Citation: 2010 TCC 347
Date: 20100622
Docket: 2008-1856(GST)G
BETWEEN:
RESTAURANT PLACE ROMAINE INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Bédard J.
[1]
This is an appeal from
an assessment made pursuant to Part IX of the Excise Tax Act (the Act)
for the period of July 1, 2002, to September 30, 2005 (the relevant period).
[2]
In the assessment, the
goods and services tax (GST) that the appellant declared was increased by
$117,441.81. The assessment also includes a penalty of $15,578.31 and interest
of $6,701.76 for a total of $139,722.88.
[3]
I immediately note that
counsel for the Minister of National Revenue, at the commencement of the last
day of the hearing, acknowledged that the appellant had used 800 litres, 800
litres and 722 litres of Fontana/Bottero type wine in the kitchen for food
preparation in its fiscal years ending June 30, 2003 (year 1), June 30, 2004
(year 2) and June 30, 2005 (year 3), respectively. I also note that when making
the assessment, the Minister of National Revenue (the Minister) granted the
appellant an allowance of 40 litres of Fontana/Bottero type wine for this purpose,
for each of the years 1, 2 and 3. This admission results in a $306,326.20
reduction of undeclared sales and a $21,442.83 reduction of the GST
assessed, with corresponding adjustment of penalties and interest.
[4]
The appellant operates
a restaurant with an alcohol permit on the Island of Montreal, called
"Piazza Romana" (the restaurant). The restaurant can serve 180 persons
and its specialty is Italian cuisine. The appellant also offers a delivery and
take out service. Maria Edoardi is the appellant's controlling shareholder and
Arash Rahimi is its director.
[5]
The restaurant was
founded in 1971. Its fiscal year runs from July 1 to June 30.
[6]
The appellant's company
was audited by Ann Fink and Sylvie Dagenais. The audit began on September 8,
2005, with an on-site visit. During this visit, Ms. Dagenais gave the
appellant's employee a letter indicating that the appellant was being audited
for GST purposes. Ms. Dagenais also gave the employee a list of documents
(Exhibit A‑1) that the appellant was to provide for the purposes of the
audit. Ms. Dagenais admitted that, during this first visit, she did not notice
anything that would suggest that the appellant was not declaring all its sales.
Philipp Schait, the appellant's external auditor, advised Ms. Dagenais that all
the documents required for the audit were at his firm and available for review.
During her first visit to Mr. Schait's office, Ms. Dagenais noted that the
following documents were missing:
a.
monthly or annual
summary of sales by item;
b.
sales invoices;
c.
inventory reports;
d.
certain purchase
invoices;
e.
inventory control
reports;
f.
purchase orders;
g.
property acquisition
record;
h.
minute books.
[7]
During a subsequent
visit to Mr. Schait's office, Ms. Dagenais received an annual summary from him,
with few details, of the appellant's sales by item for year 3 (Exhibit
I-25) that established the appellant's sales at $1,408,702.39 and another
annual summary, also with few details, of the appellant's sales by item for the
last quarter of relevant period that established the appellant's sales at
$407,760.33 (Exhibit I‑26). Ms. Dagenais explained that
she could not get such summaries for year 1 or year 2. In that respect, the
appellant's representatives explained that they were unable to provide such
summaries of sales per item for years 1 and 2 because that information was on
the hard drive of the appellant's computer that had been stolen during
renovations to the restaurant in 2003. Lastly, Ms. Dagenais explained that the
appellant's representatives had given her a very detailed summary of the
appellant's sales by item (Exhibit I‑5) for year 3 that established
the appellant's sales at $1,408,702.39 and another very detailed summary
of the appellant's sales by item (Exhibit I‑6) for the last quarter of
relevant period that established the appellant's sales at $407,760.33.
Ms. Dagenais added that the computerized food bills for the last 15 months
of the relevant period were also available.
[8]
Mr. Rahimi only took
inventory at the end of each year in the relevant period. The documents in
support of this inventory taking were not kept. Mr. Rahimi transmitted the
information from these inventory takings verbally to Mr. Schait.
[9]
Given the appellant's
annual summaries of sales by item for year 3 (Exhibits I‑5 and I‑25)
establish the appellant's sales at $1,408,702.39 when the appellant's net
tax reports and financial statements (Exhibit A‑3) establish these
sales at $1,505,443.14, given the lack of inventory reports and given the lack
of sales summaries by item and food bills for years 1 and 2 to verify the
accuracy of the taxable supplies declared, Ms. Dagenais was required to use an
alternative method to estimate the taxable supplies made by the appellant
during the relevant period, based on the sales of wine and beer for the period.
