Kenneth D. Greenwood v. Minister of National Revenue, [1988] 2 CTC 2341

St-Onge, T.C.J. [Orally] December 10, 1987:—The appeals of Mr. Kenneth D. Greenwood were heard on the 2nd day of September, 1987 and on the 7th day of December, 1987, at the City of Saskatoon, Saskatchewan.

The issue in this matter is whether the appellant reported all his income from his 1973 to 1977 taxation years.

The respondent reassessed the appellant as follows at paragraphs 2 and 3 of the reply to notice of appeal:

2. By Notices of Reassessment dated October 3, 1979 in respect of the 1973, 1974, 1975 and 1977 taxation years and Notices of Reassessment dated October 3, 1979 and October 4, 1979 in respect of the 1976 taxation year, the Respondent adjusted the reported income of the Appellant for those years by, inter alia, adding previously unreported income in respect of profits from the sale of used vehicles as follows:

Year	Amount added to Income
1973	$5,921.96
1974	9,161.00
1975	6,643.56
1976	5,948.07
1977	945.00

3. In so assessing the Appellant for his 1973 through 1977 taxation years, the Respondent relied, inter alia, on the following assumptions of fact:

(a) That at all times material the Appellant carried on a business of buying and

selling used cars, an operation which he conducted from his residence.

(b) That in reporting his income for the 1973 through 1977 taxation years, the

Appellant failed to include as income profits from the said business.

(c) That in response to a request by the Respondent pursuant to paragraph 231(3)(a) of the Income Tax Act, the Appellant provided financial statements for the said business in respect of the years under appeal. Copies of these financial statements are attached hereto and marked Appendix A through E.

(d) That the profit from the said business for the years under appeal, as disclosed by the financial statements provided by the Appellant and as assumed by the Respondent in making his reassessments, was as follows:

Years under appeal	Profit
1973	$5,921.96
1974	9,161.00
1975	6,643.56
1976	5,948.07
1977	945.00

In his notice of appeal the appellant alleged that:

(1) some bank deposits were not from the sale of cars but from other sources;

(2) the net profit on sales of vehicles would amount to no more than a net of ten per cent of the purchase price.

During the hearing of these appeals, the Court realized that this case was not well prepared by counsel for the parties and suggested that they meet together.

At the second hearing, the Court learned that no meeting whatsoever had occurred between the lawyers and there was a feeling that this case could have been settled.

Consequently, the Court asked to see the appellant and the assessor and the case was settled on the following basis:

That the appellant would pay an additional federal income tax for the years under appeal of $5,952.15 and would not have to pay the penalties of $1,488.04 for the federal and $524.98 for the provincial.

On the 22nd of December 1987, the judgment was signed without mentioning to what extent the appeals were allowed.

For more precision, the appeals are allowed in accordance with the settlement between the appellant and the assessor which took place at the end of the second hearing of these appeals.

It was allowed, without costs, and the matter referred back to the respondent for reconsideration and reassessment on the basis that the appellant would pay federal income tax in the amount of $5,952.15 in settlement and that the penalties imposed pursuant to subsection 163(2) of the Income Tax Act for the said taxation years be deleted. In all other respects, the appeals are dismissed.

Appeals allowed in part.