Date: 20011114
Docket: 98-1205-IT-G,
98-131-IT-G
BETWEEN:
SHOEL ROSENHEK,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor
Judgment
Beaubier, J.T.C.C.
[1]
These appeals pursuant to the General Procedure were heard
together on common evidence at Windsor, Ontario on October 19,
2001 and at Toronto, Ontario on October 24, 2001. The
Appellant testified. The Respondent called Leon Schwartzberg,
C.A. a technical advisor with Canada Customs and Revenue Agency
("CCRA").
[2]
Appeal number 98-131(IT)G is for the Appellant's 1988, 1989,
1990 and 1991 taxation years. Appeal number 98-1205(IT)G is for
the Appellant's 1988 taxation year.
[3]
Respecting 1988, the Appellant stated in his Notice of Appeal
that in May, 1993 he made a voluntary disclosure of receipts
of two amounts, $79,738.95 and $70,476.15 for his 1988 taxation
year which he received from two hospitals which he alleges were
also reported in his income from Ontario Health Insurance Plan
("OHIP"). On April 7, 1993, he paid the Receiver
General $2,000,000 on account of back taxes and interest
respecting unreported income during the years under appeal. His
appeals are for a reassessment for 1988 reducing his income taxes
respecting these amounts which he believes were reported twice
- first lumped into OHIP income which he received directly
from OHIP and secondly as income he received from the two
hospitals. He also wishes to recover the interest charged to him
for the succeeding years respecting his failure to pay his 1988
income tax on these alleged duplicate amounts until April 7,
1993, to be reduced accordingly.
[4]
CCRA's evidence in reply consisted of an accounting of funds
respecting the sums in dispute.
[5]
The hearing in Windsor was adjourned to Toronto because the
Respondent's accounting record was insufficient to verify the
text of Exhibit R-1, Tab 50, page 5 respecting:
(1)
The withdrawal of penalties levied respecting -
1990
-
$14,461.80
1991
-
$6,022.60
(2)
The allegation that a refund was issued on September 3, 1998 in
the amount of $149,301.34 and the accounting as to what that
constituted.
[6]
These items were accounted for by Mr. Schwartzberg when Court
opened on October 24, 2001, when he testified and used as
supporting references R-8, R-9, R-10 and R-11. At that
point the Court adjourned to allow the Appellant to reconcile
these Exhibits and Exhibit R-12. Thereupon the Appellant
cross-examined Mr. Schwartzberg and the aforesaid Exhibits were
confirmed to be a correct accounting respecting the interest and
penalties at issue. The accounting acknowledged that the
penalties described in subparagraph [5](1) hereof remain due to
the Appellant upon final judgment issuing in this appeal. The
interest at issue is found by the Court to be accounted for and
as a result, no interest is owed by the Respondent to the
Appellant.
[7]
The Appellant argued strongly that this Court should review the
Fairness decisions by the Respondent respecting interest and, in
particular, interest that he claims to be due on the $2,000,000
which he paid to the credit of his account, on April 7, 1993 of
which $1,360,049.70 was repaid to him on June 23, 1994 after the
income tax due was taken for 1992 and 1993, but before
assessments were made respecting his voluntary disclosure in May,
1993 contained in Exhibit R-1, Tab 5.
[8]
Two things arise in law respecting the claim for interest
described in paragraph [7]:
1.
By the fairness decision to waive interest arrears contained in
the reassessments of September and December, 1994, the Minister
recognized that payment with respect to the Appellant's tax
liability for the 1988, 1989, 1990 and 1991 taxation years was
received on April 7, 1993. Accordingly, no obligation arises
under section 164 for interest to be paid to the Appellant for
the period between April 7, 1993 and the date of the Notices
of Reassessment. If interest should be paid to the Appellant for
the aforementioned period, there would be a concern with a double
benefit being conferred upon the Appellant.
2.
This Court has no jurisdiction to review fairness respecting the
decision of the Fairness Committee. Respecting this, the Court
adopts the reasoning of McArthur, T.C.J in John Laverne
Housser v. Her Majesty the Queen [1994] T.C.J. No. 454
(Informal Procedure case) wherein he stated:
9.
This Court derives its powers from enabling statutes and is not a
Court of equity.
10.
The Tax Court of Canada does not have the jurisdiction to
substitute its own opinion for that of the Minister in respect of
the Minister's finding pursuant to subsection 220(3.1).
11.
