Gélinas c. La Reine, 2004 TCC 327 (Informal Procedure)

[OFFICIAL ENGLISH TRANSLATION]

REASONS FOR JUDGMENT

(Delivered orally from the bench on October 21, 2003, at Shawinigan, Quebec

and amended for greater clarity.)

Bédard, J.

[1]      The Appellant is appealing the assessment under the Excise Tax Act (the Act) for the period from January 1, 1995 to December 31, 1997.

[2]      The burden of proof is on the Appellant. He must establish, according to the balance of probabilities, that the Respondent was incorrect with respect to the five points under dispute, which I will discuss in these Reasons, below.

[3]      The evidence presented by the Appellant in support of his appeal relies essentially on his testimony and is unsupported, with the occasional exception, by any documentary evidence nor by any independent and credible testimony. On the other hand, this Court has no reason to doubt the credibility of the Respondent's witnesses and is convinced that they carried out their work conscientiously.

[4]      However, the Court has very serious doubts with respect to the Appellant's credibility, since he changed his version of the facts several times during the procedure leading up to this appeal and during the appeal itself. When there are serious doubts about the credibility of the Appellant in a case, the Court cannot rule in his favour on the simple basis of his testimony. The Appellant's testimony should be supported by documentary evidence or the testimony of an independent and credible individual.

Points in dispute

[5]      The first point relates to the starting capital of $18,000 that the Appellant claimed to have had on December 31, 1994. When the Appellant's position was disputed by the authorities, he admitted that it was $8,000 instead. When the Appellant's claim was again disputed by the authorities, he instead stated that this amount came from the sale of personal property. The Court has a great deal of difficulty believing the Appellant and must conclude that he was not able to demonstrate, on the balance of probabilities, that the Minister was wrong on this first point.

[6]      Second, with respect to the sale of personal property, the Court is ready to concede that the Appellant's claim that he sold an excavator in 1995 for $2,300 is correct. The Court rules in favour of the Appellant on this point because his testimony is supported by the testimony of an individual who seemed to me to be independent and credible. With respect to the other personal property the Appellant claims to have sold, his testimony on this point is inadequate and not very believable. There is no supporting documentation for the Appellant's testimony; there is no contract or cheque and no witness came forward to confirm his claims.

[7]      Third, with respect to the amounts of $2,000 for 1996 (see Exhibit A-4) and the amount of $5,000 for the 1997 taxation year (see Exhibit A-5), history repeats itself. During the initial meetings with the authorities, the Appellant did not raise this point, it was only when faced with opposition that he did so. The auditor asked the Appellant to provide him with invoices, which he did not do until the last minute, in March 2003 during the hearing, when he provided some supporting documents to prove his point. I must conclude once again that the Appellant is not convincing.

[8]      Fourth, with respect to accounts payable, the Appellant provided three invoices, two from Hydro Québec in the amounts of $68.67 and $87.04 and another of $1,255.78. With respect to these, the Court grants half of the first two invoices and that of $1,255.78, since the latter provided satisfactory and plausible documentary evidence. In fact, not only did he provide invoices but he was also able to trace the corresponding withdrawals of funds in his bankbook.

[9]      Fifth, with respect to the tax return, I am in full agreement with Mr. Beaulé, research officer and witness for the Respondent, that to grant this point would be to double the benefits to the Appellant.

[10]     Finally, with respect to the penalties, the Court concludes that the Appellant demonstrated flagrant negligence, year after year. The percentage of undeclared income in comparison to the declared income is too great in this case.

[11]     In summary, the appeal is allowed in part to take into consideration the points granted above.

Signed at Ottawa, Canada, this 28^th day of April 2004.

Justice Bédard

Translation certified true

on this 18^th day of August 2004.

Shulamit Day, Translator