Benmergui v. The Queen, docket 2001-3816(IT)I (Informal Procedure)

Date: 20030124

Docket: 2001-3816(IT)I

2001-4237(IT)I

BETWEEN:

MIGUEL BENMERGUI AND

PERLA AZULAY,

Appellants,

and

HER MAJESTY THE QUEEN,

Respondent.

___________________________________________________________________

          Agent for the Appellant Michel Benmergui:              Malcolm Allman

          For the Appellant Perla Azulay:                      The Appellant herself

          Counsel for the Respondent:                                   Joel Oliphant

____________________________________________________________________

REASONS FOR JUDGMENT

(Reasons for Judgment delivered orally from the Bench at Toronto, Ontario,

on Wednesday, October 9, 2002 and revised as to style and syntax at

Ottawa, Canada on January 24, 2003)

Margeson, J.T.C.C.

[1]      I am not going to call upon the Appellant to address the Court by way of argument.

[2]      The Court refuses to draw such inference against the Appellant as are being asked here. The Court is fully satisfied that the Appellant is an honest witness and accepts her evidence as she gave it. It was straight-forward.

[3]      She said that she knew the Rabbi; she thought that he was a good person; she had no reason to believe otherwise. She donated to the cause or to the association, which on the receipt is called "Abarbanel S. Learning Centre," in the belief that they were doing good work. The donation to the Centre was a reward because of the help that the Centre had given her and her family. That is a reason why people often make donations.

[4]      Her motive was well-founded and honest. Her motive was charitable. She believed that this was a registered charity. There is no evidence before the Court that it was ever de-registered as a charity. At all material times it was a registered charity.

[5]      On that ground the Appellant would be entitled to the deduction unless it could be shown that she disentitled herself. If she participated in a scheme or some fraud or had received a receipt for more money than she had donated, then that might disentitle her to the deduction. The Court would draw an unfavourable inference against her if there were any evidence that she received a receipt for a larger amount than she gave. She would know that she was participating in something fraudulent. Even if there was some real question about whether this was a valid charity or not when she donated, she could conceivably disentitle herself to claiming the deduction.

[6]      If she knew that it was a valid registration but the funds were not being used for the purposes for which she gave them, then one might question the state of mind of the donor or his or her intention when they gave the money in the first place. Because one might say, "Well, okay, you knew this was going on, you gave the money, therefore you were actually willingly participating in a scheme or a fraudulent transaction which you knew or should have known about."

[7]      So under those circumstances, one might be able to find that the donor had disentitled himself or herself to the credit for the donation, but that does not apply here.

[8]      On the first argument, the Court is satisfied that all three of these cases are statute barred. The reassessments cannot stand. Secondly, if the Court is wrong on that, and they are not statute barred, then on the merits of the case, the Court is satisfied that the Appellant is entitled to succeed.

[9]      The appeals from the assessments made under the Income Tax Act for the 1994, 1995 and 1996 taxation years are allowed, without costs, and the assessments are referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the Appellant was entitled to the credits that she claimed in the 1994, 1995 and 1996 taxation years.

Signed at Ottawa, Canada this 24th day of January 2003.

J.T.C.C.

COURT FILE NO.:                             2001-3816(IT)I

                                                          2001-4237(IT)I

STYLE OF CAUSE:                           Miguel Benmergui and

                                                          Perla Azulay and

                                                          Her Majesty The Queen

PLACE OF HEARING:                      Toronto, Ontario

DATE OF HEARING:                        October 9, 2002

REASONS FOR JUDGMENT BY:     The Honourable T.E. Margeson

DATE OF REASONS FOR JUDGMENT:    January 24, 2003

APPEARANCES:

Agent for the Appellant Michel Benmergui:              Malcolm Allman

For the Appellant Perla Azulay:                      The Appellant herself

Counsel for the Respondent:                                   Joel Oliphant

COUNSEL OF RECORD:

For the Appellants:

Name:                                                

Firm:           

For the Respondent:                            Morris Rosenberg

                                                          Deputy Attorney General of Canada

                                                          Ottawa, Canada