Zuber, J.A. (Blair and Griffiths, JJ.A. concurring) (orally): —In 1986 Her Majesty the Queen filed a claim as a preferred creditor against the bankrupt estate of Albert John Norris. The claim was disallowed by the trustee in bankruptcy. The Crown appealed unsuccessfully to the Deputy Registrar in Bankruptcy and again without success to Anderson, J. The Crown now appeals to this court.
The facts which underlie the issue in this case may be shortly stated. In 1984 the Crown issued a notice of assessment for $9,960.93 against 542175 Ontario Limited for failure to remit taxes and unemployment insurance commission premiums payable by the numbered company as source deductions on behalf of its employees. Pursuant to subsection 227.1(1) of the Income Tax Act Albert Norris as a Director of the numbered company was jointly and severally liable with the numbered company for the assessed amount.
On July 26, 1986 Albert Norris made an assignment in bankruptcy. Subsequently, the Crown filed proof of claim with the trustee in the sum of $9,960.93. The Crown also issued a notice of assessment in the same amount against the bankrupt pursuant to subsection 227(10) of the Income Tax Act.
The trustee was not satisfied with the notice of claim filed by the Crown and asked for more information. In response to this request the Crown supplied the trustee with the notice of assessment directed to the bankrupt Albert Norris. The trustee was still not satisfied and asked for "the working papers" that Revenue Canada auditors had prepared to establish the amounts owing by 542175 Ontario Limited. Neither the working papers nor any further detail was furnished to the trustee and the claim of the Crown was disallowed. The Deputy Registrar with whom Anderson, J. agreed held that the proof of claim and the notice of assessment were not sufficient for the trustee to discharge his statutory duty and that total disallowance of the claim was appropriate. With great respect to that view, we disagree.
In our view it was within the power of the trustee to call for evidence to support the proof of claim. However, the request of the trustee was fully answered by the notice of assessment. Subsection 152(8) of the Income Tax Act provides as follows:
(8) An assessment shall, subject to being varied or vacated on an objection or appeal under this Part and subject to a reassessment, be deemed to be valid and binding notwithstanding any error, defect or omission therein or in any proceeding under this Act relating thereto.
A taxpayer who objects to an assessment may file a notice of objection pursuant to subsection 165(1) of the Income Tax Act and if necessary proceed to exercise rights of appeal to the Tax Court and to the Federal Court. When the trustee in bankruptcy wishes to question the validity of an assessment against a bankrupt he, like anyone else, must seek his remedy within the Income Tax Act; see In Re Carnat Construction Company Limited (1958), 37 C.B.R. 47 and Re Selkirk (No. 2) (1972), 17 C.B.R. (N.S.) 302.
To hold that the trustee in bankruptcy can disallow an assessment made pursuant to the Income Tax Act would be tantamount to clothing the trustee with the powers of the Tax Court. No interpretation of the Bankruptcy Act can support such a conclusion.
In the result, the appeal is allowed and the disallowance is set aside and the trustee in bankruptcy is directed to allow the claim filed by the Crown. Such allowance of the claim is however without prejudice to the right of the trustee in bankruptcy to proceed with any right he may have under the Income Tax Act. We are told the trustee has filed a notice of objection to the assessment.
There will be no order with respect to costs of this appeal or the appeal before Anderson, J.
Appeal allowed.
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