M
J
Bonner:—The
appeals
of
Fred
Meikar
and
Tamara
Meikar
from
assessments
under
the
Income
Tax
Act
for
the
1976
taxation
year
were
heard
together
on
common
evidence.
In
both
cases
the
respondent
assessed
interest
and
penalties
under
subsections
161(1)
and
162(1)
respectively
because
the
returns
and
payments
which
accompanied
them
were
sent
late.
It
was
contended
that,
in
the
circumstances
outlined
below,
the
imposition
of
penalty
was
improper.
It
was
the
appellants’
position
that
the
failure
to
file
on
time
arose
from
inadvertent
and
inexplicable
human
error
in
the
office
of
the
appellants’
accountant
and
that
late
filing
was
not
the
result
of
any
default
of
the
appellants.
The
sole
witness
for
the
appellants
was
Walter
Kulyk,
the
appellants’
accountant.
He
had
prepared
the
returns
and
did
so
with
scrupulous
care.
He
advised
the
appellants
of
the
amounts
of
tax
owing.
The
appellants
then
come
into
his
office,
signed
the
returns
and
brought,
in
the
case
of
Mr
Meikar,
a
cheque,
and
in
the
case
of
Mrs
Meikar,
a
bank
draft,
payable
to
the
Receiver
General.
All
the
foregoing
was
done
on
or
before
April
30,1977.
Mr
Kulyk
then
gave
the
returns
and
instruments
of
payment
to
his
secretary
with
instructions
to
mail
them.
The
material
was
not
then
mailed
and
Mr
Kulyk
could
not
explain
how
the
failure
arose.
He
did
not
learn
of
it
until
the
situation
was
investigated
following
receipt
of
Mr
Meikar
several
months
later
of
a
demand
from
the
respondent
for
a
return.
It
was
the
appellants’
argument
that
they
neither
knew
nor
had
any
way
of
discovering
that
there
was
or
would
be
default
in
filing.
In
relying
on
Mr
Kulyk
they
followed
their
practice
of
former
years.
I
gather
there
had
been
no
previous
problem.
They
were,
it
was
submitted,
entitled
to
rely
on
their
accountant.
Subsection
162(1)
is
a
penal
section
which
does
not
apply
unless
there
is
an
intentional
failure
to
file.
The
appellants’
relied
on
the
decision
of
the
Exchequer
Court
of
Canada
in
Cyrus
C
Udell
v
MNR,
[1969]
CTC
704;
70
DTC
6019,
and
of
the
Federal
Court
of
Canada
in
MNR
v
Donald
M
Weeks,
[1972]
CTC
60;
72
DTC
6001.
On
behalf
of
the
respondent
it
was
argued
that
the
appellants,
in
effect,
sought
an
extension
of
the
time
for
making
a
return
and
that
this
Board
had
no
power
to
make
any
such
order.
In
this
regard
the
respondent
relied
on
The
Hughes-Owen
Company
(Limited)
v
MNR,
6
Tax
ABC
191;
52
DTC
161.
It
was
further
argued
that
the
respondent
alone
had
the
discretion
to
impose
or
not
impose
a
penalty
and
that
no
basis
was
shown
for
interference.
I
am
of
the
view
that,
save
in
a
case
where
the
amount
of
tax
upon
which
the
5%
penalty
has
been
calculated
has
been
shown
to
be
excessive,
it
is
not
open
to
this
Board
to
interfere
with
a
penalty
imposed
under
subsection
162(1)
unless
it
is
established
that
there
was
no
failure
to
make
a
return
on
time.
In
the
present
cases
the
quantum
of
tax
upon
which
the
penalty
was
calculated
was
not
in
dispute,
nor
was
the
fact
of
failure
to
make
a
timely
return.
The
argument
based
on
the
decisions
in
Udell
and
Weeks
cannot
succeed.
In
those
cases
the
decision
turned
on
an
analysis
of
former
subsection
56(2)
of
the
Income
Tax
Act
as
a
result
of
which
it
was
held
that
the
use
of
the
verb
“made”
required
a
finding
of
deliberate
and
intentional
consciousness
on
the
part
of
the
principal
of
the
act
of
his
agent.
Nothing
in
the
wording
of
subsection
162(1)
justifies
a
similar
analysis.
The
action
of
the
appellants
in
providing
their
accountant
with
instruments
of
payment
of
the
tax
payable
cannot,
of
course,
amount
to
payment
of
the
tax.
No
basis
has
therefore
been
shown
for
interference
with
the
assessments
of
interest
under
section
161.
It
is
unfortunate
indeed
that
the
appellants’
liabilities
suddenly
increased
due
to
a
human
error,
but
it
is
clear
that
such
relief,
if
any,
as
may
be
open
to
the
appellants
cannot
be
secured
by
an
appeal
under
the
Income
Tax
Act.
The
appeals
will
therefore
be
dismissed.
Appeal
dismissed.
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