Tarsame Singh Burmi v. Minister of National Revenue, [1980] CTC 2706, 80 DTC 1621

D E Taylor:— This is an appeal heard in Toronto, Ontario, on June 27,1980 against income tax assessments for the taxation years 1974 and 1976 in which the Minister of National Revenue disallowed certain amounts claimed by the appellant for support of non-resident dependent relatives. The physical evidence provided by the taxpayer with regard to these disallowed amounts was in the form of receipts from “Punjab Express Foreign Exchange Services” (“Punjab”). Evidence of similar payments through other agencies (eg chartered banks) had been accepted by the respondent. It was the contention of the taxpayer that “he had submitted to the Income Tax Department all the necessary documentary evidence of the monies having been sent abroad for the support and maintenance of the Said dependents ...”. The position of the respondent was that he had “failed to provide any evidence to establish that the payments . . . were actually made in any manner”. Simply, the receipts allegedly from Punjab were not acceptable to the Minister.

The appellant himself testified that he had paid to Punjab the amounts claimed. Mr Gian Singh Johal, proprietor of Punjab, testified that he knew the appellant, that indeed he had received such money from him, and had in turn transmitted it to the relatives. Mr Johal agreed he had been charged with income tax evasion with regard to the operations of Punjab and had pleaded guilty to 24 counts of issuing false receipts. Mrs Blair, an officer of Revenue Canada, produced for the Board copies of the office records of Punjab upon which the Minister relied in disallowing the receipts in question—there was no record of the appellant’s funds as either received or transmitted by Johal. Mrs Blair explained that a thorough examination had been made of everything made available to the Minister from Punjab or Johal, and where there was evidence of proper transactions for other taxpayers, these amounts had been allowed. Punjab had about 2,000 clients and the income tax returns of some 1,300 clients had been adversely affected by the investigation. About 250 of these taxpayers had filed Notices of Objection and these Notices of Objection had been the basis for prosecution in about 80 cases. The Minister had accepted Mr Johal’s guilty plea in 24 cases, and further legal proceedings were discontinued.

Counsel for the appellant in argument proposed that the Board should not accept the proposition that this appellant (Burmi) necessarily fell among those whose claims should be disallowed—he clearly was not one of the final “24”, nor even one of the “80” referenced above.

Counsel for the respondent noted that if there had been any evidence whatever in the records of Punjab regarding this taxpayer’s disallowed receipts, the Minister would have taken that into account. Since that was not the case, the Minister was entitled to conclude that the appellant had not remitted the funds claimed, and further was guilty of an infraction of the law, and subject to the penalty which had also been imposed under section 163 of the Act.

The Board notes that Mr Johal had come to the hearing under difficult and embarrassing circumstances, and provided evidence in support of the appellant. However, this precise issue was dealt with in Dilbag Singh Mangat v MNR, [1980] CTC 2011; 80 DTC 1008, and there is nothing in the present appeal which I find distinguishable. In Mangat (supra), the Board commented at pages 2013 and 1010 respectively:

In stating this, and bringing forward evidence through a Revenue Canada investigator that an effort was made by the taxing officials to establish the bona tides of the payments claimed by the taxpayer, the Minister has fulfilled any reasonable obligation on his part to attempt to verify the deductions claimed by the appellant. Further, the Minister has evidence through earlier judicial proceedings against Punjab that at least some (certainly a major part) of the receipts issued by Punjab were improper.

And at pages 2014 and 1011 respectively:

It is inconceivable that he would be unaware of the questionable business practices of Punjab, and there is nothing from him to support a conclusion that he was any less familiar with the affairs of Toronto Express.

The appeal is dismissed and the penalties upheld with respect to both the years 1974 and 1976.

Appeal dismissed.