[10]
More specifically, Ms.
Dagenais reconstructed the total amount of the taxable supplies made during
relevant period using the method described as follows:
a.
for year 3, using the
annual summary of sales by item (Exhibit I‑5) the appellant gave her, Ms.
Dagenais determined that for each litre of beer and wine combined, the
appellant had made taxable supplies for the restaurant of $139.11; this
quotient results from dividing the sales for year 3 ($1,408,702.39) by the
number of combined litres of wine and beer sold during that year (10,126) (see
details of Ms. Dagenais's calculations at Exhibit I‑7);
b.
for the last quarter of
relevant period, Ms. Dagenais used the summary report of sales by item (Exhibit
I-6) the appellant gave her to determine that for each combined litre of beer
and wine, the appellant had made taxable supplies for the restaurant of
$144.94, the quotient from dividing the sales from that quarter ($407,670.33)
by the combined number of litres of wine and beer sold during that period
(2,813) (see details of Ms. Dagenais's calculation at Exhibit I‑11);
c.
given that the food
bills and annual or monthly summaries of sales by item were not available for
year 1 and year 2, Ms. Dagenais used the ratio she had calculated for year 3,
$139.11, to reconstruct the sales for year 1 and year 2;
d.
for each of the years,
1, 2 and 3 and for the last quarter of relevant period, Ms. Dagenais verified
all the purchase invoices for wine and beer and determined the total number of
litres of wine and beer purchased during each of the years. Ms. Dagenais determined
that the appellant had purchased 16,428.509 litres of wine and beer in
year 1 (see Exhibits I‑18, I‑19 and I‑20),
13,988.740 litres of wine and beer in year 2 (see Exhibits I‑15,
I‑16 and I‑17), 15,869.708 litres of wine and beer in year 3
(see Exhibits I‑8, I‑9 and I‑10) and 3,336.379 litres of
wine and beer in the last quarter of relevant period (see Exhibits I‑12,
I‑13 and I‑14). Then, the number of litres of wine and beer the
appellant purchased was reduced by the following allowances Ms. Dagenais
granted for theft, breakage and loss, and inventory adjustment:
|
Year 1:
|
1,223 litres of beer and wine
(see Exhibit I‑18);
|
|
Year 2:
|
1,074 litres of beer and wine
(see Exhibit I‑15);
|
|
Year 3:
|
1,455.599 litres of beer and wine
(Exhibit I‑8);
|
|
Last quarter of the
period in question
|
237.519 litres of beer and wine
(see Exhibit I‑14).
|
e.
Once the appellant
presented its submissions, Ms. Dagenais granted the following additional
allowances:
|
Year 1:
|
314 litres of beer and wine
(see Exhibit I‑7);
|
|
Year 2:
|
314 litres of beer and wine
(see Exhibit I‑7);
|
|
Year 3:
|
314 litres of beer and wine
(see Exhibit I‑7);
|
|
Last quarter of relevant period:
|
77 litres of beer and wine
(see Exhibit I‑11).
|
f.
The result of this
exercise is:
|
Litres of wine and beer purchased
|
Allowance granted by Ms. Dagenais
|
Litres of wine and beer considered sold
|
|
Year 1
|
16,428
|
1,536
|
14,892
|
|
Year 2
|
13,989
|
1,388
|
12,601
|
|
Year 3
|
15,870
|
1,771
|
14,099
|
|
Last
quarter
|
3,336
|
314
|
3,022
|
Ms. Dagenais presumed that all the litres
of wine and beer purchased (minus the allowances granted) had been sold, since
the financial statements (Exhibit A‑3) indicated very little variance in
inventory from year to year.
g.
Ms. Dagenais multiplied
the respective quantities of wine and beer acquired and considered sold by the
appellant (namely, the purchases minus the allowances) by the respective ratios
mentioned at sub-paragraphs i, ii and iii above for each of the years, 1, 2 and
3 and for the last quarter of relevant period;
h.
The total of taxable
supplies made by the appellant Ms. Dagenais so reconstructed for the relevant
period is $6,224,099.33, namely $2,071,693.99 for year 1 (14,892
litres x $139.11), $1,752,986.82 for year 2 (12,601 litres x
$139.11), $1,961,377.63 for year 3 (14,099 litres x $139.11) and
$437,950.88 for the last quarter of relevant period (3,022 x $144.94). I
immediately note that the appellant's financial statements (Exhibit A‑3)
and its net tax reports indicate that the appellant made total sales of
$4,546,176.47 during relevant period, representing a gap of $1,677,832.90, thus
the increase in GST assessed of
$117,441.81 ($1,677,832.90 x 7%).
