Gérard Bousquet v. Minister of National Revenue, [1983] CTC 2064, 83 DTC 60

The Chairman [TRANSLATION]:—The appeal of Mr Gérard Bousquet from notices of reassessment for the taxation years 1961 to 1970 inclusive was heard at Montreal, Quebec and lasted for thirteen days.

The case concerned allegations by the Minister that, during the years at issue, the appellant received income totalling $157,299.18 which he did not include in his tax returns. For purposes of assessment and with the appellant’s approval, the respondent distributed the additional income alleged as being unreported over a 10-year period, thereby adding the sum of $15,814.19 to each of the years at issue. However, the appellant subsequently objected to the respondent’s assessments and filed the appeal at bar, contending that the additional amounts added to his income for the years at issue did not apply to him.

By a letter dated July 11, 1978 the appellant authorized Mr Paul Viau, CA, to appeal the said assessments, and it is Mr Viau who, acting on behalf of the appellant, prepared the statement of facts and arguments, signed the notice of appeal and represented the appellant at the hearing.

As the taxation years 1961 to 1966 inclusive are prescribed the respondent, in reliance on subsection 46(4) of the old Income Tax Act, RSC 1952, c 148, as amended (subsection 152(4) of the new Act), issued reassessments for 1961, 1962, 1963, 1964, 1965 and 1966 and at the hearing assumed the burden of showing that, in his tax returns for the said years, the appellant had made a misrepresentation attributable to neglect, carelessness or wilful default or had committed a fraud in filing his tax returns or in supplying information under the Act.

For 1967, 1968, 1969 and 1970, it is the appellant who must establish that the amounts added to his income did not apply to him and that the assessments of the respondent for the said taxation years are incorrect.

Summary of facts

The appellant is a pharmacist whose business is located in the town of St-Hyacinthe, Quebec. He is married to Jacqueline Groleau Bousquet.

On August 11, 1971 the Special Investigations Division of the Department of National Revenue undertook a search at the appellant’s residence and place of business, such as had previously been made at the premises of certain stockbrokers, including Bouchard and Leblond and Grenier and Ruel, and of a securities salesman, J Reynald Chagnon.

In the search at the appellant’s residence, two safety deposit keys with Nos 171 and 320 were discovered. Safety deposit box No 320, which will be mentioned again in this matter, was registered in the name of Mr Réal Groleau, the brother of Mrs Jacqueline Groleau Bousquet (who had access to it), and contained $170,000 in bearer bonds. In the course of the investigation a detailed list of these bonds was countersigned by Mrs Bousquet as an exact listing of the contents of safety deposit box No 320.

Point at issue

The Board must decide on the evidence presented whether the appellant was the true owner of these bonds, no trace of which can be found in the tax returns of the appellant for the years at issue.

Arguments

Counsel for the appellant submitted that the respondent made a misrepresentation, and further, by not providing the best evidence, did not succeed in showing that the appellant was the owner of the securities discovered in safety deposit box No 320. He argued that the respondent had not discharged the burden of proof which he bore for the taxation years 1961 to 1966 inclusive. On the other hand, counsel for the appellant argued that he had shown that it was Mr Réal Groleau and not the appellant who was the true owner of the securities, and that he had thus discharged the burden of proof which he bore for the taxation years 1967 to 1970 inclusive. He asked that the appeal be allowed.

The respondent submitted that he had shown that the appellant was the owner of the securities contained in safety deposit box No 320, and that he had not reported all his income for 1961 to 1966 inclusive as a result of neglect, carelessness or wilful default, and had thus made a misrepresentation. The respondent maintained that the appellant had not succeeded in rebutting the presumption that the assessments made for 1967 to 1970 inclusive are valid, and he submitted that the appeal should be dismissed and the penalties imposed for 1961 to 1970 inclusive upheld.

The respondent based his evidence on the testimony of employees of the Department of National Revenue who were directy or indirectly involved in the searches and assessments of the appellant for the years at issue; the testimony of the appellant’s accountant at that time; the capital reconciliation of the appellant for the years at issue, which the Department of National Revenue had requested from the accountant; and on the testimony of the securities salesman, implicating the appellant in the transactions involving the securities found in safety deposit box No 320. The respondent further filed Exhibits Nos 1-1 to I-59 inclusive, which together provided a basis for the assumptions of the respondent on which the appellant was assessed.

