out of Australia and therefore could not have attended at the gold traders to transact these purchases.[19]
[19] See invoices listed in the Respondent’s Submissions, [65].
However, it does not necessarily follow that it was Mr Kais who caused those transactions to occur. The evidence of Mr M regarding the response to the ATO information notice is of limited value because the staff member on whose advice that response was compiled was not prepared to give evidence. I am not prepared to make a finding that Mr Kais purchased bullion on behalf of Mr Cacciatore or Coin D’Or on the basis of this evidence without the opportunity for the staff member’s recollections to be tested. Regardless, this evidence corroborates Mr Cacciatore’s evidence that sales of gold bullion, which he could not have transacted, occurred in his name.
However, despite these considerations, there are considerable difficulties in the path of accepting the grave allegations in Mr Cacciatore’s evidence. Principally, as already noted, Mr Cacciatore potentially has a strong interest in denying that the transactions occurred. Further, when he approached Mr M’s company it was in the context that the ATO was ‘chasing’ him for tax relating to the alleged transactions, according to Mr M. Additionally, notwithstanding the assurance Mr Cacciatore claims to have received from Mr Kais, it would defy common sense to accept that he considered a process of completing, signing and handing over ‘tax invoices’ for fictional transactions to be above board.
Under cross-examination Mr Cacciatore stated for the first time that he generated an income of around $2000 per annum by undertaking catering work on a cash basis. That income apparently was not disclosed to the Commissioner or the social security authorities. Additionally, he allowed an application for a credit card which overstated his income by tens of thousands of dollars to be submitted on his behalf and, upon being issued with the credit card, incurred a substantial liability, in the order of $8,000, which at the time of the hearing had not been repaid. These actions indicate Mr Cacciatore is prepared to be less than honourable in his financial dealings when it suits.
Further, after the time when Mr Cacciatore claims to have been incensed with Mr Kais for, as he maintained, purchasing bullion in his name without his authority, Mr Cacciatore sent an email with new year’s wishes noted, an action seemingly inconsistent with his stated angry feelings towards Mr Kais. Additionally, Mr Cacciatore was not able to satisfactorily explain how he managed to acquire at least one gold bullion bar and send money to a girlfriend in Italy. The cash income he admitted under cross examination to have received from catering work was insufficient for that purpose.
Notwithstanding the consistency of his accounts of the central aspect of his activities, but bearing in mind the gravity of his allegations, and weighing up all the evidence and the factors I have highlighted, I am left with this conclusion: I do not say that Mr Cacciatore was lying, but nor am I satisfied, on balance, that his evidence was truthful. In those circumstances, I consider that Mr Cacciatore’s evidence does not provide a sound foundation for positive conclusion that the ‘tax invoices’ were fabrications. But, as already observed, that is not the end of the matter: I must consider whether I am positively satisfied that the contested acquisitions occurred.
I approach the evidence of Mr Kais with caution for the reasons already given, but not with any default starting position that it is to be treated as prima facie unreliable. I take into account that he, too, has maintained his position steadfastly in formal interviews, witness statements and cross-examination and produced detailed records, including signed invoices and photographs of scrap gold said to have been purchased from the two companies. However, the improbability of the applicants’ case in relation to Kais Jewellery purchasing from Coin D’Or in the asserted volumes and regularity, in the absence of feasible explanations in respect of the issues discussed above, and the unexplained shortcomings in Mr Ibrahim’s statement, make it difficult to accept Mr Kais’ evidence without corroboration.
The evidence of Mr Mehdi Kais provides some corroboration of his father’s evidence. However, on his own evidence, Medhi had his own business to attend to. Additionally, it became clear from his evidence that Mehdi would not regularly have had a clear, uninterrupted view of interactions between Mr Cacciatore or Mr Ibrahim and his father. In any case, his evidence does not directly corroborate that transactions in the amounts asserted by the applicants occurred.
Although by no means determinative, I also observe that acceptance of the applicants’ case would require acceptance of the coincidence of both of the allegedly significant suppliers – Too Nite and Coin D’Or - making taxable supplies amounting to over $1M in value over two tax periods but failing to lodge returns bringing this GST to account. That is, of course, not impossible, but nor is it irrelevant, especially when there is no explanation for the non-compliance in Mr Ibrahim’s statement. This latter factor raises doubts regarding whether Mr Ibrahim, even if he had survived, ever intended to make himself available for cross-examination, but as events unfolded that speculation unfortunately remains untested.
Further, in circumstances where the central controversy is whether amounts withdrawn from the bank account of Kais Jewellery were in fact consideration for purchases of scrap gold or applied to some other end, it is surprising that Mr Kais did not see fit to make a full, unprompted disclosure of the substantial[20] purchases of gold bullion that it emerged he and Kais Jewellery had undertaken. The Tribunal was never given a full explanation of how these purchases were funded or what happened to the gold so purchased. [21]
[20] See Respondent’s Submissions, Appendix A, which lists purchases from Goldtrex amounting to more than $700,000 in value over a three month period, and further significant purchases from Gold Trading Co listed in Appendix B.
