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Citation: 2004TCC61
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Date: 20040116
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Docket: 2003-1775(IT)I
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BETWEEN:
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HASMIG HALAJIAN,
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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
Teskey, J.
[1] The Appellant, in her Notice of
Appeal wherein she appealed her reassessment of income tax for
the years 1994 and 1996, elected the informal procedure.
Issues
[2] The two issues are whether the
Appellant in 1994 donated $5,000 to Or Hamaarav Sephardic
Congregation, and in 1996, did she donate $4,500 to Abarbanel S.
Learning Centre.
[3] As the Notice of Reassessments
were mailed on September 9, 2002 and August 9, 2002,
the assessments were statute-barred as they were both over
the three-year period. Thus, the onus was on the
Respondent, who proceeded first.
[4] The Respondent called
Rabbi Edery as the first witness.
[5] Rabbi Edery was the rabbi for
the Jewish Congregation known as Or Hamaarav Sephardic
Congregation. This entity also owned the Synagogue.
[6] In or around 1980,
Rabbi Edery wanted a new building to house a day-care
centre and a new charitable entity was established and known as
Arbananel S. Learning Centre.
[7] In 1985, when interest rates went
sky high, all real estate was sold by the bank under power of
sale. As a result, neither entity could carry on without
donations, which were very difficult to come by since
Rabbi Edery was considered inept.
[8] Rabbi Edery then devised a
scheme where he would give a charitable receipt for ten times the
amount of cash that would be donated, and if the donor paid by
cheque, the cheque would be cashed and 90% of the money returned
to the donor.
[9] Rabbi Edery swore that only
three donors gave the full amount of the receipt issued and those
three donors dealt directly with him. He also said he could name
the three donors. No one asked him to do so.
[10] Rabbi Edery acknowledged that he
was charged with multiple charges under the Income Tax
Act, that he pleaded not guilty and was represented by a
lawyer.
[11] He was convicted and the fine levied
has been paid in full and the balance of the terms of his
sentence have been completed in full.
[12] Rabbi Edery had several people
helping with that scheme, one of who was an Armenian person by
the name of "Joe". Joe, likewise, had a helper who was
a tax preparer by the name of "Mourad Halajian",
who is the brother-in-law of the Appellant and who
prepared her T1 tax returns.
[13] Rabbi Edery never dealt with
Mourad Halajian or any of the donors that participated in
the tax fraud through Joe.
[14] Rabbi Edery swore that all money
that came to these two charities through his various helpers was
10 cents on the dollar and never was the donation equal to
the amount of the tax receipt, all as described in
paragraph 8 above.
[15] The second witness for the Respondent
was Frank Menniti, an investigator with the Canada Custom
and Revenue Agency. His testimony confirmed the testimony given
by Rabbi Edery.
[16] The Appellant gave evidence on her own
behalf. She produced a photocopy of a cheque dated
December 30, 1996, drawn on the Bank of Montreal for $4,500,
entered as Exhibit A-1. There are several bank stamps
on the back, one being the Scotia Bank, dated:
"Ja 97 13", and a third one dated:
"Jan 13 97". Attached to the photocopy of the
cheque, is a letter from the Bank of Montreal identifying this
cheque as a Master Card cheque.
[17] Exhibit A-2 is a
Master Card statement that shows that on January 13,
there was a balance owing on the card of $5,233.35 and that the
$4,500 cheque increased the Master Card indebtedness from
$5,233.35 to $9,733.35. Thus, the Appellant borrowed the money on
a credit card to make the donation.
[18] The Appellant is a member of the
Armenian Catholic Church, which she supports but did not claim,
in either 1994 or 1996, any donations thereto.
[19] The T1 tax return for 1994 shows
that the Appellant's taxable income was $29,202 and claimed a
tax credit for a charitable gift of $5,000 to Or Hamaarav
Sephardic Congregation, a Jewish organization which she had
absolutely no connection to.
[20] The T1 tax return for 1996 shows
that the Appellant's taxable income for 1996 was $18,533 and
that she donated $4,500 to Abarbanel S. Learning Centre,
again a Jewish organization, which she had no knowledge of, or
connection thereto.
[21] She claimed that the possibility of
making donations was brought to her attention by her tax
preparer, namely Mourad Halajian, who was her
brother-in-law.
[22] When the Appellant was asked who she
gave the cheque to and who gave her the receipt, she simply
stated: "I cannot recall."
[23] The Appellant stated that her
brother-in-law was Armenian Orthodox, which is not
part of the Jewish religion.
[24] Like many cases, this one comes down to
credibility. Prior to the Appellant closing her case, I advised
her and her agent who was her husband, that if
Mourad Halajian was not called as a witness, that I
"may" conclude that his evidence would be
adverse to that of the Appellant's position. After a short
break, the Appellant declined an adjournment to Monday,
March 8, so that Mourad Halajian could be called and
the case proceeded to argument.
[25] Because of the evidence of the
Appellant, I do so draw such a conclusion. I specifically find
that Mourad Halajian was part of the fraudulent scheme and
would have said so if called as a witness.
[26] Rabbi Edery has served his
sentence and has nothing to gain in giving false or coloured
testimony and I accept his evidence in full.
[27] In regards to the evidence of
Frank Menneti, it was given in a straightforward
professional manner and I accept his testimony in full.
[28] The Appellant's testimony in its
entirety simply was not credible, particularly when she did not
call her husband's brother as a witness, who she obviously
was dealing with. She obviously gave the December 30 cheque
to her brother-in-law, whom she must have received
the tax receipts from.
[29] I specifically find that she knowingly
and deliberately took part in the false charitable receipt scheme
and that, in 1995, she received back $4,500 from her
December 30, 1994 cheque, and in 1996, she never made a
donation in the amount of the receipt. Since I find that she
knowingly and deliberately filed false T1 tax returns for 1994
and 1996, she is also liable for the penalties that were
levied.
[30] For all the above reasons, the appeals
are dismissed.
Signed at Vancouver, British Columbia, this 16th day of
January, 2004.
Teskey, J.
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