Stanford Management and Holdings Inc v. Minister of National Revenue, [1984] CTC 2517, 84 DTC 1455

Taylor, TCJ:—This is an appeal heard in Toronto, Ontario, on January 17, 1984 against an income tax assessment in which the Minister of National Reve- nue assessed a penalty of $317.75 for late filing of the corporation’s income tax return. This appeal resulted from a letter from a Mr Carlo DePellegrin, chartered accountant, which reads in part:

I did on behalf of my client prepare tax returns for the 1979 fiscal period on or about March 1980. I delivered the tax return to the director of the corporation who has indicated to me that he forthwith executed the returns and filed them with Revenue Canada. He does not recall the exact date of dropping the return in the mail box but indicates that it was within a very short period of my delivery of same. We relied on Canada Post to deliver the returns to Revenue Canada in short order. The District Taxation Office has a record of my phone calls in November, 1980 querying the whereabouts of the notice of assessment. Copies of my correspondence with the District Taxation Office dated January 28, 1981, August 25, 1981 are enclosed herein for your review.

The District Taxation Office’s position appears to be that my client is lying when he tells me that he has mailed the tax returns and that I am perpetuating this lie by making arbitrary calls to Revenue Canada and by misrepresenting the date of preparation of the tax returns by the date indicated on the bottom of the return. I take great offense to the insinuations made in this regard and am prepared to execute affidavits as to the date of preparation of the returns and am also prepared to attend upon my client to also execute affidavits in this matter.

We would ask that the late file penalty be deleted and that some credibility be given to statements made by myself and the taxpayer.

According to an affidavit from an officer of National Revenue filed by counsel for the respondent, the relevant return was due on June 30, 1980, but received on January 30, 1981. The respondent relied, inter alia, upon subsection 162(1) and paragraph 150(1)(a) of the Income Tax Act, RSC 1970-71-72, c 63 as amended (the “Act”).

Mr J S Stanford, president of the corporation, testified he was sure he caused to be mailed the return in question, together with three other corporation returns prepared by Mr De Pellegrin and apparently mailed in March of 1980. The reason there were a total of four returns (four separate envelopes in fact) was that there was another corporation for which Mr Stanford was responsible with a similar filing date, and both federal and provincial corporate tax returns prepared for each one of the two companies. Mr Stanford was not able to testify that he recalled exactly and precisely when he mailed the returns, (even the other three which were properly provided) or whether this was done by someone else from his office. His best recollection was that Mr DePellegrin normally prepared the annual returns about March each year and after he signed them the returns were mailed directly. It was also noted that the return received by Revenue Canada on January 30, 1981 was a copy of the original return, filed by the appellant after enquiries were made, and not the original return itself. No explanation of the whereabouts of the original return was provided by either party. The Minister’s counsel took the position that if the Court were satisfied that the return had been mailed the appeal should be allowed, even though there remained some question in the jurisprudence that mailing constituted filing.

The sincerity of Mr Stanford, and Mr De Pellegrin in believing that the return must have been mailed cannot be questioned, there is simply no logical explanation in their minds why or how anything else should have happened. That leaves the Court with a dilemma that if mailed, it was lost in the mail or before receipt by Revenue Canada; or if received it was not properly recorded as filed and then it was lost by Revenue Canada. Either or both of these may be quite possible — even probable it was suggested by the appellant — and indeed may have occurred. Nevertheless, the prospect of this particular return being misplaced or lost by either or both of Mr Stanford or Mr De Pellegrin is equally plausible. When I add to that, the lack of precision in the testimony of Mr Stanford, regarding the crucial act, the mailing of this particular document, I cannot find that the appellant has succeeded in overturning the Minister’s assumptions. Simply put the Minister’s assumptions when cast against the known facts are equally or more plausible than the assertions of the appellant.

The appeal is dismissed.

Appeal dismissed.