Date:
20010410
Docket:
2000-3397-IT-I,
2000-3398-IT-I
BETWEEN:
BERNARD
BÉLANGER,
LES
CONSTRUCTIONS BERNARD BÉLANGER LTÉE,
Appellants,
and
HER MAJESTY
THE QUEEN,
Respondent.
Reasons
for Judgment
Tardif,
J.T.C.C.
[1]
The parties agreed to proceed on evidence common to both appeal
cases.
[2]
The two cases concern income that was allegedly not reported. The
individual appellant, who signed both Notices of Appeal
("the Notices")-in his personal capacity as regards his
own appeal and as president of Les Constructions Bernard
Bélanger Ltée as regards that appellant's
appeal-stated the following in those Notices:
Bernard
Bélanger's appeal, 2000-3397(IT)I
[TRANSLATION]
(a)
The amounts referred to in the decision of May 15, 2000,
concerning benefits conferred by Les Constructions
Bélanger Ltée and estimated at $4,000 for 1996 and
$8,500 for 1997, when I was a shareholder in the said company,
are wrong and unfounded and merely reflect assumptions that the
auditor made without proof concerning unexplained deposits in my
personal bank account;
(b)
I deny having borrowed money from or become indebted to the
corporation by reason of my status as a shareholder in connection
with the above-mentioned amounts;
(c)
As the auditor, Mr. Marois, was told, our strongbox was stolen in
November 1996 (see copy of invoice and copy of police report
proving the theft); he asked us to provide documents that were
inside the said box, which I could not do, of course; we always
co-operated fully with the said auditor;
(d)
The said auditor estimated amounts without any proof, which is
why I am contesting the said decision;
(e)
I therefore request the Tax Court of Canada to cancel the
interest and the assessment for the said amounts;
(f)
I am also filing a copy of correspondence, a conditional
withdrawal notice and an amendment form concerning the
Ministère du Revenu of Quebec so that they can be taken
into account.
Les
Constructions Bernard Bélanger Ltée's appeal,
2000-3398(IT)I:
[TRANSLATION]
(a)
The $8,500 referred to in the Minister's notice of
confirmation dated May 15, 2000, which states that this amount is
business income for the 1998 taxation year, is wrong and
unfounded and is merely pure conjecture based on allegations
without proof;
(b)
In his letter dated September 17, 1999, the auditor,
Miville Marois, refers to unreported income in connection
with unexplained deposits in the shareholder's personal bank
account, a copy of the said letter being attached hereto as
Exhibit A-1;
(c)
I request that those amounts not be included in my income and
that they be cancelled along with the interest;
(d)
As the said auditor was told, our strongbox and equipment were
stolen in 1996; he asked us to provide documents that were inside
the said strongbox, which we could not do, of course; we always
co-operated fully with the said auditor;
(e)
The said auditor estimated amounts without any proof, which is
why I am contesting the said decision;
(f)
As Exhibit A-2, I am filing in evidence a copy of the
purchase invoice for a new strongbox and a copy of the report
from the Service de la Sécurité publique proving
the theft of the strongbox;
(g)
I am also filing a copy of correspondence, a conditional
withdrawal notice and an amendment form concerning the
Ministère du Revenu of Quebec so that they can be taken
into account.
[3]
According to the two Notices of Appeal, the respondent acted in
error and without justification and the amounts involved merely
reflect assumptions that the auditor made, without any proof,
concerning unexplained deposits in the individual appellant's
personal bank account.
[4]
In support of the appeals, Bernard Bélanger argued
basically that he had always liked $1,000 bills and that he was
in the habit of keeping small bills and then exchanging them for
$1,000 bills, which were the source of the deposits upon which
the assessments were based.
[5]
To explain the origin of the $22,500 deposited in his personal
account, Mr. Bélanger stated that it was money
obtained from sales of lots in previous years. He filed two
contracts in this regard, one dated June 2, 1994, and the other
July 14, 1997 (Exhibit A-1).
[6]
He never identified or specified exactly how much of the proceeds
from the sales of lots went into the $22,500 total deposits. Mr.
Bélanger also argued that he had made loans to his
children, who had repaid him during the same period. His children
had allegedly signed IOUs, which disappeared when the strongbox
in which everything had been placed was stolen. After the theft,
Mr. Bélanger and his children did not see fit to draw up
anew the documents attesting the existence of the
loans.
[7]
In addition, the explanations concerning the various repayments
obtained by Mr. Bélanger from his children were
vague, imprecise and confused as regards both the payment periods
and the amounts repaid. He said that the amounts had been
invested so as to earn interest, which was disputed by the
auditor, who noted that only one child had reported interest
income and had done so on just one occasion.
