Joseph Eyamie v. Minister of National Revenue, [1983] CTC 2708, 83 DTC 649

Christie, CJ:—The appellant appeals regarding interest levied against him in relation to his 1980 taxation year and a late filing penalty for the same year. The interest was imposed pursuant to subsection 161(1) of the Income Tax Act (“the Act”) and paragraph 4300(1) of Part XLIII of the Income Tax Regulations. The penalty was imposed in accordance with paragraph 162(1 )(a) of the Act. By operation of paragraph 150(1 )(d) of the Act, the appellant was required to file a return of his income for his 1980 taxation year in prescribed form and containing prescribed information with the Minister of National Revenue on or before April 30, 1981. Section 151 of the Act states that every person required by section 150 to file a return of income Shall, in the return estimate the amount of tax payable.

On May 14, 1981, the respondent received a T-1 General 1980 form of return signed by the appellant, but undated. A copy of this document is Exhibit R-1 in these proceedings. This document consists of four pages. On page 1, this statement appears at the top thereof: “FINANCIAL DATA TO FOLLOW”. It also contains some routine information about the taxpayer, for example, his name, address, social insurance number, date of birth, marital Status and type of work or occupation in which he was engaged in 1980. The rest of page 1 is blank, as are pages 2, 3 and 4, except that the appellant’s signature appears at the bottom right-hand corner of page 4. There was no estimate whatever in the return of the amount of tax payable. On December 14, 1981, the respondent received a return of income for 1980 in respect of the appellant which was signed and dated December 9, 1981. This document did comply with the provisions of the Act mentioned. It is Exhibit R-2. The assessment under appeal was mailed on February 23, 1982, and the notice of objection in relation to it is dated February 25, 1982. The assessment was confirmed by the respondent by notice dated July 8, 1982.

The notice of appeal to this Court recites that, prior to April 30, 1981, the appellant retained the services of an accountant to file a return of his income. The accountant had the appellant sign a T-1 General 1980 form. The appellant states that he paid the accountant $750, part of which was for bookkeeping work and part of which pertained to the filing of the appellant’s return of income. The accountant was in possession of the documents relevant to the preparation of the return. The accountant failed to perform his Obligations and finally, after some acrimonious exchanges between the appellant and the accountant, the former retrieved his documents. The appellant then retained another accountant to whom he paid $150 on account of services to be rendered. Sometime in October 1981 the appellant discovered that this accountant had become ill, was hospitalized and was unable to work for an indefinite period. The appellant again secured the return of his documents through the accountant’s brother and retained a third accountant who did the necessary work in relation to the 1980 return of income.

At the hearing the appellant repeated the substance of what has just been related. He emphasized that he had been a victim of the failure on the part of two of the accountants mentioned to discharge their duty to him. In cross- examination he admitted the authenticity of Exhibit R-1.

At the commencement of the hearing, counsel for the respondent brought to the attention of the Court the fact that the sum of $465.35, which had been deducted at source during 1980 in respect of the appellant, had inadvertently been omitted in calculating the interest and penalty imposed on the appellant. Counsel readily conceded that this amount should have been taken into account.

Even though the alleged treatment received by the appellant at the hands of the accountants may be regarded as reprehensible, this affords no grounds for excusing the appellant from paying the interest. For a number of months he continued to have the benefit of an amount of money which should have been paid to the respondent. It is in respect of that benefit that the interest is levied and in my opinion this Court has no jurisdiction in this case to interfere with the action taken by the respondent in this regard.

In Kenneth Hamilton White v MNR, 34 Tax ABC 180; 64 DTC 12, the taxpayer, when filing his returns for the years 1957 to 1960 inclusive, omitted to include as part of his income the amounts of bonuses or discounts received by him pertaining to his mortgage investments. In so doing, he relied on an earlier decision of the Tax Appeal Board and a decision of the Exchequer Court of Canada. Those decisions were subsequently reversed in the Exchequer Court and by the Supreme Court of Canada. The appellant paid the income tax which had been assessed against him in respect of bonuses and discounts received by him which were added to his income in reassessments issued for the years previously mentioned. In the circumstances however, he objected to paying the interest levied in those reassessments in respect of the additional income tax. It was held that the interest had been properly imposed and was payable.

Turning now to the penalty, it consisted of 5 per cent of the tax that was unpaid when the return was required to be filed and, as indicated, was imposed pursuant to subsection 162(1) of the Act. There is no doubt that the appellant’s return of income for 1980 was filed late. Again, even assuming that the reason for the late filing was dereliction of duty on the part of one or more of the accountants retained by the appellant, this does not afford a ground for allowing the appeal in respect of the penalty. On this aspect of the appeal, it is also my opinion that there is no jurisdiction in this Court to allow the appeal against the penalty. I believe this is in accordance with Georgia Medical-Dental Building Limited v MNR, [1972] CTC 2359; 72 DTC 1316. I also refer to Alcide Vaillant v MNR, [1969] Tax ABC 62; 69 DTC 60.

In the result, the appeal is allowed and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment by taking into account in calculating the interest and penalty, the sum of $465.35 which was deducted at source from the appellant’s income in 1980. The appellant is entitled to no further relief.

Appeal allowed in part.