Counsel for the appellant elected, as was his right, to call no witnesses. During his cross-examination, counsel for the appellant filed exhibits (A-1 to A-16), most of which are documents from the Special Investigations Division, such as the authorization to search, lists of documents seized during the search, and so on, or worksheets, reports or tables prepared by Department of National Revenue employees in making up the appellant’s assessments.

Throughout this lengthy proceeding, however, the Board had no opportunity to hear any testimony by the appellant, his wife Jacqueline Bousquet or Mr Réal Groleau, whose names appear in the investigator’s reports which were the basis for the appellant’s assessment for the period from 1961 to 1970. For one reason or another, Mr Réal Groleau simply refused to appear despite being summoned as a witness by the respondent. Counsel for the appellant based his case primarily on a very close cross-examination of the witnesses for the respondent and on a lengthy and detailed review of the tables and numerous exhibits filed by the respondent.

Before considering the evidence in the case at bar, the Board must rule on an objection made by counsel for the respondent as to the admissibility of Exhibit A-16 filed by counsel for the appellant towards the close of the hearing. Exhibit A-16 is a voluminous transcript of the testimony of Mr Rodolphe Martel, notary, given at the trial of Gérard Bousquet, the appellant in the case at bar, before Judge Gilles Bélanger of the Court of Sessions of the Peace at St-Hyacinthe, Quebec. Evidence having been presented that the notary Martel was deceased, counsel for the respondent did not object to the filing of this document in principle, subject to verification that it accurately represented the testimony of Mr Martel. As Exhibit A-16, of which there was no copy, was filed on the final day of the appeal hearing, counsel for the respondent could not verify the entire contents of the transcript until later. In his reply to the appellant’s arguments and authorities, counsel for the respondent objected to the filing of document A-16 on the ground that the transcript submitted was incomplete and that the cross-examination of the notary Martel had not been included in the document.

Exhibit A-16 is in two parts, the first of which relates the testimony of the notary Martel on October 16, 1973 in answer to the examination-in-chief of Mr Guy Alain, counsel for Gérard Bousquet, and it covers about 160 pages. The second part of Exhibit A-16 begins on page 73, and it is the reexamination of the notary Martel, in which Mr Guy Alain refers to the cross- examination which took place on the morning of October 17, 1973. Accordingly, the transcript of the cross-examination of the notary Martel was omitted by dropping seventy-three pages from Exhibit A-16.

I allow the objection of counsel for the respondent, not only because the evidence that counsel for the appellant sought to present is incomplete and does not comply with the requirements of Article 320 of the Code of Civil Procedure, but it is against the most fundamental principles of procedure and of natural justice to acquiesce in such an omission and to accord any evidentiary value to this document. The Board accordingly directs that Exhibit A-16 not form part of the evidence contained in the record.

As regards the evidence in general, I agree with the statement by counsel for the appellant that “the primary, principal and central purpose of testimony and of the filing of an exhibit must be to throw as much light on the matter as possible, to reveal the entire truth’. However, the silence of the taxpayer and the absence of any direct and concrete evidence from a taxpayer who is disputing his assessment does not tend to reveal the entire truth. Further, insinuations, no matter how subtle, as to the legality of the procedure followed by the Minister or the competence of his investigators, for which no real basis is provided, do not tend to clarify the matter and contribute nothing to ascertaining who was the true owner of the securities in safety deposit box No 320 from 1961 to 1970 inclusive.

Evidence

In order to place the only point at issue in its context, it should be noted that the respondent admitted that the appellant made his tax returns for each of the years 1961 to 1970 inclusive. The only question is whether the bearer bonds amounting to $170,000 found in safety deposit box No 320 should have been included in the appellant’s tax returns for the taxation years under consideration.

The assessments of the appellant by the net worth method were not made until after the respondent had by a special investigation, on August 11, 1971, made a search and seizure of relevant documents at the residence and place of business of the appellant and at the offices of certain stockbrokers.

