Guy
Tremblay:—This
case
was
heard
in
Saskatoon,
Saskatchewan,
on
October
11,
1978.
1.
Point
at
Issue
The
point
at
issue
is
to
know
whether
the
amounts
of
$7,806.97
(1970),
$4,846.22
(1971)
and
$10,777.50
(1972)
are
legally
included
in
the
revenue
of
the
appellant
(in
trucking
business)
and
whether
the
Minister
legally
imposed
penalties
on
the
appellant
on
the
basis
of
gross
negligence.
2.
Burden
of
Proof
The
appellant
has
the
burden
of
showing
that
the
respondent’s
assessments
were
not
justified.
This
burden
of
proof
is
based
not
on
a
particular
section
of
the
Income
Tax
Act
but
on
several
judicial
decisions,
among
them
a
decision
of
the
Supreme
Court
of
Canada
rendered
in
R
W
S
Johnston
v
MNR,
[1948]
CTC
195;
3
DTC
1182.
3.
Admissions
of
the
Appellant
At
the
beginning
of
the
hearing,
counsel
for
appellant
made
admissions
concerning
different
items
so
that
the
following
amounts
be
considered
as
revenue:
|
1970—
income
not
included
|
$3,649.34
|
|
1971—
income
not
included
|
$1,972.97
|
|
—unidentified
cheques
deposited
|
$
51.25
|
|
1972—
unidentified
cheques
deposited
|
$
|
74.50
|
During
the
evidence,
counsel
for
appellant
admitted
that
penalties
were
well
founded.
4.
Admissions
of
the
Respondent
After
the
evidence
was
given
and
before
the
arguments
were
presented,
counsel
for
respondent
made
admissions
so
that
the
following
amounts
should
not
be
considered
as
revenue:
|
1970—
|
Nil
|
|
1971—
manure
trade
|
$
500
|
|
—unidentified
cheques
deposited
|
$1,500
|
|
1972—
sale
of
one
truck
|
$5,999
|
5.
The
Points
in
Dispute
for
1970
5.1
Unidentified
cheque
deposited
October
2,
1970—$207.63
It
is
a
cheque
issued
by
the
Department
of
Welfare,
Province
of
Saskatchewan,
on
October
1,
1970
to
Nita
Fertuck.
According
to
the
appellant,
this
cheque
in
the
amount
of
$207.63
was
given
to
him
for
a
load
of
manure
which
cost
$25.
He
reimbursed
the
difference
to
Mrs
Nita
Fertuck.
This
cheque
has
the
same
address
as
the
appellant:
453
Avenue
W
South,
Saskatoon,
Saskatchewan.
In
his
1970
income
tax
return,
he
does
not
clearly
show
rent
revenue.
He
declared
revenue
from
many
business
sources
in
the
amount
of
$10,290.60.
In
1971,
however,
he
clearly
declared
a
rent
revenue
of
$1,020.
Since
the
address
of
the
property
is
453
Avenue
W
South,
Saskatoon,
Saskatchewan,
ie
the
same
address
as
the
appellant
in
1970,
it
is
logical
to
assume
that
he
received
rent
in
1970.
It
is
plausible.
that
a
tenant
bought
a
load
of
manure.
The
amount
of
$207.63
is
allowed
and
must
not
be
included
in
the
revenue.
5.2
Unidentified
cheque
deposited
October
5—$2,900
According
to
the
appellant,
that
amount
of
$2,900
is
part
of
the
amount
of
$3,000
which
is
the
price
of
a
1967
Dodge
Tandem.
On
the
bank
deposit
slip
(Exhibit
A-3),
the
amount
deposited
is
$3,000:
$2,900
in
cheque
and
$100
cash.
With
his
1970
income
tax
return
filed
on
March
16,
the
appellant
annexed
a
schedule:
‘‘capital
cost
allowance
1970”.
On
that
document
it
is
written
on
the
second
line:
’67
Dodge
Tandem
$4,624.14
(sold
for
$3,000).
On
the
same
document
the
vehicles
the
appellant
owned
in
1969
are
listed.
The
1967
Dodge
Tandem
appears
valued
at
$5,504.93.
A
depre-
ciation
of
16%
was
taken
on
that
amount
on
December
31,
1969.
It
is
obvious
to
the
Board
that
the
document
annexed
to
the
1970
income
tax
return
filed
in
March
1971
confirms
the
appellant’s
testimony
made
in
1978.
The
amount
of
$2,900
is
allowed
and
must
not
be
included
in
the
appellant’s
revenue.
5.3
Unidentified
cheque
February
3—$400
According
to
the
appellant,
it
would
be
rent
together
with
something
else.
What
is
the
part
of
the
“something
else”
and
the
part
of
the
rent?
For
the
party
who
has
the
burden
of
proof,
it
is
not
very
clear.
It
is
proven
that
in
1971
it
has
a
gross
rent
revenue
of
$1,020.
It
was
not
more
in
1970,
that
is
$91
per
month.
The
amount
of
$400
was
deposited
at
the
beginning
of
February.
The
Board
concludes
that
the
part
of
the
“something
else”
was
$309.
The
amount
of
$91
is
allowed
because
it
is
already
included
in
the
revenue.
The
difference,
that
is
$309,
must
be
maintained
in
the
revenue.
5.4
Unidentified
cheque
May
1—$650
According
to
the
appellant,
this
amount
comes
from
the
sale
of
a
vehicle.
He
did
not
identify
it.
After
studying
the
capital
cost
allowance
schedule
for
the
years
1969
and
1970,
annexed
to
the
1970
income
tax
return,
the
Board
cannot
identify
a
vehicle
which
could
be
sold
at
the
price
of
$650.
