Louis Norman Horowitz v. Minister of National Revenue, [1962] CTC 17, 62 DTC 1038

THORSON, P.:—This was an application on behalf of the Minister for an order quashing the appellant’s appeal against his income tax assessment for 1951. It was made before me on September 17, 1959, at Victoria but the hearing was adjourned to October 26, 1959, at Ottawa. On its conclusion I granted the application and the appeal was quashed with costs. The reasons for my decision now follow.

The issue in the application was a simple one and the facts on which it was based were not in dispute. I set them out in their chronological order. The notice of the assessment levied against the appellant for 1951 was dated March 15, 1956, and mailed to him on March 16, 1956. He objected to the assessment by a notice of objection, dated May 10, 1956, which was received in the Department of National Revenue on or about that date. On January 7, 1958, the Minister confirmed the assessment and on the same date a copy of his notification that he had done so was sent to the appellant by prepaid registered mail. There was no further step in the matter until the appellant sent a notice of appeal to the Income Tax Appeal Board, dated May 26, 1958, which was received by the Registrar of the Board on June 16, 1958. The notice was unsigned and was sent back to the appellant for signature by him. He returned it properly signed on June 21, 1958, and it was received by the Registrar on June 23, 1958. Then, on September 16, 1958, notice was given on behalf of the Minister that at the next sitting of the Income Tax Appeal Board at Vancouver a motion would be made for the dismissal of the appeal for want of jurisdiction on the ground that it had not been filed in accordance with the provisions of the Income Tax Act. At the sitting of the Board at Vancouver on February 17, 1959, counsel for the Minister moved before Mr. R. 8S. W. Fordham for an order dismissing the appeal for lateness in filing the notice of appeal. Mr. Fordham granted the application and dismissed the appeal on the ground that the appellant had not filed the notice of appeal within 90 days after the date of the Minister’s notification that he had confirmed the appellant’s assessment and that, consequently, the Board had no jurisdiction in the matter. On February 18, 1959, Mr. Fordham gave his reasons for his decision (1958-59), 21 Tax A.B.C. 350, and on April 6, 1959, the Registrar of the Board mailed the decision to the appellant and the Minister. Finally, on August 4, 1959, the appellant filed a notice of appeal to this Court from the decision of Income Tax Appeal Board. This was the only notice of appeal to this Court.

The nature of a taxpayer’s right of appeal against an income tax assessment is clear. It is a substantive right, not a procedural one, and it enures to the taxpayer by virtue of the statute by which it was granted. It is a statutory right that has no existence apart from the statute that created it and, as such, it is subject to the conditions prescribed by it. Consequently, it cannot be exercised unless the statutory conditions for its exercise have been strictly complied with. If, therefore, a taxpayer has failed to comply with such conditions the right of appeal which was granted to him subject to compliance with them no longer exists and he is left without any right of appeal against the assessment.

On the argument before me counsel for the Minister submitted that the statutory provisions to be considered in determining the issue in the present case were Sections 53, 54 and 55 of The Income Tax Act, Statutes of Canada 1948, as amended, fre- quently, and conveniently but erroneously, referred to as The 1948 Income Tax Act. I am unable to accept this submission. While an income tax assessment must be made in accordance with the law in force for the year for which it was made, it does not follow that a taxpayer’s right of appeal against it is to be determined by the law in force in such year. In my opinion, a taxpayer is entitled to the right of appeal against an income tax assessment that is in effect at the time of the assessment to which he may wish to object and against which he may wish to appeal, regardless of the year for which the assessment was made. He has no need for any right of appeal prior to the date of such assessment. It is always within the competence of Parliament to determine what right of appeal, if any, a taxpayer should have against an income tax assessment made by the Minister and to prescribe the conditions which must be complied with before the right, if granted, may be exercised, and it is not to be assumed, in the absence of clear words to the contrary, that, when Parliament has granted a right of appeal and prescribed the conditions for its exercise, its enactment is not of general application. Consequently, I find that in the present case I should consider the relevant statutory provisions that were in force when the assessment was made, that is to say, the statutory provisions that were in force on March 15, 1956. Consequently, the relevant statutory provisions to be considered are Sections 58, 59 and 60 of the Income Tax Act, R.S.C. 1952, Chapter 148. As a matter of fact, there is no difference in the present case, for Sections 53, 54 and 55 of The Income Tax Act to which counsel for the Minister referred were carried forward without change into Sections 58. 59 and 60 respectively of the Income Tax Act, but an important matter of principle is involved.

I now set out the relevant enactments. Section 58 of the Income Tax Act provided as follows :

“58. (1) A taxpayer who objects to an assessment under this Part may, within 60 days from the day of mailing of the notice of assessment, serve on the Minister a notice of objection in duplicate in prescribed form setting out the reasons for the objection and all relevant facts.

(2) A notice of objection under this section shall be served by being sent by registered mail to the Deputy Minister of National Revenue for Taxation at Ottawa.