[11]
Only Ms. Dagenais
testified in support of the respondent's position. Ms. Edoardi, Mr.
Rahimi, Mr. Schait and Giovanni Assalone, the appellant's head chef, testified
in support of the appellant's position.
Mr. Rahimi's testimony
[12]
Mr. Rahimi essentially
testified as follows:
a.
Mr. Rahimi has worked
for the appellant for more than 20 years. Mr. Rahimi explained that
he had practically been the appellant's sole director for the past
12 years since Ms. Edoardi (the appellant's sole shareholder and
administrator) had delegated almost all her powers regarding the administration
of the appellant's business;
b.
Ms. Edoardi's son
regularly stole wine and money that belonged to the appellant during the relevant
period. Mr. Rahimi added that Ms. Edoardi's son, who had drug problems,
had assaulted him twice during the relevant period;
c.
During the relevant
period, 10% to 15% of the appellant's sales were paid in cash. Mr. Rahimi
explained that 95% of this cash was related to the appellant's delivery
service. I note that the claims made by Mr. Rahimi on this subject are not
supported by any documentary evidence. Lastly, Mr. Rahimi explained that this cash
was used to pay for the appellant's smaller expenses and for the servers' tips;
d.
During year 2, the
company Investissements Romana Inc. (the shares of which were then held by Ms.
Edoardi) spent $1.2 million on renovations on the building it owned and in
which the appellant's restaurant was run. Mr. Rahimi added that in year 2, the
appellant made leasehold improvements (including the construction of beer and
wine cellars) worth $70,000 to the same building and purchased equipment worth
$70,000 (including a surveillance system). Mr. Rahimi explained that the
leasehold improvements and the equipment purchased were mainly aimed at limiting
thefts of wine at the restaurant. Lastly, Mr. Rahimi explained that the
renovation work at the restaurant took place over a period of around nine
months and a significant quantity of wine and beer, as well as the appellant's
computer were stolen during the renovations. Mr. Rahimi also testified
that the restaurant had only operated at around 66% of its potential during year
2 given the extent of the renovation work that year. I immediately note that
the financial statements of years 1 and 2 (Exhibit A-3) do not show that thefts
of wine and beer were significantly higher during year 2 than year 1. In
fact, it is difficult to reach such a conclusion since the amount of sales in
year 2 is essentially the same as that in year 1, and wine purchases ($152,095
in year 1 and $154,232 in year 2), sales ($1,336,325 in year 1 and
$1,296,738 in year 2) and the year-end inventory are essentially the same
for those two years. I also note that Mr. Rahimi's testimony, that the
restaurant operated at 66% of its potential in year 2 (renovation year), does
not correspond to the results in the appellant's financial statements (Exhibit
A-3). Indeed, in a restaurant that, before renovations, had sales with little
variation from year to year ($1,288,364 during the 2002 fiscal year and
$1,336,326 in year 2) and where the prices of the food sold (admitted by
Mr. Rahimi himself) were practically the same for these three fiscal
years, it might be expected that the sales from year 2 (renovation year) would
be significantly lower than those of the two preceding fiscal years. I would
add that Mr. Rahimi's inability to explain why sales did not drop in year 2
compared to sales from the preceding fiscal years created significant doubt in
my mind as to his credibility—this was the person responsible for managing the
appellant—and the reliability of the appellant's financial statements;
e.
there was almost no
change in the price of the food the appellant sold during relevant period;
f.
Mr. Rahimi consumed one
bottle of wine per day with the appellant's servers at its restaurant. I must
note that Mr. Rahimi's testimony on this was not supported by the testimony of
the servers who allegedly received this benefit offered by the appellant. I
also note that the appellant did not keep any books during the relevant period
in which it is supposed to have noted its promotional activities or benefits
offered. Lastly, I note that Mr. Rahimi's testimony on this was somewhat
contradicted by Ms. Dagenais' testimony, the credibility of which does not
raise doubts in my mind. Ms. Dagenais testified that on May 4, 2006 (during
negotiations) Mr. Rahimi had stated he consumed an average of one bottle of
wine per week at the restaurant;
g.
the appellant gave each
head chef two beers per day during relevant period. I note that Mr. Rahimi's
testimony on this was not supported by the appellant's head chefs who are
supposed to have received this benefit offered by the appellant;
h.