Moreover,
according
to
that
schedule,
the
only
vehicle
sold
in
1970
was
the
1967
Dodge
Tandem
(see
paragraph
5.2).
In
his
testimony,
the
appellant
said
that
probably
on
this
vehicle
he
had
never
used
capital
cost
allowance.
On
one
hand
it
is
not
very
clear;
on
the
other
hand,
it
may
be
one
of
those
vehicles
(if
it
is)
that
the
appellant
had
bought
at
an
auction
sale
and
sold
after.
The
point
remains
confused.
The
burden
of
proof
is
not
reversed.
The
amount
of
$650
is
disallowed
and
must
be
considered
as
revenue.
6.
The
Point
in
Dispute
in
1971
The
only
point
in
dispute
is
an
amount
of
$822
for
an
unidentified
cheque
deposited
on
February
1.
According
to
the
appellant
perhaps
it
is
the
sale
price
of
a
vehicle.
During
that
year,
fourteen
vehicles
were
registered
in
his
name
at
the
Registration
office
of
the
Department
of
Transport.
In
1972,
only
one
was
registered.
The
appellant
sold
thirteen
of
them.
Maybe,
on
one
hand,
the
amount
of
$822
is
one
of
them.
On
the
other
hand,
as
the
deposit
is
on
February
1,
1971,
as
the
evidence
has
given
the
date
of
purchase
of
the
vehicles
and
none
of
these
vehicles
seem
to
have
been
purchased
before
February
1971,
as
according
to
the
appellant
himself,
“perhaps
it
is
a
sale
of
motor
vehicle’’
but
perhaps
also
it
is
not.
As
the
burden
of
proof
is
on
the
appellant,
this
amount
of
$822
is
disallowed
and
must
be
considered
as
revenue.
7.
The
Points
in
Dispute
in
1972
7.1
Unidentified
cheque
April
10—$4,500
According
to
the
appellant,
after
saying
he
did
not
recall,
he
said
it
was
the
sale
price
of
the
1967
Ford
Tandem.
The
vehicle
was
sold
to
his
brother
Jacob.
However,
on
the
capital
cost
allowance
1971
schedule,
it
is
indicated
that
this
vehicle
was
sold
in
1971.
It
is
quite
difficult
to
believe
that
the
amount
of
$4,500
was
deposited
only
in
April
1972.
As
Exhibit
R-1
was
filed,
a
loan
application
in
the
amount
of
$4,800
dated
July
16,
1971,
was
signed
by
the
appellant
and
his
brother
Jacob.
According
to
Jacob
Fehr,
$4,500
was
for
the
vehicle
and
$300
for
the
licence
plates.
On
the
same
date
of
the
loan,
an
amount
of
$4,800
was
deposited
in
the
bank
account
of
the
appellant.
It
is
obvious
to
the
Board
that
the
amount
of
$4,500
deposited
in
April
1972
cannot
be
the
amount
of
the
sale
price
of
the
1967
Ford
Tandem.
What
is
it?
The
evidence
presented
does
not
give
the
answer.
This
amount
is
disallowed
and
must
be
considered
as
revenue.
7.2
Unidentified
cheque
April
24—$204
-e
-
As
the
appellant
does
not
remember
what
this
amount
represents,
it
must
be
disallowed
and
considered
as
revenue.
8.
Request
to
Amend
the
Appeal
by
Using
CCA
At
the
beginning
of
his
argument,
counsel
for
appellant
made
a
verbal
request
to
amend
the
appeal
so
that
capital
cost
allowance
could
be
used
for
the
years
1970
and
1971.
Indeed,
in
his
1970
and
1971
income
tax
returns,
the
appellant
‘did
not
use
capital
cost
allowance
because
he
did
not
need
it.
Following
the
reassessments,
the
evidence
at
the
hearing
of
the
appeal,
and
the
increase
of
revenue
for
the
years
1970
and
1971,
it
is
clear
that
it
would
be
sensible
that
the
capital
cost
allowance
be
used.
Counsel
for
respondent
objected
to
the
amendment
on
the
basis
that
it
is
too
late
and
counsel
for
appellant
should
have
included
it
in
the
Original
appeal.
It
is
useful
to
quote
subsections
9(1
j_,
(2)
of
the
Tax
Review
Board
Act:
9.(1)
Where
an
appeal
is
made
to
the
Board
under
any
Act,
the
appeal
.
Shall
be
made
in
writing
but
no
special
form
of.
petition
or
pleadings
shall
be
Required
by
the
Board,
unless.
the
Act
under
which
the
appeal
is
made
expressly
otherwise
provides.
(2)
Notwithstanding
the
provisions
of
the
Act
under
which
an
appeal
is
made,
the
Board
is
not
bound
by
any
legal
or
technical
rules
of
evidence
in.
conducting
a
hearing
for
the
purposes
of
that
Act,
and
all
appeals
shall
be
dealt
with
by
the
Board
as
informally
and
expeditiously
as
the
circumstances
and
considerations
of
fairness
will
permit.
On
the
basis
of
this
section,
the
request
for
amendment
is
allowed.
Since
the
trial
before
the
Federal
Court
of
Canada
is
a
trial
de
novo,
ft
would
be
easy
for
the
appellant
to
provide
in
the
appeal
a
paragraph
concerning
the
use
of
capital
cost
allowance
for
the
years
1970
and
1971,
or
concerning
a
claim
for
some
other
expenses
against
the
revenue
added
by
the
respondent.
It
would
be
accepted.
Why
force
the
appellant
to
spend
money
to
arrive
at
the
same
end?
9.
Conclusion
The
appeal
is
allowed
in
part
and
the
matter
referred
back
to
the
respondent
for
reassessment
in
accordance
with
the
above
reasons
for
judgment.
Appeal
allowed
in
part.
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