A
J
Frost
(orally:
June
17,
1977):—I
shall
now
give
my
decision
in
Appeal
No
77-318
between
Mr
Gordon
LeRoux,
appellant,
and
the
Minister
of
National
Revenue,
respondent.
This
is
an
income
tax
appeal
in
respect
to
penalties
levied
by
the
Minister
of
National
Revenue
for
the
1971,
1972,
1973
and
1974
taxation
years.
The
appellant
did
not
keep
adequate
books
of
account
of
his
business
affairs
and
did
not
fully
report
his
income.
An
investigation
by
the
Department
of
National
Revenue
indicated
a
discrepancy
of
$47,041.
A
subsequent
investigation
by
the
firm
of
H
R
Doane
and
Company,
chartered
accountants
on
behalf
of
the
appellant,
revealed
that
this
amount
was
overstated
by
$22,246,
reducing
the
discrepancy
to
$24,795.
The
investigation
by
H
R
Doane
and
Company
discovered
other
discrepancies
including
a
term
deposit
of
$30,000
and
a
second
residence
valued
at
$25,000.
These
items
were
voluntarily
disclosed
and
added
to
the
total
income
of
the
taxpayer
for
the
four
taxation
years
under
appeal.
On
the
evidence
I
find
the
appellant
was
negligent,
but
not
grossly
negligent.
I
have
reached
this
conclusion
on
the
basis
of
the
appellant’s
lack
of
experience
in
tax
matters
and
because
he
gave
the
special
investigator
what
records
he
had
including
a
written
direction
to
the
bank
to
give
the
departmental
auditor
whatever
he
asked
for.
The
Board
gives
some
weight
to
the
voluntary
disclosures
by
the
taxpayer.
However,
I
would
emphasize
again
that
Mr
LeRoux
was
negligent
but,
nevertheless,
I
allow
the
appeal
on
the
basis
that
he
was
not
grossly
negligent.
For
these
reasons
the
appeal
is
allowed
and
the
matter
referred
back
to
the
respondent
for
reconsideration
and
reassessment
accordingly.
Appeal
allowed.
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