McArthur J.T.C.C.: — The Applicant applied for an order extending the time within which a Notice of Objection may be served with respect to a reassessment for his 1987 taxation year. An application under section 166.1 of the Income Tax Act (the “Act”) for an extension of time within which to serve on the Minister a Notice of Objection to the said assessment was received by the Minister on October 18, 1995.
The Minister notified Counsel for the Applicant on October 20, 1995 of the following; “the provisions of the Act (subsection 165(1)) clearly state that Mr. Dudar had 90 days from the date of reassessment (April 14, 1994) to file a Notice of Objection. The Act (subsection 166.1(7)) also provided Mr. Dudar had one year from the due date of the objection i.e. July 13, 1995 to apply for an extension of time to file the objection. We have no record of either event occurring. The letter from Mr. Dudar that you refer to was sent prior to any reassessment, thus it cannot be considered as a Notice of Objection. As all time limits have expired, we are not in a position to treat your letter of October 18, 1995 as a Notice of Objection for 1987. Consequently, we cannot review the reassessment of that year when we review the objection for the 1988 taxation year.”
The Counsel for the Applicant states that the reason that a Notice of Objection was not filed, within the time specified for doing so, is that the Applicant did not receive the original Notice of Reassessment and only recently was advised to file a Notice of Objection. The Applicant did receive a Notice of Reassessment for the 1988 year and objected to it in a timely fashion. Counsel submits that Mr. Dudar would have acted in the same manner had he received the reassessment for the 1987 year.
The amount reassessed is $1,476,153.97 and the revised balance is $2,892,522.09. The Applicant filed an Affidavit, dated December 14, 1995, with ten exhibits. The Applicant’s Affidavit included the following:
10. On October 14, 1994, the Appeals Division in Kingston sent to me a letter, copy of which is attached as Exhibit “H” to this my Affidavit. In it, they indicated that they would not be dealing with the Notice of Objection which they had received in light of the fact that an action was currently taking place before the Ontario Court of Justice (Provincial Division) in Kingston.
11. Prior to the charges being laid against me, my financial status had deteriorated drastically. Changes in the real estate market, interest rates, as well as a number of other factors, had brought me to the point where I was no longer able to retain professional services in order to deal with my legal problems. The charges against me were adjourned on numerous occasions in order to allow me to retain counsel and, finally, I was required to set a date for a Preliminary Inquiry without a counsel of record. I was forced to apply for Legal Aid, due to my financial status. This was approved, but many solicitors were reluctant to take matters on with a Legal Aid Certificate due to problems with the Legal Aid Plan in Ontario.
12. I was eventually able to retain a counsel to assist me in October of 1995. The Preliminary Inquiry had already been scheduled for the week of October 16th to October 20th, 1995.
17. Since the time when first informed by Mr. Gibson that no Notice of Objection existed with regard to the 1987 reassessment #1099205, I have searched through all of the personal and business records still in my possession. I have found the original Notice of Reassessment #1099206 for the 1988 taxation year. I have been unable to find the original, or any copy, of the Notice of Reassessment for the 1987 taxation year #1099205 which was shown to me originally by Mr. Gibson, my lawyer. After careful consideration, I can state that it is my belief that I never received from Revenue Canada the Notice of Reassessment #1099205 for the 1987 taxation year. It was not with the registered mail which I received with the 1988 Notice of Reassessment #1099206. Otherwise, I would have forwarded it to my accountant, Mr. Fenemore, and I would have filed an objection to this reassessment as I did to the one received for the 1988 taxation year. The basis of the reassessment in both years arose from the same transaction, that being the share purchase of the shares of 548676 Ontario Ltd. All of the circumstances were the same for both taxation years, and my objection would have been the same for both taxation years.
The Respondent acknowledges that the reassessment for 1987 is with respect to the same transaction for which a valid Notice of Objection has been filed for the 1988 taxation year.
An employee of Revenue Canada, Don Woodcock, testified. He had been involved in an audit and reassessments of the Applicant for the 1987 and 1988 taxation years. He ordered “Reassess as soon as possible (1987 - 1988) - Civil Reassessment must be completed before charges are laid!” This direction was included in a form titled Priority Assessment and Reassessment Control completed by Mr. Woodcock, April 12, 1994.
The Respondent filed with the Court an Affidavit of Stephen M. Fox, an officer in the Ottawa Designated Appeals Office of the Department of National Revenue. His Affidavit included the following:
2. I have examined the records relating to the application of Richard Nicholas Dudar and have such knowledge of the matters hereinafter deposed to.
