FOURNIER,
J.:—This
is
an
appeal
from
the
decision
of
the
Income
Tax
Appeal
Board
of
July
11,
1952,
dismissing
the
appellant’s
appeal
from
his
income
tax
assessment
for
1946,
whereby
a
certain
amount
which
he
had
received
from
Fine
Silk
Limited,
a
corporation
of
which
he
was
a
shareholder,
was
added
by
the
Minister
to
the
amount
of
taxable
income
reported
by
him.
The
following
facts
are
not
disputed.
The
appellant
is
a
shareholder
of
Fine
Silk
Limited
(hereinafter
called
‘‘the
company”),
a
corporation
whose
fiscal
year
ends
on
August
31
of
each
year.
On
August
31,
1946,
it
had
on
hand
undistributed
income
in
the
amount
of
$77,426.09.
On
September
3,
1946,
the
appellant
received
from
the
company
the
sum
of
$26,500.00
which
was
said
to
be
a
loan.
The
appellant’s
income
tax
return
for
the
year
1946
made
no
mention
of
that
amount.
In
assessing
the
appellant
the
Minister
added
to
the
net
income
of
the
appellant
as
reported
by
him
the
sum
of
$11,319.09.
To
explain
this
addition,
on
March
5,
1951,
the
Minister
addressed
to
the
appellant
with
the
notice
of
assessment
a
document
known
as
Form
T.7-W
which
reads
partly
as
follows:
"According
to
section
18
of
the
Income
War
Tax
Act,
the
following
amount
received
from
Fine
Silk
Co.
is
considered
as
a
dividend
subject
to
tax:
|
Total
amount
|
$26,500.00
|
|
1945
|
15,180.91
|
|
1946
|
11,319.09"
|
Pursuant
to
the
provisions
of
Section
69A
of
the
Income
War
Tax
Act,
the
appellant
served
upon
the
Minister
a
notice
of
objection
on
April
3,
1951,
and
on
April
7
of
the
same
year
the
appellant
was
notified
by
the
Minister
as
follows:
"WHEREAS
the
taxpayer
was
assessed
for
the
income
tax
by
Notice
of
Assessment
in
respect
of
the
taxation
year
ended
December
31st,
1946,
AND
WHEREAS
by
Notice
of
Objection
the
taxpayer
has
objected
to
the
assessed
tax
for
the
reasons
therein
set
forth,
The
Honourable
the
Minister
of
National
Revenue
having
reconsidered
the
assessment
and
having
considered
the
facts
and
reasons
set
forth
in
the
Notice
of
Objection
hereby
notifies
the
taxpayer
of
his
intention
to
amend
the
said
assessment
to
increase
the
income
by
an
amount
of
$15,180.91
in
respect
of
advances
from
Fine
Silk
Company
Limited
and
hereby
confirms
the
said
assessment
in
other
respects
as
having
been
made
in
accordance
with
the
provisions
of
the
Act
and
in
particular
on
the
ground
that
the
advance
to
the
taxpayer
by
Fine
Silk
Company
Limited
has
been
deemed
to
be
a
dividend
and
taxed
in
his
hands
in
accordance
with
the
provisions
of
section
18
of
the
Act.’’
From
the
assessment
so
confirmed
the
appellant
appealed
to
the
Income
Tax
Appeal
Board
and
the
appeal
was
dismissed.
The
appeal
to
this
Court
is
from
that
decision.
The
section
of
the
Income
War
Tax
Act
to
be
construed
in
deciding
this
appeal
is
Section
18
which
reads:
"‘18.
(1)
For
the
purpose
of
this
Act,
any
loan
or
advance
by
a
corporation,
or
appropriation
of
its
funds
to
a
shareholder
thereof,
other
than
a
loan
or
advance
incidental
to
the
business
of
the
corporation
shall
be
deemed
to
be
a
dividend
to
the
extent
that
such
corporation
has
on
hand
undistributed
income
and
such
dividend
shall
be
deemed
to
be
income
received
by
such
shareholder
in
the
year
in
which
made.
(2)
This
section
shall
not
apply
to
a
loan
or
advance
made
by
a
corporation
in
the
ordinary
course
of
its
business
where
the
lending
of
money
is
part
of
the
ordinary
business
of
the
company.
(R.S.,
c.
97,
Section
18
;
1940-41,
c.
18,
Section
20)?’
It
is
established
that
the
loan
which
the
company
is
said
to
have
made
was
not
incidental
to
the
business
of
the
company.
It
is
also
established
that
the
lending
of
money
was
not
part
of
its
business,
therefore
their
loan
or
advance
to
the
appellant
could
not
be
covered
by
Section
18(2).
It
is
in
evidence
that
the
company
on
August
31,
1946,
had
on
hand
undistributed
income
to
the
amount
of
$77,426.09.
