Roland
St-Onge:—The
appeal
of
Mr
James
S
Robb
came
before
me
on
September
12,1979
at
the
City
of
London,
Ontario.
It
deals
with
the
assessment
of
a
penalty
under
subsection
163(2)
of
the
Income
Tax
Act,
SC
1970-71-72,
c
63,
as
amended,
with
respect
to
the
appellant’s
1976
taxation
year.
In
that
year,
the
appellant,
a
farmer,
failed
to
include
the
amount
of
$20,000
which
he
received
from
the
sale
of
40
head
of
cattle.
The
respondent
reassessed
the
appellant
on
the
following
findings
of
facts
at
paragraph
4
of
the
reply
to
the
notice
of
appeal:
(a)
the
appellant
reported
in
his
return
of
income
for
the
year
an
amount
of
$9,804.92
as
income
from
farming.
(b)
the
appellant’s
income
for
the
year
from
farming
was
$29,804.92.
(c)
the
appellant
failed
to
include
in
filing
his
return
of
income
for
the
1976
taxation
year
an
amount
of
$20,000
from
the
sale
of
40
steer
to
the
London
Meat
Market
Limited.
(d)
the
appellant
“knowingly”
or
under
circumstances
amounting
to
gross
negligence,
participated
in,
assented
to
or
acquiesced
in
the
making
of
a
false
statement
in
his
return
filed
for
the
1976
taxation
year.
At
the
hearing,
the
appellant
testified
that
in
1976
he
was
reporting
his
income
on
a
calendar
year
basis;
that
at
the
end
of
June
1976
he
sold
40
head
of
cattle
in
a
single
transaction
for
the
amount
of
$20,000;
that
he
did
not
deposit
this
money
as
usual
in
his
current
account
but
used
it
to
purchase
a
term
deposit
in
the
amount
of
$20,000;
and
finally,
in
that
year,
he
made
four
big
cattle
transactions.
On
the
other
hand,
the
witness
for
the
respondent
referred
to
a
document
of
the
London
Meat
Market
Limited
under
the
title
of
“Purchased
Cattle
from
Individuals’’.
Under
the
appellant’s
name,
there
are
the
following
transactions:
(1)
March
15,
1976,
sold
20
steers,
one
cow
and
calf
for
$9,350.
Cheque
negotiated
at
Royal
Bank
on
March
18,
1976.
(2)
July
16,
1976
sold
41
steers
for
$16,800,
cheque
negotiated
at
Royal
Bank
on
July
19,
1976.
(3)
June
30,
1976,
sold
40
steers
for
$20,000,
cheque
negotiated
at
Royal
Bank
July
5,
1976.
(4)
September
24,
1976,
sold
24
cattle
for
$5,200,
cheque
negotiated
at
the
same
bank.
As
may
be
seen,
the
largest
transaction
for
the
1976
taxation
year
was
the
one
under
discussion.
There
is
no
evidence
to
show
that
the
omission
was
due
to
the
fault
of
the
bank
or
the
appellant’s
representative.
According
to
the
evidence
adduced,
the
respondent
has
substantiated
all
the
allegations
in
his
reply
to
the
notice
of
appeal
and
the
appellant
neglected
to
report
two-thirds
of
his
total
income
in
1976.
This
constitutes
gross
negligence
within
the
meaning
of
subsection
163(2).
It
is
inconceivable
that
such
a
substantial
amount
of
income
would
have
gone
unnoticed
by
a
taxpayer.
Furthermore,
the
appellant
was
grossly
negligent
in
keeping
track
of
his
income.
For
all
these
reasons,
the
appeal
is
dismissed.
Appeal
dismissed.
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