Provisions St-Felix Limitée v. Minister of National Revenue, [1980] CTC 2875

Guy Tremblay [TRANSLATION]:—This application was heard at Montreal, Quebec on September 17,1979. The appellant was to file a written plea before November 15, 1979 but has not yet done so.

1. Point at Issue

The question is whether an extension should be granted to the appellant to serve a notice of objection concerning the 1974 taxation year.

2. Facts

2.01 On November 17, 1977 the respondent issued a notice of assessment concerning the 1974 taxation year of the appellant company, Provisions St- Felix Limitée. In this assessment, the respondent included in the appellant’s income the sum of $217,113, a dividend apparently received from Pauzé & Chevrette Inc.

2.02 According to Yves Dufresne, counsel for the claimant, the original notice of assessment was never received by the appellant. The postal strike which occurred in December of that year was doubtless to blame.

2.03 The appellant was, however, aware of the notice of assessment, and in the interim, according to Mr Dufresne, the respondent claimed the taxes owing.

In early December 1978 at the latest, the appellant reportedly received a letter on this matter from the respondent, dated November 28. The letter begins as follows: “Although the amount owing has been brought to your attention, our records show that it has not yet been paid.”

2.04 According to Mr Jacques Frappier, witness for the respondent, numerous conversations took place in December 1978 and January 1979, between representatives of the respondent and the appellant’s accountant, Mr Rémi Deschambault, concerning the amount due and the details of the November 17, 1977 assessment.

2.05 On January 22,1979 the appellant offered, through its representatives, to pay half the amount on that day and the remainder at the end of January.

2.06 The appellant’s accountant was aware of the problem concerning the dividend even before the notice of assessment was issued. He had, in fact, met the respondent’s auditor when the latter conducted an investigation at the appellant’s office in 1977, before the issue of the notice of assessment.

2.07 On February 13,1979 the appellant received a copy of the notice of assessment.

2.08 An application dated May 10, 1979 was sent to the Board for an extension of the time within which to file a notice of objection to the said assessment; however, the appellant has not provided any proof of the mailing date of this letter. It was received by the Appeals Branch on June 4 and by the Board on June 7,1979 and refers to three enclosed copies of a notice of objection dated May 31, 1979.

3. Act— Case Law—Comments

3.1 Act

The sections of the Income Tax Act concerned in this application for a timeextension are subsections 165(1), 167(1) and (2), paragraph 167(5)(a) and subparagraph (c)(ii), and subsection 244(14). They read as follows:

165.(1) A taxpayer who objects to an assessment under this Part may, within 90 days of the mailing of the notice of assessment, serve on the Minister a notice of objection in duplicate in prescribed from setting out the reasons for the objection and all relevant facts.

167.(1) Where no application to an assessment under section 165 or appeal to the Tax Review Board under section 169 has been made or instituted within the time limited by section 165 or 169, as the case may be, for doing so, an application may be made to the Tax Review Board for an order extending the time within which a notice of objection may be served or an appeal instituted and the Board may, if in its opinion the circumstances of the case are such that it would be just and equitable to do so, make an order extending the time for objecting or appealing and may impose such terms as it deems just.

(2) The application referred to in subsection (1) shall set forth the reasons why it was not possible to serve the notice of objection or institute the appeal to the Board within the time otherwise limited by this Act for so doing.

(5) No order shall be made under subsection (1) or (4)

(a) unless the application to extend the time for objecting or appealing is made within one year after expiration of the time otherwise limited by this Act for objecting to or appealing from the assessment in respect of which the application is made;

(c) unless the Board or Court is satisfied that,

(ii) the application was brought as soon as circumstances permitted it to be brought.

244.(14) For the purposes of this Act, the day of mailing of any notice of assessment or notification described in subsection 152(4) shall, in the absence of any evidence to the contrary, be deemed to be the day appearing from such notice or notification to be the date thereof unless called in question by the Minister or by some person acting for him or Her Majesty.

3.2 Case Law

The case law cited by the respondent is as follows:

1. Savary Beach Lands Ltd v MNR, [1972] CTC 2608; 72 DTC 1497;

2. Louis Vachon v MNR, [1972] CTC 2211; 72 DTC 1182;

3. Maria Paletta, Antonio Paletta v MNR, [1977] CTC 2285; 77 DTC 203;

4. Philip Gow v MNR, [1978] CTC 2360; 78 DTC 1266;

5. James Wayne Elliott v MNR, [1978] CTC 2919; 78 DTC 1643;

6. Antonio Arnone v MNR, 79 DTC 22;

7. Henriette A Baillargeon v MNR, 79 DTC 684;

8. Yvon Faucher v MNR, 79 DTC 685;

9. Pierre Martineau, La Prescription, Montreal, UMP 1977, pp 369 et seq;

10. R v Oakes, [1959] 2 QB 350;

11. R v Wimbledon Justices, ex p Derwent, [1953] 1 QB 380.

3.3 Comments

3.3.1 The presumption of subsection 244(14)

The presumption of subsection 244(14) cited above has not been disproved by the appellant, who had the burden of proof. The notice of assessment is therefore deemed to have been sent to the appellant on November 17, 1977.

3.3.2 Even if the appellant did not receive the November 17, 1977 notice of assessment until February 13, 1979, as claimed, the appellant had been made aware of its existence by November 1978 at the latest, and quite possibly even before that date, since the November 28 letter clearly states:

Although the amount owing has been brought to your attention, our records show that it has not yet been paid.

Why did the appellant not request a copy of the notice of assessment upon receipt of this letter? Why was a notice of objection not filed? Or, since the ninety-day limit prescribed in section 165 had expired, why was an application for an extension not filed at that time? No valid reason has been given to explain why the application was not made until May 10, 1980. The Board must conclude that the application was not filed “as soon as circumstances permitted”, as prescribed in subparagraph 167(5)(c)(ii).

Moreover, a notice of objection bearing the date May 31, 1979 accompanied the May 10,1979 application for a time extension. The appellant has not provided any proof of when the application was mailed; however, the weight of the evidence is that the application and notice of objection could not have been mailed before May 31, 1979—more than ninety days after February 13, 1979.

3.3.3 Even if the Board considered itself bound (and it does not) by the date on which the copy of the notice of assessment was received, which was February 13, 1979, the fact remains that no explanation has been given as to why the notice of objection was not filed within ninety days of that date. Since no valid reason has been given, the condition set forth in subsection 167(2) has not been fulfilled and the application must be dismissed.

3.3.4 Finally, the Board is somewhat surprised that the main respresen- tative of the company appellant in the matter of the assessment— Remi Deschambault, the company’s accountant—did not appear as a witness.

4. Conclusion

The application is dismissed in accordance with the foregoing reasons for judgment.

Application dismissed.