Addy,
J:—The
appeal
involves
the
disallowance
by
the
respondent
of
certain
expenses
claimed
by
the
appellant
taxpayer
for
the
1972
taxation
year.
The
latter
had
worked
for
part
of
the
year
as
a
financial
controller
for
Diamond
Flooring
Ltd,
a
family
company
specializing
in
concrete
and
plastic
floor
designs
and
installations.
For
part
of
the
year
he
also
worked
for
another
party
as
a
commission
agent
earning
$1,117.92
in
commissions.
Whilst
employed
by
Diamond
Flooring
Ltd
he
also
performed
services
as
an
accountant
for
other
parties
and
firms
on
a
fee
basis.
His
services
consisted
of
preparing
income
tax
statements
for
the
claimants.
He
declared
earnings
of
$1,200
from
this
last-mentioned
source.
The
case
turns
to
a
considerable
extent
on
a
question
of
credibility.
In
view
of
the
many
contradictions
in
his
evidence
and
of
his
evasiveness
under
cross-examination,
I
largely
reject
his
testimony
as
to
expenses
allegedly
incurred.
He
changed
his
figures
several
times
during
his
testimony.
The
evidence
was
at
times
so
vague
and
disjointed
and
was
presented
in
such
a
fragmented
and
haphazard
fashion
that
it
seemed
as
if
the
appellant
was
making
a
conscious
effort
to
confuse
the
issue
before
the
Court
and
was
completely
disregarding
the
fact
that
the
onus
of
proof
rested
on
him
and
not
on
the
respondent.
The
vagueness
in
the
presentation
and
proof
of
the
figures
was
all
the
more
surprising
due
to
the
fact
that
the
taxpayer
earned
part
of
his
revenue
in
preparing
annual
income
tax
returns
for
other
persons.
He
obviously
possessed
considerasble
experience
in
accounting
and
in
dealing
with
financial
matters
and
one
cannot
explain
the
situation
by
a
lack
of
knowledge
or
of
skill
on
his
part.
The
deductions
claimed
were,
in
my
view,
grossly
exaggerated
and
inflated.
Many
of
them
were
not
established
by
bill,
voucher,
record
of
payment
or
any
other
form
of
documentary
evidence.
The
appellant
claimed
repairs
of
some
$5,000
during
the
year
for
an
automobile
the
book
value
of
which
was
$2,500.
Of
the
total
automobile
and
transportation
expenses
of
$8,300
there
was
no
documentary
substantiation
whatsoever
for
some
$3,800.
In
other
general
expenses
claimed
a
similar
situation
existed.
He
maintained
that
his
various
duties
for
Diamond
Flooring
Ltd
entailed
travelling
frequently
to
Ottawa
during
the
year.
Yet,
he
was
unable
to
produce
a
single
bill
covering
any
expense
incurred
in
Ottawa.
His
return
reflected
the
following:
total
rental
income
$2,564.72
with
total
expenses
$4,694.71,
for
a
net
loss
of
$2,129.
Total
revenue
referred
to
in
paragraph
1
above
amounted
to
$11,336.91
and
total
expenses
amounted
to
$9,346.50
for
net
earnings
of
$1,990.41
from
these
last-three
mentioned
sources
for
the
entire
year.
The
appellant
attempted
to
make
much
of
a
letter
dated
December
28,
1972,
produced
at
trial
as
Exhibit
P-1.
This
letter
was
signed
by
John
Pittaro
as
Vice-President
of
Diamond
Flooring
Ltd.
After
hearing
Mr
Pittaro
testify
at
trial,
as
well
as
the
appellant,
I
am
not
at
all
satisfied
that
the
duties
which
the
latter
performed
for
Diamond
Flooring
Ltd
in
any
way
required
that
he
maintain
an
office
or
any
office
equipment
at
his
residence.
The
letter
was
prepared
by
the
appellant
for
income
tax
purposes
and
was
presented
to
Mr
Pittaro
for
signature,
who
testified
that
he
had
never
requested
that
Mr
Deutsch
work
at
home
and
was
not
aware
of
his
being
requested
to
do
so
by
any
other
person
on
behalf
of
Diamond
Flooring
Ltd.
Although
some
of
the
appellant’s
work
for
the
preparation
of
income
tax
returns
for
which
he
earned
fees
totalling
$1,200
was
probably
done
at
his
residence.
I
find
that
he
was
not
required
to
do
any
office
work
at
home
for
his
employer,
although
he
was
required
to
travel.
I
also
find
on
a
balance
of
probabilities
that
he
was
required
to
use
his
own
car
and
pay
his
travelling
expenses
whilst
working
for
Diamond
Flooring
Ltd
and
whilst
earning
his
fees
aS
an
accountant
and
his
commission
revenue.
Since
he
only
used
the
office
at
his
residence
for
doing
part
of
the
work
involved
in
preparing
income
tax
returns
(most
of
which
work
would
undoubtedly
have
been
carried
on
at
his
clients
place
of
business
or
residence)
and
perhaps
also
for
making
certain
phone
calls
pertaining
to
commission
business,
both
activities
having
produced
a
total
of
$2,317
gross
income,
the
following
charges
regarding
office
expenditures
namely
$629.01
for
rental
of
office
equipment,
$415.15
for
telephone
and
telegram,
$374.11
for
office
supplies
and
$237.77
depreciation
on
furniture,
are
totally
unreasonable
and
would
not
have
been
incurred
by
a
businessman
of
his
obvious
experience.
This
produces
a
total
income
of
only
$662
after
deducting
only
the
office
expenses
and
takes
no
account
of
his
car
and
any
other
expenses.
The
utter
confusion
makes
it
almost
impossible
to
determine
with
any
degree
of
accuracy
the
precise
amount
of
expenses
actually
incurred
in
earning
income
as
reported.
I
do
feel,
however,
after
hearing
all
of
the
evidence
that
the
Minister’s
assessment
now
appears
to
be
somewhat
low.
Having
regard
to
all
of
the
circumstances
(including
his
use
of
the
car
for
personal
reasons),
I
find
that
what
has
been
established
on
a
balance
of
probabilities
as
expenses
which
can
legally
be
claimed
as
incurred
for
the
purpose
of
earning
income
in
accordance
with
the
Act
would
be
$3,462.08
in
lieu
of
$1,117
as
originally
assessed
by
the
Minister.
This
figure
includes
the
depreciation
of
$724.31
claimed
on
the
automobile
and
$237.77
claimed
on
the
furniture
and
fixtures.
The
matter
will
therefore
be
referred
back
to
the
Minister
for
reassessment
on
that
basis.
In
view
of
the
fact
that
the
original
assessment
made
by
the
Minister
in
1973
was
more
than
fair
having
regard
to
the
information
available
at
that
time
and
having
regard
to
the
fact
that
it
was
only
at
or
about
the
time
of
the
trial,
some
six
years
later,
that
definite
information
was
supplied
by
the
Appellant
which
would
have
permitted
some
form
of
reassessment,
he
shall
not
be
entitled
to
any
costs.
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