at Mr. Rahimi's
request, the appellant's servers (there could have been up to 120, according to
Mr. Rahimi, in any given year during the relevant period considering the high
turnover rate of servers working for the appellant) tasted the wines on the
appellant's wine list (in particular the new wines) so that they could better
advise the appellants' clients in their choice of wine. Mr. Rahimi explained
that before the restaurant's renovations, around 10 such bottles of wine were
consumed by the appellant's servers per month and after the renovations, this
type of consumption was closer to 150 litres per year. I immediately note that
Mr. Rahimi's testimony on this point was in no way supported by the servers who
allegedly tasted the appellant's wines. I would add that part of Mr. Rahimi's
testimony was contradicted by Ms. Dagenais' more credible testimony. She
testified that her verifications allowed her to confirm that the maximum number
of T-4 forms issued in a given year during the appellant's period in question
was significantly lower than the 120 suggested by Mr. Rahimi;
i.
Ms. Dagenais never
asked Mr. Rahimi to explain the gap between the appellant's sales in year 3 as
indicated both in the financial records and the net tax and sales reports
recorded in the annual summary of sales by item (see Exhibits I‑5 and I‑25).
I would note that the annual summary of sales per item that the appellant gave
to Ms. Dagenais established the appellant's sales at $1,408,702.39 for year 3,
whereas the financial statements and net tax reports established the appellants
sales at $1,505,203 for the same period;
j.
on average, three
employee parties were held at the restaurant. Mr. Rahimi explained that
during these parties, wine and beer were provided by the appellant free of
charge. I immediately note that Mr. Rahimi did not specify the quantity of
wine and beer consumed during these alleged parties organized for the
appellant's employees. Once again, Mr. Rahimi's testimony was not supported
by the testimony of the employees who would have enjoyed this benefit.
[13]
The appellant must be
aware that a judge is not required to believe a witness who is not
contradicted. In fact, this non-contradicted testimony can be deemed unlikely
under the circumstances set out by the evidence and according to common sense.
It is even more difficult for a judge to believe a witness when his version of
the facts is contradicted by an element of objective evidence or by the
testimony of a credible witness, and when he merely makes general, often
unverifiable, statements, and provides evasive and ambiguous explanations. In
such a case, it is hard to grant any probative value to that witness's
testimony when it is unsupported by serious documentary evidence or by the
testimony of independent and credible witnesses. In this case, Mr. Rahimi's
version of the facts regarding the particularly high theft rate of wine and
beer in year 2, and regarding the way the restaurant operated that year, at 66%
of its potential, is contradicted by objective evidence. Mr. Rahimi was unable
to explain the inconsistencies between his version of the facts on this subject
and the financial statements (Exhibit A‑3). Additionally, his
version of the facts regarding the number of servers (120) who worked at the
restaurant in a given year during relevant period was contradicted by credible
testimony by Ms. Dagenais. His testimony that he only recently realized
that Ms. Dagenais had established the $139.11 ratio for year 3 from the annual
summary of sales by item (Exhibit I‑5) is highly unlikely under the
circumstances. I recall that Mr. Rahimi's testimony on this was also
contradicted by Ms. Dagenais' testimony, and I do not question her credibility
at all. Most of the time, Mr. Rahimi was happy to make general and unverifiable
statements. For all these reasons, I grant little probative value to Mr.
Rahimi's testimony.
Mr. Schait's testimony
[14]
From Mr. Schait's
testimony I note that:
a.
Mr. Rahimi took
inventory only at the end of each year in the relevant period. Mr. Schait
explained that the information from these inventory takings was given to him
verbally by Mr. Rahimi, then noted in the appellant's financial records
(Exhibit A‑3);
b.
he had all the
appellant's monthly sales summaries (except for three or four months) for the relevant
period;
c.
he was unable to
provide Ms. Dagenais details for each of the food bills for years 1 and 2
because this information was simply not available. He also explained that he
could not provide annual or monthly sales summaries by item for years 1 and 2
that were as detailed as those provided by the appellant for year 3 and the
last quarter of the relevant period (Exhibits I‑5 and I‑6) because
the appellant had not prepared any such summaries before year 3;
d.
after the renovation
work at the restaurant, the appellant's sales increased, the cost of sales
decreased and, as a result, its profit increased.
e.
Ms. Dagenais never
asked for an explanation of the gap between the appellant's sales in year 3
that were in the financial records and those in its net tax reports and sales
recorded in the annual sales summaries by item (Exhibits I‑5 and I‑25).