[8]
Mr. Bélanger also asserted that he had done various
estimates, in circumstances that were poorly explained, for which
he again received payments in cash. The extent, frequency and
dates of that income were, once again, not established. In
addition, he denied that he had been willing to admit to the
auditor, Mr. Marois, that he had received $10,000 for those
estimates.
[9]
The evidence submitted by Mr. Bélanger is in keeping with
the very poor quality of his bookkeeping as noted by Mr.
Marois.
[10]
Mr. Bélanger accuses the respondent of drawing
conclusions without having satisfactory proof to support those
conclusions.
[11] Yet he
would like the Court to do exactly what he has criticized the
respondent for, namely render judgment without there being any
conclusive evidence or even a preponderance of evidence, solely
on the strength of his having been a good, hard-working taxpayer
and having raised a fine family without the help of any
government money.
[12] I do
not doubt Mr. Bélanger's qualities as a businessman
and good father, which moreover, in light of the facts brought
out by the evidence during the trial, benefited him at the time
of the audit. To succeed in this case, he would have had to
adduce coherent, precise and plausible evidence. Instead, he
referred to a multitude of possibilities, such as loan repayments
by his children, the sale of a tractor, the sale of a car, the
sale of assorted stock, land sales, the preparation of estimates
and his habit of having large amounts of cash in his possession
and, in the end, he concluded that the $22,500 must have come
from just about all of this.
[13] Such
evidence is certainly not conclusive, especially when the most
important information, namely the loan repayments by
Mr. Bélanger's children, was never mentioned
during the audit, that explanation having suddenly materialized
after the proposed assessment.
[14] The
appellants cannot criticize the respondent for having drawn hasty
conclusions without supporting documents, since the obligation to
provide such documents was theirs and not the respondent's;
in other words, the appellants themselves brought about the
result they are contesting.
[15] The
burden of proof was on the appellants; the evidence basically
confirmed the respondent's finding that the appellants'
bookkeeping was deficient and incomplete. The evidence they
adduced was just as deficient, so much so that the appellants
have been unable to discharge their burden of proof.
[16] The
assessments that were issued resulted from an audit made
difficult by the fact that the appellants' bookkeeping was
very perfunctory and very poorly documented.
[17] As a
result of the audit, a proposed assessment was submitted for
discussion purposes. Following the discussions, the respondent
reduced the assessments initially made to take account of the
explanations given.
[18] Mr.
Bélanger therefore repeated the same explanations in court
and denied any statements or admissions he may have made during
the negotiations, even though those negotiations had led to a
substantial reduction in the assessments initially
made.
[19] Since
the appellants have not discharged their burden of proof, the
appeals must be dismissed.
Signed at
Ottawa, Canada, this 10th day of April 2001.
J.T.C.C.
Translation
certified true on this 25th day of October 2002.
Erich
Klein, Revisor
[OFFICIAL
ENGLISH TRANSLATION]
2000-3398(IT)I
BETWEEN:
LES
CONSTRUCTIONS BERNARD BÉLANGER LTÉE,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Appeal heard
on common evidence with the appeals of
Bernard
Bélanger (2000-3397(IT)I)
on March 14,
2001, at Sherbrooke, Quebec, by
the
Honourable Judge Alain Tardif
Appearances
Agent for
the
Appellant:
Bernard Bélanger
Counsel
for the
Respondent:
Alain Gareau
JUDGMENT
The appeal from the assessment made under the Income Tax
Act for the 1998 taxation year is dismissed in accordance
with the attached Reasons for Judgment.
Signed at
Ottawa, Canada, this 10th day of April 2001.
J.T.C.C.
Translation
certified true on this 25th day of October 2002.
Erich Klein,
Revisor
[OFFICIAL
ENGLISH TRANSLATION]
2000-3397(IT)I
BETWEEN:
BERNARD
BÉLANGER,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Appeals
heard on common evidence with the appeal of
Les
Constructions Bernard Bélanger Ltée(2000-3398(IT)I)
on March 14,
2001, at Sherbrooke, Quebec, by
the
Honourable Judge Alain Tardif
Appearances
For the
Appellant:
The Appellant himself
Counsel
for the
Respondent:
Alain Gareau
JUDGMENT
The appeals from the assessments made under theIncome Tax
Act for the 1996 and 1997 taxation years are dismissed in
accordance with the attached Reasons for Judgment.
Signed at
Ottawa, Canada, this 10th day of April 2001.
J.T.C.C.
Translation
certified true on this 25th day of October 2002.
Erich Klein,
Revisor
[OFFICIAL
ENGLISH TRANSLATION]
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