M
J
Bonner:—The
appellant
appeals
from
assessments
of
income
tax
for
the
1974
to
1977
taxation
years
inclusive.
The
appeal
for
1977
was
aban-
doned
and
will
therefore
be
dismissed.
The
respondent,
by
his
counsel,
consented
during
the
hearing
of
the
appeals
to
judgment
allowing
the
appeal
from
the
assessment
for
the
1975
taxation
year
and
referring
the
assessment
back
to
the
respondent
for
reconsideration
and
reassessment
on
the
basis
that
the
deductions
claimed
for
the
support
of
non-resident
dependants
are
to
be
allowed
and
that
no
penalty
is
exigible.
Judgment
will
issue
accordingly.
The
appeals
for
1974
and
1976
remain
to
be
decided.
The
grounds
set
forth
in
the
notices
of
appeal
were
stated
to
be,
“The
disallowance
of
personal
exemptions
and
monies
paid
with
respect
thereto
for
dependent
children
and
wife’’.
As
a
lucid
notice
of
appeal,
this
leaves
much
to
be
desired.
The
appellant
was
born
in
India.
He
emigrated
to
Canada
in
1972
or
1973.
His
wife
and
children
remained
in
India.
The
appellant’s
parents
and
grandparents
remained
in
India
as
well.
In
1974
and
1976
the
appellant
claimed
deductions
in
respect
of
the
support
of
non-resident
dependants
as
follows:
|
Amount
|
Amount
|
|
Claimed
|
Claimed
|
Name
|
Relationship
|
1974
1974
|
1976
1976
|
Surinder
Kaur
|
Wife
|
$1,492
|
$1,830
|
Baljinder
Singh
|
Son
|
320
|
390
|
Sarvjit
Kaur
|
Daughter
|
320
|
390
|
Paviter
Singh
|
Son
|
|
390
|
Atma
Singh
|
Father
|
586
|
700
|
Mahan
Kaur
|
Mother
|
586
|
725
|
Thakur
Singh
(Mrs)
|
Grandmother
|
|
|
1,455
|
Thakur
Singh
|
Grandfather
|
|
Despite
the
allegation
in
the
reply
to
the
notice
of
appeal
that
the
1974
claims
in
respect
of
the
support
of
the
appellant’s
wife
and
two
children
were
allowed,
the
explanation
which
accompanied
the
reassessment
of
October
23,1979,
indicates
that
claims
in
respect
of
the
appellant’s
dependent
children
and
parents
were
disallowed
and
that
$927
of
the
$1,492
claimed
in
respect
of
the
appellant’s
wife
was
disallowed.
The
$565
allowed
appears
to
have
been
in
respect
of
a
payment
made
through
International
Express
Services
and
evidenced
by
a
receipt
dated
March
18,
1974,
a
copy
of
which
was
attached
to
the
appellant’s
income
tax
return.
The
remaining
1974
claims
were
supported
by
receipts
issued
by
Punjab
Express
Foreign
Exchange
Services
(hereinafter
called
“Punjab’’).
As
to
1976,
the
notice
of
assessment
made
December
13,
1977,
simply
states:
“Your
claim
for
non-resident
dependants
has
been
adjusted
based
on
information
available”
and
“Penalty
of
$246.93
levied
under
subsection
163(2)
of
the
Income
Tax
Act
is
included
in
Federal
Tax”.
The
reply
to
the
notice
of
appeal
indicates
that
all
claims
made
for
the
support
of
nonresident
dependants
were
disallowed
on
assessment.*
The
evidence
of
Noël
Blair,
one
of
the
respondent’s
assessors,
indicates
that
such
was
the
case.
Mrs
Blair
testified
as
well
that
the
1976
tax
return
included
receipts
from
Punjab
for
the
amounts
claimed
in
respect
of
all
dependants
other
than
the
grandparents
and
that
the
basis
of
the
disallowance
was
that
there
was
no
indication
in
the
records
of
Punjab
that
any
money
was
transferred
to
any
dependant.
I
should
note
that
the
copies
of
the
1976
returns
forwarded
to
the
Board
pursuant
to
subsection
170(2)
of
the
Income
Tax
Act
did
not
include
copies
of
any
Punjab
receipts.*
The
enigmatic
notice
of
appeal,
the
inaccurate
reply
and
the
incomplete
documents
do
nothing
to
clarify
what
happened
on
assessment
and
the
issues
which
arise
as
a
result.
However,
both
parties
approached
the
case
on
the
basis
that
the
issue
was
whether
the
appellant
did,
in
both
years,
send
monies
through
Punjab
as
claimed.
The
parties
agreed
that
the
evidence
given
by
Mrs
Blair
as
to
the
operation
and
records
of
Punjab
during
the
appeals
of
Iqbal
Sumbal
is
common
to
both
those
appeals
and
to
the
present
appeals.
I
will
therefore
repeat
the
summary
of
that
evidence
and
comments
thereon
as
set
forth
in
the
reasons
in
the
Sumbal
appeal:
Evidence
was
given
by
Mrs
Noël
Blair,
an
assessor
employed
with
the
Special
Investigations
Branch
of
the
Department
of
National
Revenue.
She
testified
that
she
was
a
member
of
a
team
of
investigators
who
looked
into
the
operations
of
Punjab.
It
was,
she
said,
a
business
which
received
money
in
Canada
and
elsewhere
for
transmission
to
persons
in
India.
As
well,
it
received
money
in
India
for
transmission
elsewhere.