Ms. Edoardi's testimony
[15]
From Ms. Edoardi's
rather emotional testimony, we learn that:
a.
she is illiterate;
b.
she delegated
management of the restaurant to Mr. Rahimi, in whom she had full trust;
c.
her role in the
appellant's business was essentially to welcome clients and take care of the
employees.
Analysis and conclusion
[16]
In regard to the
appellant's claim that it was unwarranted for the Minister to use an indirect
audit method since the books and records were adequate and well kept, my
comments will be brief. The appellant must understand that the Minister may be
justified in using an indirect audit method for a taxpayer's affairs even if
the books and records appear to be adequate and well kept on the surface. In
fact, these books, records and financial statements must be reliable. How could
the appellant claim that in this case the books, records and financial
statements are reliable when it submitted the annual summaries (Exhibits I‑5
and I‑25) of sales by item for year 3 that indicate sales that are
substantially different from those in its own financial statements and its own
net tax reports for the same period? How can the appellant claim that its
books, records and financial statements are reliable when it has no
documentation in support of its inventory taking? How can the appellant claim
that its books, records and financial statements for year 1 and year 2 are
reliable when it cannot provide the Minister with the food bills or details of
these bills for the two years? How can the appellant claim that these books,
records and financial statements are reliable when, for each of the periods in
relevant period, there is a significant gap between the purchases and the sales
of beer and wine considering how little variation there was in its inventory
from one year end to another? I immediately note that I do not believe the
testimony of Messrs. Rahimi and Schait that Ms. Dagenais never asked them
to explain the gap between the appellant's sales as noted in the annual
summaries of sales by item for year 3 (Exhibits I‑5 and I‑25)
and those in its financial statements and net tax reports. Mr. Rahimi's
testimony that he only just recently noticed a gap of around $100,000 between
the appellant's sales in year 3 as noted in the annual summaries of sales by
item and those noted in the financial statements and net tax report do not seem
any more credible to me and is highly unlikely considering the many assessment
projects Ms. Dagenais presented to the appellant's representatives and the
ensuing negotiations. At any rate, the appellant had an excellent opportunity
to provide explanations about this gap and also to convince me that Ms.
Dagenais erroneously used the information in the annual summary of sales by
item for year 3 to establish the ratio of $139.11. The appellant preferred, for
reasons unknown to me, to not provide any explanations. When the financial
statements are not reliable, the taxpayer is at risk of an audit that could
lead the Minister to use less accurate methods to establish the amount of the
underestimated taxable supplies. It was warranted for the Minister in this
case, considering the evidence that was presented before me, to use an indirect
method.
[17]
With regard to the
appellant's claims that the indirect audit method used by the Minister is a
purely arbitrary and estimative method that does not have the required degree
of reliability, in particular regarding the completely unlikely results, my
comments will be just as brief. First, for year 3, it is difficult to claim
that the method the Minister used is purely arbitrary and estimative. In fact,
the ratio of $139.11 that the Minister used was derived from the annual summary
of sales by item, which the appellant gave to Ms. Dagenais. That the Minister
then multiplied the ratio of $139.11 by the number of litres of wine and beer
the appellant purchased that year (reduced by the number of litres of wine and
beer as allowances for loss, breakage, bonuses, premiums, promotions and
kitchen use) is hardly estimative and arbitrary, considering the number of
litres of beer and wine the appellant purchased that year was not challenged
and considering the appellant's financial statements clearly show that there
was little variation in inventory from one year to another during relevant
period. In fact, the only element of the method the Minister used to establish
the sales for year 3 that is estimative in this case is the number of litres of
wine and beer the Minister granted as allowances for loss, breakage, bonuses,
premiums, promotions and kitchen use. In this case, the Minister granted an
allowance equal to around 14% of the litres of wine and beer purchased by the
appellant that year. In other words, the Minister presumed that only 84% of the
litres of wine and beer purchased in year 3 were sold that year. On this, I
feel that the allowance of 14% the Minister granted is more than generous under
the circumstances. Granting a more generous allocation would, in my opinion, be
a purely arbitrary decision considering the evidence the appellant provided on
this subject. In fact, the appellant's evidence on this came solely from Mr.
Rahimi's testimony (aside from the allowance for the wine used in the kitchen,
where Mr. Rahimi's testimony was supported by that of Giovanni Assalone, the
appellant's head chef). Further to this testimony, the Minister granted an
additional allowance for this purpose during the hearing. Considering my
previous conclusion that I find it difficult to grant any probative value to
Mr. Rahimi's testimony when not supported by reliable documentary evidence
or credible and independent witness testimony, it is difficult for me to grant
an additional allowance to the appellant.