It
is
also
clear
that
the
Minister
found
that
the
company
had
on
hand
on
September
3,
1946,
undistributed
income
the
extent
of
which
was
sufficient
to
cover
the
loan
or
advance
made
to
the
appellant.
These
are
the
facts
of
the
case.
This
is
an
appeal
from
an
assessment.
An
assessment
for
income
tax
is
deemed
to
be
valid
and
binding
until
it
is
proved
to
be
erroneous.
The
facts
found
or
assumed
by
the
Minister
must
be
accepted
unless
disputed
by
the
appellant.
The
onus
is
his
to
establish
that
the
facts
are
incorrect.
It
has
been
held
in
the
case
of
Dezura
v.
M.N.R.,
[1948]
Ex.
C.R.
10;
[1947]
C.T.C.
375,
"that
the
onus
of
proof
of
error
in
the
amount
of
determination
rests
on
the
appellant”.
In
Johnston
v.
M.N.R.,
[1947]
Ex.
C.R.
483;
[1947]
C.T.C.
258;
[1948]
S.C.R.
486;
[1948]
C.T.C.
195,
it
was
held:
"That
an
assessment
for
income
tax
is
valid
and
binding
unless
an
appeal
is
taken
from
such
assessment
and
the
Court
determines
that
such
was
made
on
an
incorrect
basis
and
where
an
appellant
has
failed
to
show
that
the
assessment
was
incorrect,
either
in
fact
or
law,
the
appeal
must
be
dismissed.”
On
appeal
to
the
Supreme
Court
of
Canada
this
decision
was
affirmed.
In
that
case
Mr.
Justice
Rand,
speaking
for
the
Court,
said
(page
489)
:
66
.
.
.,
the
proceeding
is
an
appeal
from
the
taxation;
and
since
the
taxation
is
on
the
basis
of
certain
facts
and
certain
provisions
of
law
either
those
facts
or
the
application
of
the
law
is
challenged.
Every
such
fact
found
or
assumed
by
the
assessor
or
the
Minister
must
then
be
accepted
as
it
was
dealt
with
by
these
persons
unless
questioned
by
the
appellant.
If
the
taxpayer
here
intended
to
contest
the
fact
that
he
sup-
ported
his
wife
within
the
meaning
of
the
Rules
mentioned
he
should
have
raised
that
issue
in
his
pleading,
and
the
burden
would
have
rested
on
him
as
on
any
appellant
to
show
that
the
conclusion
below
was
not
warranted.
For
that
purpose
he
might
bring
evidence
before
the
Court
notwithstanding
that
it
had
not
been
placed
before
the
assessor
or
the
Minister,
but
the
onus
was
his
to
demolish
the
basic
fact
on
which
the
taxation
rested.”
These
decisions
establish
that
an
assessment
carries
with
it
a
presumption
of
validity
and
legality
and
the
onus
of
showing
that
it
is
erroneous
in
fact
or
in
law
is
on
the
taxpayer
who
appeals
against
it.
In
Phipson
on
Evidence,
9th
edition,
page
107,
under
the
title
Previous
and
Subsequent
Existence
of
Facts’’,
it
is
said:
""
Continuance,
(b)
States
of
mind,
persons,
or
things,
at
a
given
time
may
in
some
cases
be
proved
by
showing
their
previous
or
subsequent
existence
in
the
same
state,
there
being
a
probability
that
certain
conditions
and
relationships
continue.
The
presumption
of
continuance,
which
is
one
of
fact
and
not
of
law,
will,
however,
weaken
with
remoteness
of
time,
and
only
prevails
till
the
contrary
is
shown,
or
a
different
presumption
arises
from
the
nature
of
the
case
.
.
.’’
Having
this
in
mnd,
I
believe
that
the
undistributed
income
in
the
hands
of
the
company
on
August
31,
1946,
was
still
in
its
hands
on
September
3,
1946.
On
that
last
date
the
appellant
received
a
loan
or
advance
from
the
company.
This
was
found
as
a
fact
by
the
Minister
and
served
as
the
basis
of
his
assessment
of
the
appellant’s
income.
The
presumption
of
continuance
being
one
of
fact,
the
appellant
could
have
readily
adduced
evidence
to
destroy
this
presumption,
if
the
facts
on
which
the
Minister
based
his
assessment
were
incorrect.
The
burden
of
proof
to
this
effect
rested
on
him.
He
failed
to
satisfy
the
onus
east
upon
him.
Under
these
circumstances
I
have
arrived
at
the
conclusion
that
the
Minister’s
assessment
of
the
appellant’s
income
was
made
according
to
the
provisions
of
Section
18
of
the
Income
War
Tax
Act.
The
appeal
is
dismissed
with
costs.
Judgment
accordingly.
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