Dubienski,
T.CJ.:—The
corporate
appellant
and
the
other
appellants
operate
a
business
as
a
Canadian-controlled
private
corporation
that
deals
in
wholesale
flowers.
The
corporation
is
appealing
the
assessment
made
by
the
respondent
concerning
the
taxation
years
1984,
1985,
1986
and
1988.
The
personal
appellant,
Kingsley
Wijesinha,
is
appealing
the
assessment
for
the
taxation
year
1985.
The
appellant
Rohan
Wijesinha
is
appealing
the
assessment
for
the
year
1984,
and
the
appellant
Daphne
Wijesinha
is
appealing
the
assessment
for
the
taxation
year
1985.
The
activities
of
the
corporate
appellant
were
controlled
by
Rohan
Wijesinha
as
the
managing
director,
but
the
appellant
Daphne
Wijesinha
was
the
major
shareholder.
The
amounts
concerned
are
as
follows:
Re:
421229.
Ontario
Ltd.:
:
It
failed
to
report
in
its
1984
taxation
year
the
sum
of
$15,761,
and
in
its
1985
return,
failed
to
report
$52,517.25.Re:
Rohan
Wijesinha
failed
to
report
in
the
1984
taxation
year
the
amount
of
$25,467.85
Re:
Daphne
Wijesinha
in
the
1985
taxation
year
failed
to
report
the
sum
of
$46,123
in
earnings
and
$3,766
in
interest.
Re:
Kingsley
Wijesinha:
The
appellant,
Daphne
Wijesinha,
is
the
wife
of
Kingsley
Wijesinha
who
claimed
her
as
a
dependant
in
1985.
If
she
did
in
fact
have
earnings
as
above
alleged
in
1985,
her
net
income
would
exceed
the
amount
allowed
a
wife
to
be
considered
available
for
a
married
exemption;
the
"married"
status
would
then
not
be
allowed
to
the
taxpayer
appellant.
The
evidence
indicated
that
the
corporation
and
the
appellant
Rohan
Wijesinha
received
money
from
certain
customers
in
varying
amounts,
and
instead
of
depositing
it
in
the
company’s
account,
these
sums
were
deposited
into
the
accounts
of
Rohan
Wijesinha
and
Daphne
Wijesinha,
and
not
disclosed
in
the
return
of
the
corporation.
These
amounts
are
the
amounts
referred
to
above
as
being
non-disclosed
in
the
returns
of
the
taxpayers,
Rohan
and
Daphne
Wijesinha
and
the
corporate
appellant.
The
reasons
given
by
the
appellants
through
the
evidence
of
Rohan
Wijesinha
and
Kingsley
Wijesinha
were:
(1)
to
get
interest
on
the
moneys
paid
in
since
they
were
of
the
opinion
that
they
could
not
get
interest
on
a
business
account,
and
therefore
put
it
into
personal
accounts;
(2)
to
build
up
a
fund
in
anticipation
of
building
new
premises;
(3)
because
the
money
was
not
needed
for
immediate
obligations,
it
did
not
need
to
be
put
into
the
company's
account
for
use
in
day-to-day
operations.
The
taxpayer
Rohan
admits
that
he
took
the
money
on
his
behalf,
and
admits
that
he
paid
moneys
into
the
account
of
Daphne,
but
the
evidence
as
alleged
by
the
taxpayers
was
that
all
the
money
was
returned
to
the
company
and
they
alleged
that
they
had
receipts
to
account
for
this.
The
taxpayers
endeavoured
to
trace
deposits
marked
“loan
Daphne"
plus
receipts
from
an
inheritance.
The
taxpayer
alleges
that
all
moneys
were
accounted
for
except
a
deficiency
of
approximately
$6,700.
There
is
some
confusion
in
the
mind
of
the
Court
because
the
label
"loan
Daphne"
could
mean
a
loan
"to
Daphne",
or
could
equally
mean
"a
loan
from
Daphne"
to
the
Corporation.
If
it
is
a
loan
to
"Daphne",
then
it
is
that,
and
that
only,
a
shareholder's
loan,
but
if
a
loan
to
the
Corporation,
it
is
moneys
of
the
shareholder
being
loaned
to
the
company.
In
the
mind
of
the
Court,
all
evidence
of
the
appellant
is
based
on
surmise,
deduction
and
interpretation,
but
the
Court
says
the
documents
speak
for
themselves.
For
instance,
interest
earned
on
funds
taken
by
the
taxpayer
and
deposited
are
disclosed
in
the
personal
income
tax
return.
This
is
factual
evidence.
The
taxpayer
says
he
only
did
this
because
he
was
advised
to
do
so
by
a
friend.
The
Court
can
place
little
credence
in
this
if
it
is
considering
the
evidence
of
a
person
who
is
a
businessman
of
some
experience
and
acumen.
The
whole
of
the
evidence
presents
a
picture
of
a
completely
slipshod
way
of
doing
business,
all
the
more
noticeable
when
one
considers
that
this
is
a
business
that
was
showing
a
gross
of
almost
$2,000,000
a
year.
There
is
no
doubt
that
the
lack
of
disclosure
in
this
case
amounted
to
gross
negligence.
One
cannot
imagine
a
total
loss
of
records
so
unexplained.
The
fact
that
there
was
no
effort
to
protect
company
records,
the
fact
that
there
was
no
proper
place
of
storage
of
records
and
that
they
became
lost
so
easily
in
the
course
of
transfer
from
one
business
to
another,
the
Court
finds
impossible
to
accept.
The
allegation
of
open
storage
of
loose
documents
on
the
top
of
storage
coolers
is
only
evidence
of
extreme
neglect.
The
Court
is
not
satisfied
that
the
taxpayer
is
able
to
discharge
the
onus
upon
him;
the
sums
alleged
should
be
income
and
properly
included.
Due
to
the
finding
of
ross
negligence,
the
penalties
are
properly
levied.
The
appeal
on
the
part
of
the
company,
Rohan
and
Daphne
are
disallowed
as
above
stated.
The
appeal
of
Kingsley
Wijesinha
is
disallowed
because
the
income
of
Daphne
Wijesinha
for
the
applicable
year
was
in
excess
of
the
amount
allowable
for
her
to
be
shown
as
a
dependant.
All
appeals
are
accordingly
dismissed.
Appeals
dismissed.
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