Uppal Estate – Tax Court of Canada strikes pleadings of assumptions of facts in the alternative, and states that it cannot impose a penalty that was not assessed

Graham J ordered that the Crown’s pleading, that the deceased taxpayer’s purchase of shares of a company occurred “singly or jointly with” a corporation owned by him, should be struck (with leave to file amended pleadings), as acquisition of beneficial ownership by the taxpayer’s company or by him personally were mutually inconsistent, and substantially affected the case that his estate would have to make.

The Minister also assessed the taxpayer for gross negligence penalties but then, in the Amended Reply argued, in the alternative, that the taxpayer should be liable for penalties under ss. 162(7) and (10) for failing to file T1134 (or T1135) information returns. Before ordering that such alternative argument should be struck, Graham found that the Court did not have “the power to order the Minister to assess a previously unassessed penalty” as “[p]enalties are imposed by the Minister, not by the Court”.

Neal Armstrong. Summaries of Uppal Estate v. The King, 2025 TCC 34 under General Concepts – Onus and s. 171(1).