The Court was referred to the case of Floyd Estate v. M.N.R. 93
D.T.C. 5499., This was an application under the Federal Court Act
for judicial review. The Court stated at page 550:
"At the outset, I should point out that it is not for the
Court to decide whether the interest otherwise payable by the
taxpayer ought to be waived or cancelled. It is within the
discretion of the Minister. The function of the Court in this
judicial review, as I understand it, is to determine whether or
not the Minister failed to observe procedural fairness or erred
in law in making his decision, as outlined under subsection
18.1(4) of the Federal Court Act."
The Court refused to analyze the substantive question of
whether or not the decision was fair to the taxpayer.
12.
This Court will not second guess the Minister's decision. The
decision, on the merits of the Appellant's application under
subsection 220(3.1) is at the discretion of the Minister.
[9]
The Appellant also disputed the detailed accounting rendered to
him in Court and in particular suggested that two cheques paid to
him of $149,301.34 (See Exhibit R-9) and of $31,422.47 (See
Exhibit R-8, page 9), did not add up to the total which he
considered due to him of the sums of
$83,105.44
$37,529.36
$13,096.00 and
$65,470.28
(See Exhibit R-8, page 9). However these figures are
accounting entries by the Respondent contained in different
columns, which arise from numerous entries due to the
Appellant's original failure to report income and consequent
payments, credits and debits over in excess of 10 years. The
Respondent's accounting is in balance and the Appellant did
not succeed in refuting it in any way. The Appellant argued that
he suffered illness and professional reversals during the years
in question. But there is no evidence that these existed during
his very first years of failure to report income. The accounting
by the Respondent is accepted by this Court as it is recorded in
Exhibits R-8 to R-12 inclusive.
[10] Finally,
respecting the Appellant's alleged duplicate report of income
for 1988 described in paragraph [3] herein, the Appellant has
failed to lead any evidence that there was a duplication. Indeed,
in his original disclosure to Revenue Canada, he was quite
specific that he had failed to report these receipts.
In the last paragraph of page 1 of that letter (Exhibit R-1,
Tab 5) in May, 1993, he stated:
With regards to the 1988 tax year, the actual total of Gross
Professional Income for that year amounted to $1,116,046.00. On
my tax return, I reported a Gross Professional Income of
$965,832.00. I did not include an additional $150,214.00 in Gross
Professional Income which is accounted for in the two T4A
Supplementary information slips I have now disclosed to Revenue
Canada, one representing the amount of $79,738 and the other
representing the amount of $70,476. Hence, for the 1988 tax year,
there exists a total undeclared Gross Professional Income of
$150,214.00 representing the difference between the actual Gross
Professional Income of $1,116,046.00 and the previously reported
figure of $965,832.00.
Thus, in his own words, he refuted his current allegations at
a date much closer to the failures in question than the date of
this hearing. It is on that letter of disclosure that the
reassessments were based.
[11] Based
upon the advice of counsel for the Respondent and the testimony
of the Respondent's witness, the Appellant is entitled to
withdrawal of the penalties for 1990 of $14,461.80 and for 1991
of $6,022.60, but that is all.
[12] The
assessments before the Court are referred to the Minister of
National Revenue for reassessment and reconsideration
accordingly.
[13] The
Respondent is awarded a full set of costs respecting each appeal,
but only one set of costs is to be taxed for the actual hearing
of these appeals.
Signed at Ottawa, Canada, this 14th day of
November, 2001.
"D. W. Beaubier"
J.T.C.C.
COURT FILE
NO.:
98-1205(IT)G and 98-131(IT)G
STYLE OF
CAUSE:
Shoel Rosenhek v. The Queen
PLACE OF
HEARING:
Windsor, Ontario and Toronto, Ontario
DATE OF
HEARING:
October 19 and 24, 2001
REASONS FOR JUDGMENT
BY:
The Honourable Judge D. W. Beaubier
DATE OF
JUDGMENT:
November 14, 2001
APPEARANCES:
For the
Appellant:
The Appellant himself
Counsel for the
Respondent:
Roger Leclaire
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
98-1205(IT)G
98-131(IT)G
BETWEEN:
SHOEL ROSENHEK,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on common evidence on October 19,
2001 at Windsor, Ontario
and on October 24, 2001 at Toronto, Ontario
by the Honourable Judge D. W. Beaubier
Appearances
For the
Appellant:
The Appellant himself
Counsel for the Respondent: Roger
Leclaire
JUDGMENT
The
appeals from the assessments made under the Income Tax Act
for the 1988, 1989, 1990 and 1991 taxation years are allowed, and
the matter is referred to the Minister of National Revenue in
accordance with the attached Reasons for Judgment.
The
Respondent is awarded costs.
Signed at Ottawa, Canada, this 14th day of
November, 2001.
J.T.C.C.
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