[OFFICIAL ENGLISH TRANSLATION]
2000-1079(IT)I
BETWEEN:
JOUMANA DARGHAM,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on May 14, 2001, at Montréal, Quebec, by
the Honourable Judge Alain Tardif
Appearances
For the Appellant: The Appellant herself
Counsel for the Respondent: Simon Crépin
JUDGMENT
The appeal from the assessments made under the Income Tax Act for the 1992 and 1993 taxation years is dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 14th day of August 2001.
|
"Alain Tardif" |
J.C.C.I.
Translation certified true
on this 12th day of February 2003.
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
Date: 20010814
Docket: 2000-1079(IT)I
BETWEEN:
JOUMANA DARGHAM,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Tardif, J.T.C.C.
[1] This is an appeal from an assessment made outside of the three-year period provided for under subsection 163(2) of the Income Tax Act (the "Act").
[2] The assessment under appeal concerns two receipts for gifts of $2,000 and $4,000 which the appellant claims she made to the Ordre libanais des Maronites for the 1992 and 1993 taxation years respectively.
[3] The assessments were made following a major investigation which uncovered a downright fraudulent organization in which a number of taxpayers were involved.
[4] Abundant documentation confiscated through a search conducted as part of an investigation revealed that the Ordre libanais des Maronites had put in place a veritable network for the sale of charitable receipts.
[5] In general terms, the investigation showed that the Maronite community issued receipts for gifts the actual paid amount of which was usually approximately 20 percent of the amount stated on the receipt.
[6] The persons involved were often professionals with large incomes, and word of mouth was very effective in developing the fraud ring. The investigation also revealed that taxpayers with more modest incomes also participated in the scheme.
[7] The organization was, beyond a doubt, well structured and able to collect large sums of money, in return for which receipts showing substantially larger amounts than those actually received were issued. What is more, it was observed in a number of cases that receipts were even prepared and issued to individuals who had paid nothing at all but had undertaken to make a payment upon receiving a tax refund based on the false and misleading receipts.
[8] The evidence also showed that the fathers of the Ordre libanais des Maronites clearly had few scruples and a highly elastic conscience. One of them deliberately lied when he told the auditor, Colette Langelier, that premises which she had wanted to visit in conducting her investigation were essentially private and contained nothing that was useful and/or used for administrative purposes.
[9] During the searches, it was discovered that those same premises housed an array of office equipment of which abundant use was made in the illegal activities. It is therefore not surprising that the fathers in question disappeared when the investigation was completed and that none of them came to testify in order to help or cooperate with those who had received the receipts whose plausibility was questioned by the respondent.
[10] The investigation yielded highly conclusive and decisive results, to such an extent that, as a result of the audits, a number of persons who had received receipts admitted the fraud and cooperated with the authorities, while others readily accepted the reassessments issued.
[11] In the cases of some, including the appellant, who had received receipts issued by the Ordre libanais des Maronites, there was no direct evidence explicitly showing participation. This absence of direct evidence did not prevent the investigating auditors from claiming that all those who had received receipts issued by the Ordre libanais des Maronites had filed false and misleading receipts.
[12] In the instant case, the respondent adduced no direct evidence to discharge her burden of proof. Only circumstantial evidence was produced.
[13] Although such evidence clearly does not have the quality or objectivity of direct evidence, it can nevertheless constitute a backdrop against which one conclusion becomes more likely than another.
[14] The advantage of such circumstantial evidence for the appellant was that it enabled her to state that there was no direct evidence that she had not made the two gifts for which receipts had been issued by the Ordre libanais des Maronites. Consequently, she vigorously asserted that she had made the gifts, saying that the receipts were proof of what was stated thereon and that the Court could not disregard that fact.
[15] In support of her claims, she contended that her religion condemned such cheating and that she personally concurred in that condemnation. The appellant, who had recently arrived in Canada, testified that she was living with her brother and sister and, later, with friends; she had the cash to make such gifts and to be so generous since she was paying no rent and had minimum expenses.
