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Docket: 2000-4538(IT)G
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BETWEEN:
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PAUL MANHAS,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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____________________________________________________________________
Motion heard on January 17, 2005 at Nanaimo, British Columbia
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Before: The Honourable
Justice L.M. Little
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Appearances:
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For the
Appellants:
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The Appellant
himself
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Counsel for the
Respondent:
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Karen Truscott
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____________________________________________________________________
ORDER
Upon motion made by the Respondent for dismissal
of the appeals on the basis that the Appellant is in breach of a Court Order
dated September 17, 2004 for failure to pay costs awarded to the Respondent as
a consequence of the Appellant's request for an adjournment of a previous
hearing date, and on the basis that the Appellant was in breach of a Court Order
dated March 26, 2004 by failing to produce information and documentation
pursuant to undertakings given at the Examination for Discovery;
And upon reading the Affidavit of Thomas
Torrie filed;
And upon hearing what was alleged by the
parties;
The motion is dismissed.
Signed at Vancouver, British
Columbia, this 13th day of
May 2005.
Little
J.
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Docket: 2000-4538(IT)G
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BETWEEN:
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PAUL MANHAS,
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Appellant,
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And
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HER MAJESTY THE QUEEN,
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Respondent.
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____________________________________________________________________
Appeals heard on January 17, 2005 at Nanaimo, British Columbia
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Before: The
Honourable Justice L.M. Little
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Appearances:
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For the
Appellants:
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The Appellant
himself
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Counsel for the
Respondent:
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Karen Truscott
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____________________________________________________________________
JUDGMENT
The appeals from the assessments made under
the Income Tax Act for the 1993, 1994 and 1995, taxation years are allowed
without costs in accordance with the attached Reasons for Judgment.
Signed at Vancouver, British
Columbia, this 13th day of May
2005.
Little
J.
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Citation: 2005TCC327
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Date: 20050513
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Docket: 2000-4538(IT)G
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BETWEEN:
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PAUL MANHAS
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Appellant,
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And
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
Little J.
A. FACTS:
[1] The
Appellant resides in Nanaimo,
British Columbia.
[2] In
the 1993, 1994 and 1995 taxation years the Appellant managed Via Contracting
Ltd. ("Via") and Gurdev Holdings Ltd. ("Gurdev"). (Via and
Gurdev are collectively referred to as the "Companies".)
[3] Via
was in the demolition and excavation business. Via rented equipment and office
space from Gurdev.
[4] The
Appellant was the President and a Director of the Companies. The Appellant
testified that his father Gurdev Manhas was the sole shareholder of the
Companies.
[5] The
Appellant reported income for the indicated taxation years as follows:
Income
1993 - $10,673.00
1994 - $28,144.00
1995 - $11,876.00
[6] Officials
of the Canada Revenue Agency (the "CRA") determined that the amounts
of income reported by the Appellant for the 1993, 1994 and 1995 taxation years
were insufficient to pay for the Appellant's living expenses.
[7] Officials
of the CRA carried out an audit and a Net Worth Calculation on the Appellant.
Pursuant to the Net Worth Calculation the Minister of National Revenue (the
"Minister") concluded that the Appellant had understated his income
as follows:
Amount of Understated
Income Income
Initially
Reported Assessed
1993 $10,673.00 $73,218.00
1994 $28,144.00 $56,950.00
1995 $11,876.00 $
1,493.00
[8] As
a consequence of the understatement of income as determined by the Minister
penalties were imposed under subsection 163(2) of the Income Tax Act
(the "Act") as follows:
Income
1993 - $3,633.52
1994 - $4,232.21
1995 - $1,197.31
[9] The
Appellant filed Notices of Objection to the Reassessments and officials of the
Appeals Section of the CRA agreed to reduce the Appellant's unreported income as
follows:
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Revised Unreported Income
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1993
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$32,936.00
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1994
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$36,293.00
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1995
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$13,675.00
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B. ISSUES:
[10] The issues are:
(a) Whether the
Appellant's income for the 1993, 1994 and 1995 taxation years was understated?
(b) Whether the
Minister was correct in imposing penalties?
C. ANALYSIS:
[11] Counsel for the Respondent maintained that the onus is on the
Appellant to show that the Net Worth Calculations are incorrect and that the
Appellant must discharge this onus.
[12] I have carefully reviewed the evidence provided by the Appellant and
the evidence provided by counsel for the Respondent. Based on the evidence that
was presented I have concluded that the following deductions should be made to
the Appellant's income.
[13] The Appellant testified that in 1993 a Delorean Automobile was
purchased for $12,000.00. The Appellant maintains that the Delorean Automobile
was purchased by his father, Gurdev, using money owed to him by Via. The
Appellant said that the Delorean Automobile has been stored in a garage since
the date it was purchased. Based on a careful analysis of the evidence I have
concluded that this transaction has nothing to do with the Appellant and
therefore the amount of $12,000.00 should be deleted from the Net Worth Calculations
of the Appellant.
[14] The Reassessments indicate that the Appellant's personal expenditures
were determined by the Minister to be $400.00 per month or $4,800.00 per year.
[15] The Appellant maintains that these numbers are too high and the
numbers for personal expenditures should be $300.00 per month or $3,600.00 per
year. I accept the Appellant's position and the amount of $1,200.00 per year
should be deducted from the Net Worth Calculations for the 1993, 1994 and 1995
taxation years.
[16] The Appellant testified that in the 1993, 1994 and 1995 taxation years
he had a bank account at a branch of the Canadian Imperial Bank of Commerce
located in the Harbour Park complex. The Appellant said that this bank account was later changed to a
branch of the Canadian Imperial Bank of Commerce located in the Country Club
Mall. Counsel for the Respondent said that officials of the CRA had requested
copies of the bank records but nothing was ever provided by the Appellant.
[17] As noted above, the Appellant had the onus of proving that the
Minister's Net Worth Calculations were incorrect. The Appellant maintains that
the Minister's Net Worth Calculations were incorrect. However, the Appellant
did not produce any acceptable evidence to establish that the Minister's
calculations were incorrect. Because of the failure by the Appellant to
establish that the Net Worth Calculations were incorrect I accept the majority
of the Minister's Net Worth Calculations.
[18] The appeals will be allowed to delete the amount of $12,000.00 re the
cost of the Delorean Automobile purchased in 1993 from the Net Worth Calculations
and to reduce the personal expenditures from $4,800.00 per year to $3,600.00
per year. No other adjustments should be made to the Reassessments. I have
concluded that costs should not be awarded on the appeal. However, the
Appellant is in breach of the Court Order dated September 17, 2004 since he
failed to pay costs of $405.39 awarded to the Respondent. The amount of $405.39
should be paid by the Appellant to the Respondent forthwith.
[19] I have also concluded that the penalties should be applied but
adjustments should be made to recognize the amounts that were deleted from income.
Signed at Vancouver,
British Columbia, this 13th day of May 2005.
Little
J.
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