3. The Minister of National Revenue (the “Minister”) reassessed the Applicant for the 1987 taxation year on April 14, 1994, and, to the best of my knowledge and belief sent a Notice of Reassessment to the Applicant by mail at 1098 King Street W., Kingston, Ontario K7M 812 on that day.
4. After a careful examination and search of the records, I am unable to find that a Notice of Objection has been served on the Minister in respect of the Notice of Reassessment for the 1987 taxation year within the time limit prescribed by section 165 of the Income Tax Act.
5. My examination of the records also shows that no Notices of Reassessment respecting the Applicant’s 1987 taxation year have been issued subsequent to the Notice of Reassessment mailed on the fourteenth day of April, 1994.
Mr. Fox was not present to be examined in chief and cross- examined. Mr. Woodcock stated that the reassessments were sent from the Sudbury Office of Revenue Canada. While he and Stephen M. Fox had no personal knowledge of the reassessments at issue actually having been sent, he stated that, because of the enormous volume of assessments and reassessments mailed from the Sudbury Office, no further proof of mailing could be provided.
Position of the Applicant:
Briefly put, the Applicant states that he never received the 1987 reassessment. Upon being made aware of the 1987 reassessment same years later he took all reasonable means to file a Notice of Objection.
Position of the Respondent:
The reassessment was sent to the Applicant on April 14, 1994 and all time limits provided in the Act, for serving a Notice of Objection, have expired.
The Applicant does not meet the criteria in paragraph 166.2(5)(b) of the Act and that the application was not made within one year after the expiration of the time otherwise limited by paragraph 166.2(5)(a) of the Act for serving a Notice of Objection or making a request.
Legislation
165(1) A taxpayer who objects to an assessment under this Part may serve on the Minister a notice of objection, in writing, setting out the reasons for the objection and all relevant facts,
(a) where the assessment is in respect of the taxpayer for a taxation year and the taxpayer is an individual (other than a trust) or a testamentary trust, on or before the later of
(i) the day that is one year after the balance-due day of the taxpayer for the year, and
(ii) the day that is 90 days after the day of mailing of the notice of assessment; and
(b) in any other case, on or before the day that is 90 days after the day of mailing of the notice of assessment.
166.1(1) Where no notice of objection to an assessment has been served under section 165, nor any request under subsection 245(6) made, within the time limited by those provisions for doing so, the taxpayer may apply to the Minister to extend the time for serving the notice of objection or making the request.
166.2(1) A taxpayer who has made an application under subsection 166.1 may apply to the Tax Court of Canada to have the application granted after either
(a) the Minister has refused the application, or
(b) 90 days have elapsed after service of the application under subsection 166.1(1) and the Minister has not notified the taxpayer of the Minister’s decision,
but no application under this section may be made after the expiration of 90 days after the day on which notification of the decision was mailed to the taxpayer.
166.2(5) No application shall be granted under this section unless
(a) the application was made under subsection 166.1(1) within one year after the expiration of the time otherwise limited by this Act for serving a notice of objection or making a request, as the case may be; and
(b) the taxpayer demonstrates that
(i) within the time otherwise limited by this Act for serving such a notice or making such a request, as the case may be, the taxpayer
(A) was unable to act or to instruct another to act in the taxpayer’s name, or
(B ) had a bona fide intention to object to the assessment or make the request,
(ii) given the reasons set out in the application and the circumstances of the case, it would be just and equitable to grant the application, and
(iii) the application was made under subsection 166.1(1) as soon as circumstances permitted.
167(1) Where an appeal to the Tax Court of Canada has not been instituted by a taxpayer under section 169 within the time limited by that section for doing so, the taxpayer may make an application to the Court for an order extending the time within which the appeal may be instituted and the Court may make an order extending the time for appealing and may impose such terms as it deems just.
Analysis
Upon considering all of the evidence, I accept that the Applicant did not receive the 1987 reassessment. This is not fatal to the Respondent’s position, Bowen v. Minister of National Revenue, [1991] 2 C.T.C. 266 (sub nom. Canada (Attorney General) v. Bowen), 91 D.T.C. 5594 (F.C.A.), but it does shift the burden of proof to the Respondent to satisfy the Court that the reassessment had been mailed to the Applicant.