On August 26, 1971, the appellant authorized his accountant at that time, Mr Jean-Guy Aubin of the firm Aubin, Hudon, Associés, chartered accountants, to act on h is behalf in the investigation being made by the Department of National Revenue into the affairs of the appellant personally, documents relating to the affairs of Gérard Bousquet Inc and those of Les Placements G Bousquet Ltée (Exhibit A-7).

An urgent request was made by Mr A Giroux, director of taxation, asking that a capital reconciliation be filed for the appellant from June 30, 1960 to June 30, 1970. In a letter accompanying the reconciliation, Mr Aubin stated that the balance sheets submitted were based on the appellant’s original financial statements prepared for tax purposes from 1960 to 1970; on subsequent information obtained from the appellant himself; on documents which were seized by the Minister of National Revenue in the course of the search, and on the inventory of safety deposit box No 320 — the source of the list of investments at June 30, 1970, the securities on which were included in the capital reconciliation (Exhibit I-4).

In his testimony, Mr Aubin confirmed the way in which the reconciliation was prepared, and the cross-examination of counsel for the appellant did not succeed in weakening the statement of Mr Aubin on any relevant point.

It was established that, while on a visit to the Department of National Revenue offices, the appellant told Mr André Giroux, director, and Mr Guy Marcotte, special investigatons auditor, as well as Mr Hervé Duguay, that the entire contents of safety deposit box No 320 belonged to him. He explained that the securities had been bought under assumed names, primarily through Mr J Reynald Chagnon, a securities salesman, with funds from interest produced by the sale of bonds which he had already and from unreported income from his pharmacy.

The assessment of the appellant by net worth for the period from June 30, 1960 to June 30, 1970 was derived from all the statements made by the appellant and by his accountant Mr Aubin, and from the capital reconciliation report prepared by Mr Aubin, and based on purchase and sale document, brokerage house invoices and deposit records and coupons seized at the Bank of Montreal and at the Canadian National Bank in St-Hyacinthe. The balance sheet prepared by Mr Marcotte, the Department of National Revenue auditor (Exhibit 1-5), is based both on the balance sheet of Mr Aubin (Exhibit 1-4) and on the table (Exhibit I-6) indicating the investments made during the period from June 30, 1960 to June 30, 1970. This table refers to several securities transactions, including invoices, brokerage cheques and credit and debit notes relating thereto seized from the brokers which were classified by the respondent as Nos A to Z and AA to HH. For each of these transactions, there is an envelope containing purchase and sale invoices for securities from the companies Grenier, Ruel or Bouchard, Leblond, for which Mr Chagnon was a salesman. According to Mr Chag- non’s testimony, these transactions were undertaken on behalf of the appellant, his client.

Mr Reynald Chagnon, a salesman for the brokerage firms Bouchard and Leblond and Grenier, Ruel, stated in his testimony under the protection of the Court that the appellant was his client and that he had handled several transactions for him. Counsel for the appellant objected to the filing of Exhibit 1-7 of the portfolio of security transactions which Mr Chagnon had identified as being that of the appellant. The Board allowed the list to be filed. The transactions are of course relevant to the issue, and the list, even though all entries were not made by the same person, was identified by Mr Chagnon as representing transactions concluded through him on behalf of the appellant. Mr Chagnon explained that the entries in Exhibit I-7 were made when the contract was issued, that is from invoices or purchase slips. The securities.were made to bearer, and the names entered were fictitious or the names of existing persons who were not in fact the owners.

Analysis of evidence

In view of the way in which counsel for the appellant elected to present his case before the Board and the tenor of his argument, it is necessary to point out that this is not a civil law or criminal law case but an appeal on a taxation matter. The auditing of tax returns and the investigations conducted by the Department of National Revenue resulting in reassessments have been organized in conjunction with an honour system, by which taxpayers themselves declare the income which they received in each year.

Under subsection 152(7) of the Act, the Minister is not bound by the information contained in the tax returns of taxpayers and may proceed to issue reassessments within four years. In the great majority of income tax disputes, the taxpayer has the burden of showing that the return of his income for each year is accurate and that the assumptions on which the respondent based his reassessments are incorrect (Johnston v MNR, [1948] CTC 195; 3 DTC 1182.

