Guy
Tremblay
[TRANSLATION]:—This
case
was
heard
ex
parte
at
Montreal,
Quebec
on
July
10
and
12,
1978,
counsel
for
the
appellant
having
notified
the
Board
that
he
would
not
appear.
1.
Point
at
Issue
It
must
be
decided
whether
the
respondent
is
justified
in
imposing
the
25%
penalty
provided
for
in
subsection
163(2)
of
the
new
Act
for
fraud
or
gross
negligence.
This
penalty
amounts
to
$3,069.87
for
the
1973
taxation
year
and
$163.32
for
the
1974
taxation
year.
2.
Burden
of
Proof
In
accordance
with
subsection
163(3)
of
the
new
Act,
the
burden
of
proof
is
on
the
respondent.
3.
Facts
3.1
According
to
the
respondent’s
auditor,
Mr
Charles
Raymond,
an
article
appeared
on
January
7,
1975,
in
the
newspaper
“La
Presse”
(Exhibit
1-1)
concerning
certain
accounts
maintained
under
false
names
at
the
Bank
Canadian
National
in
Louiseville.
3.2
On
January
24,
1975,
the
bank
in
question
received
from
the
respondent,
through
the
Special
Investigations
Section,
a
requirement
for
information
(Exhibit
I-2)
relating
to
individuals
who
might
be
connected
with
these
accounts
maintained
under
false
names.
3.3
On
February
24,1975,
the
respondent
was
provided
with
a
reply
(Exhibit
I-3)
which
mentioned,
among
others,
account
No
V-983
in
the
name
of
Mr
Jos
Paillé,
whose
real
name
was
Reginald
Paillé,
the
appellant.
3.4
On
March
7,1975,
the
appellant
made
a
voluntary
disclosure
admitting,
among
others,
omissions
from
his
returns
for
1973
and
1974.
3.5
According
to
the
auditor,
a
review
of
the
bank
account
of
the
summary
of
deposits
shows
that
all
the
deposits
were
made
in
cash.
3.6
The
amounts
added
as
a
result
of
the
voluntary
disclosure
to
the
income
already
reported
by
the
appellant
are
as
follows:
|
Previous
|
Amount
|
|
|
Amount
|
Added
|
Total
|
|
1973
|
$62,748.69
|
$40,173.25
|
$102,921.69
|
|
1973
|
$53,732.92
|
$
2,000.00
|
$
55,732.92
|
3.7
The
25%
penalties
amounted
to
$3,069.87
for
1973
and
$163.32
for
1974.
3.8
Following
the
issue
of
notices
of
assessment
on
February
27,
1976,
notices
of
objection
were
filed
on
May
25,
1976.
3.9
Following
the
respondent’s
notification
of
December
14,
1976,
confirming
the
notices
of
assessment
of
February
27,
1976,
an
appeal
was
filed
with
the
Tax
Review
Board
on
January
12,
1977
in
relation
to
the
penalty
only.
4.
Acts,
Case
Law
and
Comments
4.1
Act
The
relevant
provisions
of
the
Act
are
subsections
163(2)
and
(3):
163.(3)
Statements
or
omissions
in
return.
Every
person
who,
knowingly,
or
under
circumstances
amounting
to
gross
negligence
in
the
carrying
out
of
any
duty
or
obligation
imposed
by
or
under
this
Act,
has
made
or
has
participated
in,
assented
to
or
acquiesced
in
the
making
of,
a
statement
or
omission
in
a
return,
certificate,
statement
or
answer
filed
or
made
as
required
by
or
under
this
Act
or
a
regulation,
as
a
result
of
which
the
tax
that
would
have
been
payable
by
him
for
a
taxation
year
if
the
tax
had
been
assessed
on
the
basis
of
the
information
provided
in
the
return,
certificate,
statement
or
answer
is
less
than
the
tax
payable
by
him
for
the
year,
is
liable
to
a
penalty
of
25%
of
the
amount
by
which
the
tax
that
would
so
have
been
payable
is
less
than
the
tax
payable
by
him
for
the
year.
163.(3)
Burden
of
proof
in
respect
of
penalties.
Where,
in
any
appeal
under
this
Act,
any
penalty
assessed
by
the
Minister
under
this
section
is
in
issue,
the
burden
of
establishing
the
facts
justifying
the
assessment
of
the
penalty
is
on
the
Minister.
4.2
Case
Law
The
respondent
cited
the
following
cases:
1.
Fernand
Renaud
v
MNR,
[1976]
CTC
2233:
76
DTC
1179;
2.
Bernardin
Baril
v
MNP,
[1976]
CTC
787;
76
DTC
1276;
3.
Paul
E
Gagné
v
MNP,
[1978]
CTC
2458;
78
DTC
1336.
4.3
Comments
It
is
clear
from
the
evidence
given
that
it
was
a
result
of
the
activities
of
the
Special
Investigations
Section
of
the
Department
of
Revenue
that
the
appellant
felt
compelled
to
make
a
so-called
‘’voluntary”,
disclosure,
in
which
he
revealed
the
previously
unreported
amounts.
The
Board
does
not
believe
that
a
simple
oversight
could
have
been
the
reason
for
the
failure
to
report
these
amounts.
The
substantial
sums
involved
lead
the
Board
to
conclude
that
there
was
at
least
gross
negligence,
and
that
the
so-called
“voluntary”
disclosure
referred
to
by
the
appellant
in
his
notice
of
appeal
cannot
be
regarded
as
a
reason
for
quashing
the
penalty.
5.
Conclusion
The
appeal
is
dismissed
and
the
penalties
upheld
in
accordance
with
the
above
reasons
for
judgment.
Appeal
dismissed.
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