Kudelka, P. and Kudelka, P.I.

The Full Federal Court considered an appeal by the applicants, P. and P.I. Kudelka, against a decision of a single judge of that court. The dispute concerned the validity of a notice of assessment issued by the Commissioner of Taxation, which the applicants sought to have set aside.

The primary legal issue before the Full Court was whether the Commissioner had acted *ultra vires* in issuing the notice of assessment. This question turned on whether the Commissioner had properly exercised the discretion afforded to him under section 167 of the *Income Tax Assessment Act 1936* (Cth) to make an assessment in the absence of a return. The applicants argued that the Commissioner had failed to consider relevant material and had acted on irrelevant considerations when forming the belief that it was necessary to make an assessment under that section.

The Court reasoned that section 167 requires the Commissioner to form a genuine belief that it is necessary to make an assessment, and this belief must be based on reasonable grounds. The Court found that the evidence before it did not establish that the Commissioner had failed to consider relevant material or had acted on irrelevant considerations. The Court held that the Commissioner's belief was reasonably open on the material before him, and therefore, the notice of assessment was valid.

The appeal was dismissed.