(3) Upon receipt of the notice of objection, the Minister shall with all due despatch reconsider the assessment and vacate, confirm or vary the assessment or re-assess and he shall thereupon notify the taxpayer of his action by registered mail.”

It is interesting to note that while it was provided by Section 58 that a taxpayer who objected to his assessment had to serve his notice of objection on the Minister within 60 days from the day of mailing of the notice of objection there was no provision of any fixed period within which the Minister had to reconsider the assessment other than that upon receipt of the notice of objection he should do so with all due despatch.

Section 59 provided for an appeal to the Income Tax Appeal Board to have the assessment to which objection had been taken vacated or varied and prescribed the time within which such appeal might be instituted, as follows:

‘ ‘59. (1) Where a taxpayer has served notice of objection to an assessment under section 58, he may appeal to the Income Tax Appeal Board constituted by Division I to have the assessment vacated or varied after either

(a) the Minister has confirmed the assessment or re-assessed, or

(b) 180 days have elapsed after service of the notice of objection and the Minister has not notified the taxpayer that he has vacated or confirmed the assessment or re-assessed ;

but no appeal under this section may be instituted after the expiration of 90 days from the day notice has been mailed to the taxpayer under section 58 that the Minister has confirmed the assessment or re-assessed.

(2) Service of a notice of appeal under this section shall be served and all other matters in connection with an appeal under this section shall be regulated by Division I.”

Then section 60 provided for an appeal to this Court from the decision of the Income Tax Appeal Board and it also provided for an appeal against the assessment directly to this Court instead of to the Income Tax Appeal Board. It read as follows :

“60. (1) The Minister or the taxpayer may, within 120 days from the day on which the Registrar of the Income Tax Appeal Board mails the decision on an appeal under section 59 to the Minister and the taxpayer, appeal to the Exchequer Court of Canada.

(2) Where a taxpayer has served a notice of objection to an assessment under section 58, he may, in place of appealing to the Income Tax Appeal Board under section 59, appeal to the Exchequer Court of Canada at a time when, under section 59, he could have appealed to the Income Tax Appeal Board.

(3) All matters in connection with an appeal under this section shall be regulated by Division J.’’

It was an essential condition of the right of appeal to the Income Tax Appeal Board provided by Section 59 and of the right of appeal directly to this Court provided by Section 60 that the taxpayer should have served on the Minister a notice of objection under Section 58 within the prescribed period of 60 days from the day of mailing of the notice of assessment. The facts established that the appellant had complied with this condition. The notice of assessment was mailed on March 16, 1956, and the notice of objection was given on May 10, 1956, and received by the Minister’s Department on or about that date.

But it was also an essential condition of the right of appeal to either the Income Tax Appeal Board or to this Court that it should have been instituted within 90 days from the day notice was mailed to the taxpayer under Section 58 that the Minister had confirmed the assessment or re-assessed. The facts established that the appellant had not complied with this condition. The Minister notified the appellant on January 7, 1958, that he had

confirmed the assessment to which the appellant had objected but the appellant’s notice of appeal was dated May 26, 1958. The last day on which he could have validly instituted an appeal to vacate or vary the assessment was April 7, 1958, which was 90 days from the day notice had been mailed to him that the Minister had confirmed the assessment. Section 59 declared specifically that after the expiration of that period no appeal under the section might be instituted. Consequently, the appellant, after April 7, 1958, no longer had any right of appeal and his purported appeal to the Income Tax Appeal Board, of which he gave the notice, dated May 26, 1958, was unauthorized by law and should have been quashed by Mr. Fordham as a nullity. Indeed, his dismissal of it for want of jurisdiction to entertain it was, in effect, a quashing of it and it was clearly right.

That was a complete disposal of the matter. Since the appellant allowed the period of 90 days referred to in Section 59 to expire without instituting an appeal to the Income Tax Appeal Board or to this Court he ceased to have any right of appeal from the assessment and his purported appeal to the Income Tax Appeal Board was, as already stated, a nullity.

Consequently, he did not have any right to appeal to this Court. While Section 60(1) provided for an appeal to this Court within 120 days from the day on which the Registrar of the Income Tax Appeal Board mailed the decision of the Board on an appeal under Section 59 to the Minister and the taxpayer, it is clear that it did not apply to the facts in the present case. The section contemplated as a condition precedent to there being an appeal to this Court that there should have been an appeal under Section 59, that is to say, an appeal that was permitted by it. There was no such appeal under Section 59 in the present case. Section 59 specifically enacted that no appeal under the section might be instituted after the expiration of the 90 days referred to and it would be absurd to interpret Section 60(1) as contemplating a right of appeal to this Court from a decision in an appeal that was prohibited from institution under the section, such as that attempted by the appellant. His purported appeal to the Income Tax Appeal Board was, therefore, not ‘an appeal under Section 59’’, within the meaning of Section 60(1), and the section has no application to the present case.

It followed that the appeal which the appellant sought to institute by his notice of appeal of August 4, 1959, was unauthorized by law. I, therefore, granted the application for an order quashing it and it was quashed accordingly.