It is necessary to refer to the relevant governing sections of the Act which are 165(1), 166.1(1), 166.2(1) and 166.2(5). Upon reading these sections, it is clear that no extension of time may be granted after the expiration of 1 year from the end of the 90 day period given for serving a Notice of Objection. The time limited to the taxpayer, which in essence totals 1 year and 90 days, starts from the “day of mailing the Notice of Assessment.” To satisfy the onus of proof that the Notice of Reassessment was mailed, the Respondent filed an affidavit of Stephen M. Fox an officer of National Revenue who did not testify at trial. Paragraph 3 of his Affidavit states:
3. The Minister of National Revenue (the “Minister”) reassessed the Applicant for the 1987 taxation year on April 14, 1994, and, to the best of my knowledge and belief sent a Notice of Reassessment to the Applicant by mail at 1098 King Street W., Kingston, Ontario K7M 8 2 on that day.
It would appear that Stephen M. Fox is saying in his Affidavit that, from his Ottawa Office, he reviewed information in the Applicant’s file and he believes that a reassessment, for the 1987 taxation year, was mailed to the Applicant, on October 20, 1994, from the Sudbury Office of Revenue Canada. In the opinion of S.M. Fox it should have or must have been mailed from Sudbury. There was no direct evidence that the reassessment was in fact mailed.
Counsel for the Applicant referred the Court to Aztec Industries Inc. v. R. (sub nom. Aztec Industries Inc. v. Canada), [1995] 1 C.T.C. 327, 95 D.T.C. 5235 (F.C.A.) wherein, at page 329 (D.T.C. 5237), Hugessen, J.A. stated:
With great respect, I am of [the]opinion that the Tax Court judge erred in law. There was, in my view, simply no evidence at all in the record before him from which he could conclude that the Minister had issued and mailed the relevant notices of assessment. Knowledge of the fact that the Minister was asserting a claim, and payment of a portion thereof by or on behalf of the taxpayer, does not constitute evidence of the existence or the mailing of notices of assessment. A finding of fact which is unsupported by any evidence is an error of law.
The evidence in the present case does not support a finding of fact that the 1987 reassessment was mailed to the Applicant. Any presumption in favour of the Minister has been satisfactorily rebutted by the Applicant.
Upon considering all of the evidence, I conclude that the reassessment for 1987 year was not sent to the Applicant. Surely the Applicant would have filed a Notice of Objection had he received the 1987 reassessment at the same time as his 1988 objection was filed given that the Respondent believed both were sent at the same time. Both reassessments deal with the same transaction. It is preferable to have the issues tried on the merits provided that is possible given time limitations in the Act. It is not necessary to consider the criteria in subparagraphs 166.2(5)(a) and (b).
The recent and unreported case of McGowan v. R. (sub nom. McGowan v. Canada), [1995] 2 C.T.C. 18, 95 D.T.C. 5337 (F.C.A.), at page 4 provides a useful summary of Aztec (supra) - which I find helpful in deciding the present case:
In Aztec, the applicant wanted to file Notices of Objection against Notices of Assessments allegedly issued by the Minister more then ten years earlier. Consequently, the applicant applied to the Minister for an extension of time in which to file the Notices of Objection. The Minister rejected the application because section 166. l(7)(b) requires an applicant to file an extension application within one year of the expiration date (90 days plus 1 year). Next, the applicant applied to the Tax Court of Canada for an extension of time within 90 days of the Minister mailing the applicant a notification of his decision. The
Tax Court of Canada agreed with the Minister’s decision and also rejected the application. The applicant then requested this court to judicially review the decision of the Tax Court of Canada.
Hugessen J.A. found that section 165(1) fixes the triggering date for the applicable prescription periods as “90 days after the day of mailing of the Notice of Assessment” (although he refers to 165(1 )(b), the wording is identical in 165(1 )(a)(iii)). When he found that the Trial Judge erred in finding a date of mailing without an evidential basis, the whole question of timing became irrelevant because there was no date of mailing upon which to trigger the subsection 166.2(5) prescription period. Therefore, he dismissed the application for an extension of time as being unnecessary because he could not establish when, or if, the Minister mailed the Notices of Assessment and therefore he could not establish the subsection 166.2(5) triggering date.
I have found that the Applicant rebutted any presumption in favour of the Minister that the reassessment was mailed. Following the reasoning of the Federal Court of Appeal in Aztec, there being no date of mailing upon which to trigger the subsection 166.2(5) prescription period there is no need for an extension of time and the application is dismissed.
Application dismissed.
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