[21] The applicants maintained that these purchases had been disclosed to the ATO in an interview with its officers on 14 November 2016. However, the transcript references provided by the applicants make it clear that Mr Kais’s comments did not suggest purchases to the values and with the regularity that in fact occurred. His response to a direct question about whether he made purchases of gold bullion was: ‘No. But, sometime, if a customer want something, I can go get it for them.’ (Hearing Book, Vol 1, page 53)
The applicants sought to downplay that shortcoming by saying they focused upon the disputed acquisitions. But in the context where the applicants bear the burden of proving the assessments are excessive, that is no answer to the missing elements of the picture presented to the Tribunal. It is impossible to assess the probability of the contested transactions occurring in a vacuum, devoid of the context of the alleged sales and purchases in the overall scale and activities of the business. Similarly, the absence of evidence of the external accountant, who may have shed light on these aspects of the business and how the asserted acquisitions were reflected in the purchases and sales is not answered by the assertion that the accountant could not speak to the individual acquisitions.
In that regard, Kais Jewellery did not put into evidence financial accounts or other records that might have enabled the probability that the purported transactions with Too Nite and Coin D’Or actually occurred to be tested against the broader context of the entirety of the purchases and sales of the business. That is particularly unfortunate when on its own case the gold purportedly acquired from Too Nite and Coin D’Or was not able to be traced through to sales to the refiners because it was intermingled with gold from other sources.
The applicants did endeavour to fortify their case by filing a ‘reconciliation’ which purports to show payments received by Kais Jewellery from the gold refiners coinciding with payments to Too Nite and Coin D’Or. This indicates that sales were indeed made by Kais Jewellery to the refiners in temporal proximity to cash withdrawals from the bank account of Kais Jewellery and the purported acquisitions. However, there is in this document no direct tracing of scrap gold said to have been received from Too Nite and Coin D’Or – because, as noted, scrap from other sources was said to be intermingled with the scrap gold from those two companies for sale to the refiners. The reconciliation is therefore of limited assistance in determining whether scrap gold was acquired from Too Nite and Coin D’Or.
In the end, I am left with an incomplete picture of the business of Kais Jewellery.
Balancing all these factors, I find myself unable to be satisfied that Kais Jewellery made the contested acquisitions. There is, in my view, insufficient evidence to support Kais Jewellery’s assertions. While the evidence of Kais Jewellery’s other witnesses is capable of providing some corroboration, as direct evidence that the transactions occurred, I am primarily left with the evidence of Mr Kais and, aside from the ‘tax invoices’, records that Mr Kais caused to be created.
Given my conclusion in respect of the weight to be given to Mr Ibrahim’s statement, there is no direct, independent evidence to which I would give substantial weight in support of the assertion that the acquisitions from Too Nite or Coin D’Or occurred. As already observed, that is not necessarily fatal; it is not a requirement that a taxpayer’s evidence must be corroborated to discharge the burden of proof.
But against the background of neither Coin D’Or nor Too Nite disclosing such acquisitions in GST returns as required by law; the substantial amounts in contention; and the context of transactions said to have been transacted wholly in cash, the importance of approaching self-serving evidence with caution comes into particular focus. The unexplained limited content of Mr Ibrahim’s witness statement; the absence of corroboration by Mr Cacciatore; the improbability, in the absence of any meaningful explanation, that Mr Cacciatore could obtain such volumes of supplies of scrap gold; the similar absence of a meaningful explanation of how Too Nite could have regularly accessed the amount of scrap gold required for the purported transactions; the absence of a complete disclosure of the applicants’ financial position providing relevant context against which to test the applicants’ assertions (especially having regard to the admitted substantial gold bullion purchases); and the other issues outlined above, combine to leave me in the position that I cannot be satisfied that the substantial quantity and value of purported transactions, which neither purported supplier disclosed, actually occurred.
For these reasons, I conclude that Kais Jewellery has not discharged the burden of proving the GST assessments are excessive.[22]
[22] For completeness, I note that a good deal of time was spent in the hearing and there were references in `written submissions to what the Commissioner considered to be telling irregularities in the handwriting on the ‘tax invoices’. These were contested by the applicants. In the absence of evidence of a handwriting expert, I have not relied upon these submissions. Similarly, there were references to what were said by the Commissioner to be inconsistencies and other issues in the minutiae of the evidence which again were contested by the applicants. Although I have considered all of the submissions, it is not necessary to address each and every one in these reasons in circumstances where I have reached my conclusion in reliance upon the factors detailed above rather than conclusions in respect of individual transactions.
PENALTY ASSESSMENTS
As noted, Kais Jewellery sought to establish that the penalty assessments were excessive on the basis that there were no GST shortfalls and therefore could be no penalty assessments. Kais Jewellery did not submit that, if I concluded that it had not discharged the burden of proving the GST assessments are excessive, the penalties should nevertheless be reduced either by change to the calculation of the base penalty amount or uplift, or because full or partial remission is appropriate.

