Court strikes out Shafee’s bid to file counterclaim on tax arrears

PUTRAJAYA: An attempt by Tan Sri Muhammad Shafee Abdullah to resurrect his right to file a counterclaim against the Inland Revenue Board (LHDN) over income tax arrears amounting to Rm9.41mil was struck out by the Court of Appeal.

A three-member bench led by Justice Hanipah Farikullah held that the subject matter cannot be appealed, pursuant to Section 3 of the Courts of Judicature Act.

Justice Hanipah, who presided over the matter with Justices Azimah Omar and Wong Kian Kheong, also ordered the senior lawyer to pay RM10,000 in costs.

Muhammad Shafee was represented by lawyers Datuk Seri Rajan Navaratnam, Muhammad Farhan Muhammad Shafee and Wee Yeong Kang.

Senior counsel Norhisham Ahmad, Al-hummidallah Idrus, Norzilah N Hamod @ Abdul Hamid and Muhammad Faqrol Syazreen Mohd Ghause acted on behalf of LHDN.

Meanwhile, Rajan told reporters that his client is at liberty to file a fresh suit.

On April 13, last year, the High Court dismissed Muhammad Shafee’s application to obtain leave to file a counterclaim.

The court then found that the counterclaim does not arise from the recovery of taxes but from mala fide acts by the Malaysian Anti-corruption Agency and the Attorney General’s Chambers.

The latter, the court reasoned, does not fall within the set scope of the rule prohibiting counterclaim.

On Dec 21 last year, Muhammad Shafee was ordered by the High Court here to pay over Rm5.5mil in income tax arrears to LHDN after the revenue board obtained a summary judgment against the lawyer.

LHDN, which filed the suit on May 6, 2021, claimed that the lawyer had failed to pay the entire income tax arrears.

In addition, the tax increase imposed on Muhammad Shafee amounting to RM9,414,708.32 was recorded for five assessment years: 2011, 2012, 2013, 2014 and 2016.