[OFFICIAL ENGLISH TRANSLATION]
Date: 20020319
Docket: 2000-565(IT)I
BETWEEN:
GEORGES NASSIF,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
Docket: 2000-566(IT)I
BETWEEN:
ANTOUN NASSIF,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
Docket:2000-827(IT)I
BETWEEN:
KHALIL NASSIF,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
and Docket:2000-926(IT)I
BETWEEN:
HAMID NASSIF,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Tardif, J.T.C.C.
[1] This is one of four appeals in
which the parties agreed to proceed by way of a common hearing;
the respondent brought the same evidence for the four
appeals.
[2] The appeals raise three
questions:
- Was the Minister
of National Revenue (the "Minister") justified in
disallowing the appellants the credit claimed in respect of
charitable donations?
- Was the Minister
justified in assessing a penalty for the taxation years in issue
in respect of the credit claimed by the filing of the receipts in
issue?
- Could the Minister
reassess after the normal period set out in
paragraph 152(4)(a) of the Income Tax Act had
expired?
[3] The first two questions involve
all four cases. However, the third question does not apply to the
case of Hamid Nassif (2000-827(IT)I) since
the reassessment for 1993 was made within the prescribed
time.
Facts
[4] The evidence showed that all
appellants are related. They came to Canada in the early 1990s
when their native country, Lebanon, was going through very
difficult times. All Catholic, they stated that they soon
contacted or were contacted by the Ordre Antonien libanais des
Maronites (the "Ordre").
[5] Concerned by the war in Lebanon,
which was having tragic consequences and forcing thousands of
inhabitants to leave the country, the appellants said they had
been called upon by the Ordre Antonien libanais des Maronites to
assist in meeting the many needs of refugees. They said the Ordre
acted as a kind of refuge to which all refugees turned for their
basic needs. It was a kind of cornerstone that met the basic
needs of many Lebanese refugees.
[6] After explaining their motivation
and expressing their solidarity, the appellants curtly said that
they had given various cash amounts totalling the figures
appearing on the receipts in issue. They acknowledged that they
had refused to cooperate in any way to shed any light whatsoever
on the ground that they had receipts, that those receipts were
valid and that the respondent had to accept them as such, without
questioning anything whatever.
[7] Stating that they were utterly
indifferent to the outcome of the investigation, they added that,
while several hundreds of persons had taken part in a tax evasion
scheme, they had not, and that the gifts corresponded to the
amounts indicated on their receipts.
[8] The appellants stated that they
had obtained the receipts in issue as a result of gifts made by
means of a number of instalments. They said they had never kept
any books or notes enabling them to keep track of the gifts they
made. They also mentioned that everything had been done in a very
private context and that no witness was in a position to confirm
their claims.
[9] They regularly repeated their
basic argument, which was that they had made a gift, obtained a
receipt and appended it to their income tax returns. In the
appellants' view, a charitable donation is an intimately
private act, which concerns no one but the donor and the
donee.
[10] The appellants contended that they were
indifferent to Revenue Canada's findings and conclusions. In
their view, their receipts stated an amount, and the respondent
had to assume that they had paid the amount stated and to accept
it without questioning anything. They added that, if tax evasion
had been committed, Revenue Canada had only to blame the tax
evaders and that they had had nothing to do with that.
[11] In essence, the appellants claim that,
failing direct and absolute evidence that proves that they did
not pay the amounts appearing on the receipts, their appeals
should be allowed.
[12] Not only is this way of seeing and
doing things unacceptable, I would have had to find that their
testimony had some value in order for their theory to be
admissible. That in fact was not the case and, in my view, the
appellants lied throughout the trial.
[13] My assessment of the credibility of
their testimony is based on a number of factors, in particular,
the following: on a number of occasions, they avoided answering
the questions, claimed they did not remember facts or simply
refused to answer. As to the answers provided, they were
obviously deceptive, vague, confused and often implausible. At
certain points, the appellants' evidence was also marked by
shocking inconsistencies.
[14] The only unwarranted, clear and
unequivocal statement in their testimony was that they had indeed
paid the amounts stated on the receipts in cash. They adduced
nothing, strictly nothing, that might render their claims
plausible.
[15] Furthermore, they systematically
refused to cooperate on the ground that they had had nothing to
do with the purported tax evasion scheme. They refused to comply
with the requirements stated in the subpoenas served on them on
the basis that they were unjustified, pointless and baseless.