[18]
In regard to the last
quarter of relevant period, it is hard to claim that the method the Minister
used is purely arbitrary and estimative. In fact, the ratio of $144.94 the
Minister used was derived from the appellant's quarterly summary of sales by item
for the last quarter of relevant period, given to Ms. Dagenais by the
appellant's representatives (Exhibit I‑6). On this point, I note
that the appellant's sales for this period as indicated in the quarterly
summary of sales by item are the same as those in the appellant's net tax
report for that same period. That the Minister then multiplied the ratio of
$144.94 by the number of litres of wine and beer the appellant purchased that
year (reduced by the number of litres of wine and beer as allowances for loss,
breakage, bonuses, premiums, promotions and kitchen use) to reconstruct the
appellant's sales is hardly estimative and arbitrary, considering the number of
litres of beer and wine the appellant purchased that year was not challenged.
In fact, the only element of the method the Minister used to establish the
sales from that period that is estimative and challengeable is the number of
litres of wine and beer the Minister granted as allowances for loss, breakage,
bonuses, premiums, promotions and kitchen use. In this case, the Minister
granted an allowance equal to 9.44% of the litres of wine and beer the
appellant purchased during this period. In other words, the Minister presumed
that only 91.56% of the litres of wine and beer the appellant purchased during
this period were sold during that period. The appellant's evidence on this came
solely from Mr. Rahimi's testimony, to which I granted little probative value.
It would therefore be difficult for me to grant an additional allowance to the
appellant.
[19]
As for years 1 and 2,
the Minister reconstructed the appellant's sales by using a method that is
certainly arbitrary and estimative in that it relied on a ratio of $139.11,
established using the annual summary of sales by item for year 3, given to Ms. Dagenais
by the appellant's representatives; this ratio, I will restate, was used by the
Minister to reconstruct the appellant's sales for year 3. In this case, if the
appellant hoped to succeed, it should have at least raised serious doubt as to
the method the Minister used, in which case the burden of proof would have been
reversed. In this case, evidence the appellant presented to raise serious doubt
has little probative value because it relies essentially on Mr. Rahimi's
testimony, which lacks credibility; he was content to make general statements
on the subject. Moreover, counsel for the appellant claimed that the method the
Minister used is not reliable because it yields unlikely results considering
the nature of the appellant's activities. On this, counsel for the appellant
reminded the Court that Mr. Rahimi's testimony indicated that the percentage of
the appellant's sales in cash never exceeded 85% and that 95% of the sales paid
in cash were generated by his delivery service. However, counsel for the appellant
claimed it was unlikely that undeclared sales of $1,371,516 for relevant period
(that were necessarily paid in cash since, according to the evidence, only
sales paid in cash can be hidden from the tax authorities) were generated by
the appellant's delivery service. In other words, counsel for the appellant
claimed that it is unlikely that the appellant generated that many cash sales
during relevant period. If the appellant had presented reliable documentary
evidence regarding the percentage of sales paid by credit card, in terms of the
percentage of sales generated by its delivery service, its sales at the counter
an in the dining room, it could have shown that the method the Minister used
was not reliable because it gave unlikely results. In this case, the
appellant's evidence was essentially based on Mr. Rahimi's testimony, to which
I granted little probative value. In general, serious doubt cannot be raised
regarding the method the Minister used by merely making general and
unverifiable statements.
[20]
The appellant could
also have succeeded regarding years 1 and 2 by showing that the allowances the
Minister granted were inaccurate. However, the appellant's evidence on this was
essentially based on Mr. Rahimi's testimony, to which I granted little probative
value. I note that only one witness supported Mr. Rahimi's testimony regarding
the additional allowances the appellant declared. Mr. Assalone's testimony
supported that of Mr. Rahimi regarding the litres of Fontana/Bottero type wine
the appellant used in the kitchen during the first three years of relevant
period. I note that the respondent had made an admission during the hearing
regarding the wine the appellant used in the kitchen following Mr. Assalone's
testimony.
[21]
For these reasons, the
appeal is allowed, without costs, to take into consideration the Minister's
admission at paragraph 3 of these reasons.
Signed at Ottawa, Canada, this 22nd day of June 2010.
"Paul Bédard"
Translation
certified true
on this 7th day of
January 2011.
François Brunet,
Revisor
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