If however, as in the case at bar, the Minister has reason to believe that through neglect a taxpayer has made any misrepresentation, has wilfully omitted relevant information or has committed any fraud in filing his return, he may issue reassessments after the four-year period has expired (subsection 152(4) of the Act). In such circumstances, the respondent must assume the burden of proof for the years prescribed.

Although counsel for the respondent had to assume the burden of proof for the years prescribed, from 1961 to 1966, counsel for the appellant was nonetheless required to present evidence that the respondent based his assessments for the taxation years 1967 to 1970 inclusive on mistaken assumptions.

Before judgment can be rendered in this matter, the evidence must clearly show who was the owner of the securities contained in safety deposit box No 320. The strategy of counsel for the appellant, if there was a strategy, of not calling the appellant, his wife and Mr Réal Groleau to testify is two- sided, if we consider the requirements of subsections 152(4) and (7) of the Income Tax Act. If he is unable to cross-examine any of the persons concerned in this matter, the burden which the respondent must assume for the prescribed years (1961 to 1966 inclusive) obviously becomes more difficult, since the appellant is deemed to have declared all his income for each of these years, in accordance with proper bookkeeping. On the other hand, for 1967 to 1970 it is the appellant who must establish that he was not the owner of the securities allegedly owned by him.

The case therefore turns on which of the two was owner of all the securities found in safety deposit box No 320 for the period from 1961 to 1970: the appellant, as the respondent maintains, or Mr Groleau, as counsel for the appellant suggests. There was no evidence that during the entire period involved, any transfer or exchange of all the securities in the safety deposit box took place between the appellant and Mr Groleau, so that whoever was owner of the securities in safety deposit box No 320 in 1961 to 1966 inclusive was also the owner of the securities in the safety deposit box in 1966 to 1970, and vice versa. If counsel for the appellant did not succeed in clearly establishing that it was not the appellant but Mr Réal Groleau who was owner of the contents of safety deposit box No 320 in 1966 to 1970, I may then conclude that it was the appellant also who was owner from 1961 to 1966.

Several points raised by counsel for the appellant in his arguments and authorities might have some application before other tribunals, but have no relevance before the Tax Review Board, which is governed primarily by the Income Tax Act.

For example, counsel for the appellant maintained that Mr Bousquet, having signed and sent to the Department of National Revenue his tax returns for 1960 to 1970 inclusive, a fact which is admitted by the respondent, acted legally under the law, and he suggested without saying so that the taxpayer should then be exempt from any further investigation concerning the appellant’s income for the said period.

It is true that the appellant filed his tax returns and that he included in his reported income the contents of safety deposit box No 171 at the Bank of Montreal in St-Hyacinthe. However, for the reasons already indicated, and in accordance with subsection 152(7) of the Act, the Minister is not bound by taxpayers’ returns, and he may, after finding that returns wilfully made by the taxpayer do not accurately reflect all the taxpayer’s annual income, issue reassessments.

In some circumstances, the Minister may set taxes, interest and penalties after the usual time limit of four years has expired:

Subec 152 (4) Idem. The Minister may at any time assess tax, interest or penalties under this Part or notify in writing any person by whom a return of income for a taxation year has been filed that no tax is payable for the taxation year, and may

(a) at any time, if the taxpayer or person filing the return

(i) has made any misrepresentation that is attributable to neglect, carelessness or wilful default or has committed any fraud in filing the return or in Supplying any information under this Act, or

(ii) has filed with the Minister a waiver in prescribed form within 4 years from the day of mailing of a notice of an original assessment or of a notification that no tax is payable for a taxation year, and

(b) within 4 years from the day referred to in subparagraph (a)(ii), in any other case,

reassess or make additional assessments, or assess tax, interest or penalties under this Part, as the circumstances require.

The purpose of the searches and investigations conducted by the Minister of National Revenue at the premises of the appellant and other persons in connection with the appellant’s affairs are [sic] legal, and the way in which the searches and investigation were carried out by the investigators seemed quite normal and acceptable to me in such circumstances. Counsel for the appellant did not show how the procedure followed by the investigators in this matter was fundamentally vitiated. Even though the investigation may have involved Mrs Bousquet and Mr Réal Groleau as well as the appellant, its purpose was to trace certain income and certain securities to their true source so that the appellant could be reassessed.