Apparently
foreign
exchange
laws
of
that
country
prohibited
transactions
of
the
latter
type.
Thus,
monies
received
in
India
were
paid
to
persons
within
that
country
in
accordance
with
the
directions
of
off-shore
customers
and
equivalent
amounts
of
monies
received
off-shore
were
paid
in
accordance
with
the
directions
of
Indian
customers.
In
short,
the
operation
was
one
of
substitution.
The
respondent
seized
the
business
records
of
Punjab.
The
investigation
revealed,
according
to
Mrs
Blair,
that
although
the
business
had
operated
in
the
manner
described,
the
receipts
issued
in
Canada
exceeded
the
funds
actually
transferred.
Punjab
records
showed,
she
said,
no
indication
that
transfers
of
funds
were
made
by
it
or
on
behalf
of
or
at
the
behest
of
the
appellant.
The
proprietor
of
Punjab,
one
Gian
Singh
Johal,
pleaded
guilty
to
twenty-four
charges
of
providing
false
receipts
for
tax
purposes.
In
no
charge
was
the
appellant
alleged
to
be
a
recipient
of
a
false
receipt.
I
cannot
find
that
a
plea
of
guilty
by
a
person
who
is
not
a
party
to
this
appeal
establishes
that
all
Punjab
receipts
were
false
or
that
the
receipts
issued
to
the
appellant
were
false.
Equally,
I
can
place
no
reliance
on
the
state
of
the
facts
as
revealed
by
the
books
of
a
person
who,
had
he
been
called
as
a
witness,
would
undoubtedly
have
been
subject
to
a
successful
attack
on
credibility
based
at
least
on
the
conviction.
I
note
that
no
objection
was
made
to
the
admissibility
of
this
evidence.
In
any
event,
I
regard
it
as
utterly
useless.
I
should
add
that
here,
as
in
the
Sumbal
case,
there
was,
according
to
Mrs
Blair,
no
evidence
in
the
Punjab
register
of
funds
transferred
of
any
record
of
transfers
made
at
the
behest
of
the
appellant
during
1974
or
1976.
The
appellant
gave
evidence.
He
said
that
the
monies
sent
to
India
were
sent
through
Punjab
and
that
he
paid
Punjab
by
cheque.
A
copy
of
his
passbook
for
the
period
from
September
17,
1973,
to
July
15,
1974,
was
marked
as
Exhibit
A-1.
He
was
asked
about
a
number
of
cheques
noted
therein.
He
identified
two
entries,
February
18,
1974,
for
$630
and
July
11,
1974,
for
$540,
as
being
funds
sent
to
India.
The
entries
apparently
correspond
to
cheques
marked
as
Exhibit
A-2,
in
respect
of
which
no
claim
was
asserted.
The
payees
were
foreign
exchange
services
other
than
Punjab.
One
other
entry
dated
July
8,
1974,
being
a
cheque
in
the
amount
of
$500,
was
Said
to
relate
to
monies
paid
to
Punjab.
It
does
not
tally,
either
in
date
or
amount,
with
any
of
the
receipts
attached
to
the
return
of
income.
I
cannot
find
that
the
appellant
was
not
allowed
a
deduction
in
respect
of
any
expenditure
which
he
said
was
made
in
1974
and
in
respect
of
which
a
claim
was
disallowed.
I
cannot
regard
any
of
the
Punjab
receipts
attached
to
the
return
as
reliable
in
light
of
the
appellant’s
evidence
of
what
happened
in
1976.
The
appellant’s
evidence
as
to
support
payments
made
in
1976
was
that
he
went
to
India
on
October
24,
1975.
He
withdrew
$1,000
from
his
bank
before
leaving
and
converted
it,
together
with
$500
which
he
had
in
cash,
to
the
equivalent
amount
in
travellers
cheques
in
pounds
sterling.
In
India
he
cashed
the
travellers
cheques
and
received
13,000
rupees.
He
gave
2,000
rupees
to
his
wife
and
loaned
the
balance
to
Mr
Johal,
proprietor
of
Punjab.
There
was
no
indication
in
evidence
that
the
2,000
rupees
were
given
to
the
appellant’s
wife
in
1976.
There
was
also
no
indication
in
evidence
that
Mr
Johal
repaid
the
balance
to
the
appellant
by
paying
11,000
rupees
to
the
appellant’s
wife
at
any
time.
The
appellant
returned
to
Canada
on
February
27,
1976.
In
October
of
1976
the
appellant
said
he
gave
a
cheque
for
$1,500
to
Mr
Johal.
He
identified
the
entry
in
his
bank
passbook,
Exhibit
A-4.
The
appellant
did
not
say
that
this
money
was
sent
or
intended
to
be
sent
to
India
for
the
support
of
his
dependents.
Finally,
the
appellant
said
that
Mr
Johal
gave
him
receipts
dated
in
1976
in
relation
to
“extra
money”
paid
to
Johal
in
1975.
It
would
appear
that
receipts
issued
by
Punjab
cannot
be
regarded
as
accurate.
In
summary,
the
appellant
had
every
opportunity
to
testify,
as
it
was
in
his
interest
to
do,
that
he
had
paid
the
monies
claimed
in
1976
for
the
support
of
the
named
dependants.
His
failure
to
do
so
leads
me
to
conclude
that
the
monies
in
question
were
not
expended,
at
least
for
the
relevant
purposes.
The
appeals
for
1974
and
1976
are
therefore
dismissed.
Appeals
dismissed.