They even expressed frustration and repugnance over attempts to
shed light on their personal files, even though the respondent
had in her possession the results of an extensive investigation
that had yielded exceptional and decisive findings concerning the
scope of the scheme, thus, fully justifying the conclusions made
with respect to the appellants.
[16] The amounts of the gifts constituted a
significant percentage of their disposable income. Lastly, in all
cases the amounts were, by chance, round figures even though all
the amounts were totals of several contributions of uneven
amounts ($2,000, $2,000, $2,000, $3,000 and $4,000).
[17] As chance would also have it, despite
their humanitarian concern, developed sense of solidarity with
the Lebanese community, considerable generosity and their concern
for the well-being of their own kind, the appellants had made
gifts on an ad hoc basis only and in a year in which, given their
tax burden, they benefited greatly from the receipts in
issue.
[18] Despite all the indications undermining
the appellants' claims, the appellants showed such
indifference in their testimony that they even allowed themselves
to be arrogant, appalled and insulted that the respondent
question the quality of the receipts filed in support of their
tax returns. For all these reasons, I conclude without hesitation
that their testimony lacked credibility and was worthless and,
therefore, must be rejected.
[19] The respondent, on the other hand,
brought well-documented evidence resulting from a very elaborate
investigation. The evidence was substantiated by credible and,
especially, decisive exhibits and documents establishing the
validity of the conclusions reached, that is to say, that the
receipts filed by the appellants were false documents.
[20] It is clear from the evidence that the
Ordre Antonien libanais des Maronites had established an
organization that issued tax receipts stating amounts
substantially higher than the consideration it had received. It
generally cost between 10 and 20 percent of the stated
amount to obtain a receipt. In other words, the Maronites
community was simply in the business of income tax receipts.
Consequently, the purported donors and donees were enriching
themselves at the expense of Canadian society. The income tax
refunds obtained as a result of filing false receipts were
generally higher than the outlay made to obtain the receipt. The
evidence showed that those who had received such receipts were
simply partners and full-fledged accomplices in a genuine tax
evasion scheme. Consequently, it is utterly inappropriate to say
that any gifts were made in such circumstances; rather, this was
a fraudulent act from which the appellants wished to benefit.
Penalties
[21] The evidentiary standard in the matter
of penalties is high and requires evidence establishing bad faith
and reprehensible conduct. Analyzing and assessing whether
penalties are justified requires taking into consideration a
number of factors that are revealing of the taxpayer's
behaviour and intention at the time he filed his return. In the
instant case, it seems on a balance of probabilities that the
appellants were perfectly aware of the benefit resulting from the
filing of a receipt certifying that a charitable donation had
been made. They knowingly and deliberately filed receipts that
they knew contained false amounts in order to derive a benefit, a
tax refund, from it.
[22] The coherence of all the evidence
brought by the respondent satisfactorily showed on a balance of
probabilities that the receipts were false.
[23] I also find that the appellants'
arrogance and indifference to the reassessments made showed their
bad faith. They never attempted to substantiate the validity of
their claims. They never requested supporting documents from the
Ordre Antonien libanais des Maronites.
[24] Not only did they refuse to cooperate
by not acting on a written request for information, they
deliberately chose not to comply with the written demands in the
subpoena on the ground that they had done nothing wrong and that
this was a pointless request.
[25] The receipts filed generated income tax
deductions. The appellants had to be able to establish and prove
the value and quality of those receipts. Not only did they not do
that, they also expressed their impatience with and aversion and
utter indifference to the fraudulent scheme.
[26] I conclude without hesitation that the
reassessments made in the four cases are valid and confirm that
the penalties are justified. The respondent discharged her burden
of proof, whereas the appellants confined themselves to claiming
that they had made gifts, the amounts of which appeared on the
receipts. For this to be an effective explanation, the
appellants' testimony would have had to be credible. In fact,
I consider the testimony of the four appellants to be of no
value, convinced that they never told the truth. Their answers,
attitudes and behaviour as a whole showed that the appellants
were capable of lying with disconcerting ease. They were arrogant
to the point of expressing their frustration at having to explain
themselves.
[27] The respondent discharged her burden of
proof in these cases to justify the reassessments made after the
new period had expired.
[28] For all these reasons, the appeals are
dismissed. The penalties were fully justified and were rightly
assessed.
Signed at Ottawa, Canada, this 19th day of March 2002.
J.T.C.C.
Translation certified true
on this 27th day of May 2003.
Sophie Debbané, Revisor
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