The conclusion formed by the respondent as a consequence of his investigation was that the appellant was the owner of securities found in safety deposit box No 320, and that he wilfully omitted to report his additional income for each of the years at issue. The reassessments of the appellant were then calculated in light of the securities found in the safety deposit box.

I do not propose to go into all the details of the voluminous evidence which the respondent submitted in support of his assessments, or to go over all the points raised by counsel for the appellant. It will suffice for the purposes of this case to analyse the general outline and arrive at the necessary conclusion.

The evidence submitted by the respondent regarding the many securities transactions was necessarily long and complicated. The Board also followed with attention, patience and at times consternation the painstaking cross- examination which counsel for the appellant felt was necessary. The Board has nevertheless not lost sight of the essential facts, testimony, admissions and statements which in my opinion can establish, even without an exhaustive analysis of the large number of invoices and tables submitted, who was the owner for tax purposes of the contents of safety deposit box No 320 throughout the period at issue.

Testimony

The testimony of Mr Reynald Chagnon, a securities salesman, made under the Court’s protection at his request is not as suggested by counsel for the appellant’s evidence that Mr Chagnon’s testimony was made under duress and under the threat of reprisals by the Department of National Revenue to the point where his health was threatened. On the contrary, this request for protection by the Court allows the Board to have full confidence in Mr Chagnon’s testimony. Mr Chagnon confirmed that the appellant himself told Messrs Giroux and Marcotte that the securities were bought under fictitious names, payable to bearer but on behalf of the appellant. I accept Mr Chagnon’s testimony and I accept without reservation his statements as to the portfolio of securities which the appellant filed as Exhibit I-7, contained in balance sheet 1-5 and table I-6, supported by a number of invoices relating to the securities processed by Mr Chagnon on behalf of the appellant (Exhibits A to Z and AA to HH).

As regards Mr Aubin’s testimony, the appellant had authorized his accountant at the time, Mr Aubin, to negotiate with employees of the Department of National Revenue in the investigation to arrive at a reassessment. The appellant himself gave Mr Aubin certain information to be used in calculating the capital reconciliation requested by the Minister, which with the documents seized, including the list of securities found in safety deposit box No 320, was the basis for Exhibit 1-4. The points raised by counsel for the appellant and the objections made regarding the evidentiary value of Exhibit I-4, prepared by Mr Aubin, and on the basis of which Exhibits I-5 and I-6 were prepared and the assessment made, have no basis in fact. Not only was Mr Aubin authorized by the appellant to co-operate with employees of the Minister in preparing Exhibit I-4, but he represented a firm of chartered accountants who could only act in accordance with the accounting standards and principles imposed by the institute which supervises chartered accountants. The professional competence and integrity of Mr Aubin were not questioned, and no evidence was presented that Mr Aubin did not follow generally accepted principles of accounting to the letter in compiling the appellant’s capital reconciliation. Furthermore, the appellant agreed with the balance sheet as prepared by Mr Aubin and dated June 18, 1982, and it was sent to the Department of National Revenue with the appellant’s approval.

The Board also cannot overlook the fact that, a few days after the search and seizure, the appellant stated that he was owner of the contents of safety deposit box No 320, explaining how he had gone about accumulating his securities, and that the appellant confirmed this admission to Messrs Giroux and Marcotte in December 1971, when he accepted the distribution of additional income of $15,814.19 for each of the years in question. These statements by the appellant have not been denied in any way.

The submissions by counsel for the appellant that safety deposit box No 320 was rented for Mr Real Groleau’s will (Exhibit I-9) — which the appellant took occasion to point out was an authentic deed, by which Mr Groleau, and that Mr Real Groleau bequeathed to his sister Mrs Bousquet any contents of any safety deposit box which he might have in a bank or caisse populaire — in no way refute the two statements by the appellant, and in the circumstances of this appeal do not constitute evidence that the contents of safety deposit box No 320 belonged to Mr Réal Groleau.

