1. The Appellant was ordered to be wound up in mid-2006. The Appellant’s former directors (later convicted of fraud) were found to have inflated the Appellant’s reported profits through creation of fictitious sales. Profits tax returns were submitted to the Commissioner based on such falsified accounts and as a result, in respect of the 1998/99 to 2003/04 years of assessment, the Appellant paid a total of almost HK$89 million in profits tax. The liquidators claimed a refund of those taxes, on the basis that the Appellant did not make any taxable profits in the relevant years, and that its reported profits were false and non-existent as the result of various frauds perpetrated by its former directors. 2. The liquidators’ claim was based on (i) section 64 of the Inland Revenue Ordinance (the “IRO”) which allows a taxpayer to object to an assessment within one month after the notice of assessment, provided that, if owing to reasonable cause, the taxpayer is prevented from objecting within time, an extension of time may be granted; and (ii) section 70A of the IRO which empowers the Commissioner to correct an assessment within six years after the end of a year of assessment (in the present case, only 2003/04 was eligible) if the tax charged is excessive by reason of an error in the tax return submitted. The Commissioner rejected the liquidators’ claim, an important reason given being that the relevant returns were filed with knowledge of the Appellant of the alleged fraud. 3. The Court of First Instance decided in favour of the liquidators and directed the Commissioner to reconsider her decisions, holding that knowledge of an agent should not be attributed to the principal where it is acquired by the agent who is defrauding the principal in the same transaction. The Court of Appeal disagreed and allowed the Commissioner’s appeal. 4. The Court, by a majority, dismissed the Appellant’s appeal. After reviewing the factual situation and the language and legislative purpose of the statutory provisions, the Court held that the guilty knowledge of the fraudulent directors should be attributed to the Appellant in the present context. Therefore, the liquidators could not rely on the proviso in section 64 because the Appellant was not “prevented” from lodging an objection with time: it “chose” not to do so. Nor could the liquidators rely on section 70A, because the Appellant, knowing that the return was false, had not made an “error” but had instead told a deliberate lie by filing the return. 5. The Court accepted the importance of having a fair and efficient tax system which can be expected, year on year, to produce public revenue to a more or less predictable level. To that end, prompt payment and finality within a reasonably short time were the policy aims of the provisions in question. Dissenting judgment of Tang PJ: 6. Tang PJ dissented on the issue of attribution, and held that section 70A of the IRO was applicable. If the liquidators could prove that the profits had indeed been inflated, and that the Appellant paid more tax than was properly chargeable, justice and common sense should not allow knowledge of the fraudulent directors be attributed to the Appellant. The order of the Court of First Instance should be restored, and the matter be remitted to the Commissioner for further consideration.