It therefore follows from my conclusion regarding the GST assessments that Kais Jewellery has not discharged the burden of proving the penalty assessments are excessive.
HAS MR KAIS PROVED THAT THE CASH WITHDRAWALS WERE NOT HIS INCOME?
It also follows from my conclusion, that I am not satisfied Kais Jewellery made the purported acquisitions of scrap gold from Too Nite and Coin D’Or, that I cannot be satisfied the cash withdrawals were paid to those companies as consideration for the acquisitions.
As he offered no other explanation for the withdrawals, it follows that Mr Kais has not discharged the burden of proving the withdrawals were not ordinary income of Mr Kais.
DISPOSITION OF APPLICATIONS FOR REVIEW
As the applicants have not discharged the burden of proving the GST, penalty and income tax assessments are excessive, the objection decisions must be affirmed.

I certify that the preceding 126 (hundred and twenty-six) paragraphs are a true copy of the reasons for the decision herein of Senior Member R J Olding

.................................[SGD]......................................
Associate
Dated: 11 March 2022

Dates of hearing: 14-18 December 2020, 20-21 January 2021

Date final submissions received: 7 April 2021

Counsel for the Applicant: C Bolger

Solicitors for the Applicant: Husseini Lawyers

Counsel for the Respondent: M Hirschhorn

Solicitors for the Respondent: Australian Government Solicitor

Dates of hearing:	14-18 December 2020, 20-21 January 2021
Date final submissions received:	7 April 2021
Counsel for the Applicant:	C Bolger
Solicitors for the Applicant:	Husseini Lawyers
Counsel for the Respondent:	M Hirschhorn
Solicitors for the Respondent:	Australian Government Solicitor