Furthermore, in his testimony at a hearing held on May 21, 1975, Mr Réal Groleau (Fr Groleau) made under oath the following statements concerning the securities at issue in this appeal:

MR MICHEL LECOURS:

Are there any items in safety deposit box 320 which belonged to you personally?

A No.

Q Nothing at all?

A No.

After showing Mr Réal Groleau the brokerage invoices at issue in the appeal at bar, confirming the transactions made by Mr Chagnon regarding certain securities found in safety deposit box No 320, which forms part of the respondent’s documentary evidence, Mr Réal Groleau told Mr Lecours:

A I bought no sécurités.

Q You bought no securities?

A No securities.

THE COURT:

Q Is it true to say in general that you have never bought securities?

A I have never bought securities.

Further, soon after this search the appellant had safety deposit box No 320, which had until then been registered in Mr Real Groleau’s name, transferred to his own. In February and March 1972, the appellant proceeded to sell certain securities found in safety deposit box No 320, which had been included in calculating the capital reconciliation by Messrs Aubin and Marcotte (Exhibits 1-4 and I-5). The appellant deposited the proceeds of these sales in his personal bank account, and included them as income in his tax return for the taxation year 1982.

In his lengthy cross-examination and even in his arguments and authorities, counsel for the appellant, without thereby providing any conclusive evidence, set forth a wealth of detail on certain aspects of the procedure followed by the Minister, on the competence of his employees, on the way in which worksheets were written up, on the initials placed on invoices, on the evidentiary value of bank books filed as Exhibit I-8, and on the value of the testimony of an employee of the bank who identified the books. The rebuttal evidence presented by counsel for the appellant was purely negative, and dealt with isolated points of detail which, in my opinion, cannot in any way alter or offset the vast body of convincing technical evidence presented by counsel for the respondent for 1961 to 1970 inclusive, tracing to the appellant the various securities transactions at issue in this appeal. Despite his valiant efforts, counsel for the appellant did not succeed in demolishing or weakening the respondent’s documentary evidence.

What is in my opinion more important is that the appellant completely failed in his efforts to undermine the testimony of Messrs Aubin, Chagnon, Giroux and Marcotte, and he could not contradict or explain the admissions made and the acts performed by the appellant, who had admitted he was the owner of the securities in safety deposit box No 320 and had caused this box to be transferred to his own name after the search. The statement by Mr Réal Groleau under oath that the contents of safety deposit box No 320 did not belong to him and he had never bought any securities also was not contradicted in any way.

Act

The approach which, under the Income Tax Act, the Board must take to the evidence in this case differs appreciably from that suggested by counsel for the appellant in his arguments and authorities. The appellant is before this Board, at his request, to establish that the Minister’s assessment is based on false assumptions and is erroneous. This proceeding does not involve any charge of a criminal offence, and the procedure under the Income Tax Act and the Tax Review Board Act is not that followed in a criminal matter. The procedure, the evidence required and even the attitude of the Board on a taxation matter necessarily differ from the rules of procedure established for other purposes and followed by courts in criminal proceedings.

Subsection 9(2) of the Tax Review Board Act reads as follows:

Appeals to the Board

9. (2) Notwithstanding the provisions of the Act u nder which an appeal is made, the Board is not bound by any legal or technical rules of evidence in conducting a hearing for the purpose of that Act, and all appeals shall be dealt with by the board as informally and expeditiously as the circumstances and considerations of fairness will permit.

This section clearly should not be interpreted in such a way as to enable the Board to completely ignore the evidence or any other well-established rule of law at a hearing. However, the section emphasizes the importance in tax matters, as a consequence both of the nature and complexity of the subject and the voluntary income reporting method established in Canada, of allowing the Board greater flexibility in applying the rules of evidence in order to determine the merits of an assessment. In practice, none of these rules is ignored by the Board; however, their strict application is subject to the circumstances and considerations of each of the cases heard by the Board.

I refer by way of example to two points of law raised by counsel for the appellant, which appear to me to be relevant. The first concerns admissions made by the appellant on August 23, 1971 and in December 1971 that he was the owner of the securities found in safety deposit box No 320.

Counsel for the appellant cited Article 1244 of the Civil Code, which reads:

Art 1244. An extra-judicial admission must be proved by writing or the oath of the party against whom it is set up, except in the cases in which, according to the rules declared in this chapter, proof by testimony is admissible.

Counsel for the appellant asked the Board not to admit the testimony given under oath by Messrs Giroux and Marcotte, to the effect that the appellant had told them he was the owner of the securities, since the extrajudicial admission had not been proven in writing or by the appellant’s oath.

The Civil Code itself indicates the circumstances in which evidence of an admission by a witness is admissible. The courts have held that when a delict or quasi-delict is in question, proof by testimony of an admission is admissible. Although a criminal offence is not involved, the case at bar turns on the possibility of an offence against the tax laws, namely that the appellant, as the owner of certain securities, wilfully failed to report income from them for ten consecutive taxation years. The testimony of Messrs Giroux and Marcotte in this regard is not only legally admissible, the fact that the appellant was the owner of the said securities was confirmed by the testimony of Mr Chagnon and of Mr Real Groleau, and by the documentary evidence filed by the respondent.

The observations of Rinfret J concerning evidence of an extra-judicial admission in Grimaldi v Restaldi, [1933] SCR 489, at 494, cited by counsel for the respondent, are in my opinion so relevant to the case at bar that I feel I should reproduce them here as applicable a fortiori:

The Court does not have to consider whether the appellant was bound by his admissions to the point that he could not revoke them at the hearing, for the fact remains that he did not testify and has not contradicted the version of respondent. The evidence of the admission is still in the record with full force and effect.

The second point of law raised by counsel for the appellant is that the Board must require the best evidence, and he submitted that since on several occasions the respondent has not produced the best evidence, in assuming the burden for the prescribed years 1961 to 1970, the Board should dismiss the respondent’s evidence.

It is clear that one of the elementary rules of procedure is that the best evidence should be produced. However, under subsection 9(2) of the Tax Review Board Act, the Board only requires the best evidence when it is possible to produce it and reasonable in the given circumstances to require it. The objections made to the presentation by the respondent of evidence which counsel for the appellant did not regard as the best evidence were as to isolated items, which did not have the necessary weight to rebut or even weaken the body of evidence presented by the respondent and could have no determining effect on the final outcome of the case.

Though, in assuming the burden for the prescribed years 1961 to 1966, counsel for the respondent did not produce the best evidence on each point raised by counsel for the appellant, there can be no doubt that counsel for the respondent, taking his evidence as a whole, firmly and clearly established that the Minister’s assumptions rested on a sound footing and that he did not err in assessing the appellant as the owner of the securities found in safety deposit box No 320 in the course of the search.

On the other hand, counsel for the appellant, who has the burden of proof for the taxation years 1966 to 1970, not only did not produce the best evidence, but produced no valid evidence that Real Groleau was at any time during the period under consideration the owner of the said securities.

I accordingly conclude that:

1. the evidence presented by counsel for the respondent for the taxation years 1961 to 1966, taken as a whole, clearly established, and the Board is satisfied, that the appellant was the owner of the securities found in safety deposit box No 320: counsel for the appellant was not able to demolish the respondent’s evidence for 1961 to 1966;

2. counsel for the appellant did not establish to the satisfaction of the Board that, during the taxation years 1967 to 1970, Mr Real Groleau was the owner of the portfolio found in safety deposit box No 320;

3. counsel for the respondent established that, in his tax returns, the appellant failed through neglect, carelessness or wilful default to include all his income for the taxation years 1961 or 1966;

4. counsel for the appellant did not establish that the appellant included in his tax returns all the income which he knowingly received during the taxation years 1966 to 1970;

5. there is no evidence that a sale, transfer or exchange of the securities in safety deposit box No 320 occurred between the appellant and Mr Réal Groleau during the period from 1961 to 1970;

6. the appellant was accordingly the owner of the said securities throughout the period at issue. The respondent did not err in including the securities found in safety deposit box No 320 in computing the appellant’s income for 1961 to 1970, and the penalties imposed for each of these taxation years are justified.

For these reasons, the appeal is dismissed.

Appeal dismissed.