[16] She contended that she had never spoken to her brother or sister about her gifts, that she had kept her contributions secret. The only persons aware of them were herself and the priests involved in the fraud; those priests moreover issued the two receipts showing the total gifts made. The amounts of the receipts obtained represented the total of a number of small cash gifts made during the year in which they were issued.
[17] At the end of each of the years in issue, the many small cash gifts were added up and a receipt for the total amount was then issued. As chance would have it, the totals were $2,000 and $4,000 for those years respectively.
[18] I found the appellant's discretion quite surprising for someone who shares many things with the members of her family, including matters pertaining to her finances. The appellant, who had never had a chequing account, said that she had turned to her brother when she needed to make a cheque. She indicated, moreover, that this was how she paid her taxes. She added that she did not remember very clearly, but her brother may very well have advanced her the money, just as it was possible that she gave her brother the corresponding amount when the cheques were issued to pay her taxes.
[19] She mentioned as being normal the fact that her brother advanced her money if, at the time the cheque was written, he was in a better financial position than she, thus showing by that testimony that the members of her family supported each other in financial matters.
[20] She shared an apartment for which she apparently did not pay her share of the rent. In short, there existed within the family harmony and great solidarity, which does credit to its members. In this context, did she keep to herself her amazing generosity, the consequences of which were important, significant and numerous both for her and her family unit, since they shared virtually everything? She deprived herself and possibly the members of her family of what was, considering her modest income, a large amount of money. While the gifts had significant tax consequences, they implied a cash disbursement and a significant net loss, assuming the gifts were actually made.
[21] In and of themselves, these are not decisive factors. However, they are certainly quite surprising, particularly since such discretion as that shown by the appellant has the advantage of not involving anyone in giving testimony.
[22] The appellant testified that she had kept detailed accounts regarding the status of her contributions; the small amounts were donated according to the funds she had available at a given time. She never indicated what the number of her contributions may have been or provided details as to the amounts. Where did the money used for the gifts come from? She asserted that it came from amounts withdrawn at an automatic teller machine and also from amounts withdrawn directly at the counter. In this regard, the appellant never made a single connection between a withdrawal and any gift. What became of the handwritten accounting used to record the details of the gifts? It was apparently destroyed once the receipt was issued and handed over.
[23] The auditor's analysis itemizing all the ATM withdrawals for the years in which the gifts were made established that the total amount of those withdrawals was less than the amount of the gifts, which were, having regard to the appellant's income, very large gifts.
[24] In rebuttal, the appellant hastened to say that the money for the gifts also came from large withdrawals made at the counter. However, the evidence revealed that the appellant had, on a few occasions, purchased drafts payable in U.S. currency, thus giving rise to a presumption that the large withdrawals may have been used to purchase that foreign currency. The appellant offered no explanations on the subject.
[25] Throughout the trial, the appellant often made comments or remarks suggesting that material things were of little interest to her. For example, she stated that her gifts were justified by gratitude; according to her, they were a fair return for having been able to receive scholarships, to obtain a considerable reduction in her tuition fees, and so on.
[26] However, in cross-examination it was shown that the appellant was clearly much more meticulous and pragmatic in the management of her finances than she wished to appear. She was moreover obviously uncomfortable when asked about the amount she had invested in a registered savings plan. Despite the evidence that large amounts had been withdrawn to purchase U.S. currency, no explanation was given.
[27] To my great regret, I do not possess the ability to discover the absolute truth. I must analyze, assess and reflect on the facts which the parties have put in evidence.
[28] The claim cannot be made that such an exercise is infallible in terms of the conclusion arrived at; it is essentially a process guided by the search for truth, a process in which, unfortunately, a great deal depends on perception and interpretation.
[29] In the instant case, I have made a certain number of observations. First, the appellant was much more informed than she wished to show. Although she described herself as a devoutly religious person, very much devoted to her church and setting little store by material things, it appears from the evidence that the appellant was much more organized than that. She kept a record of her many small cash gifts on a piece of paper which she says she destroyed once the receipts had been issued. She was never able to describe in detail any of the circumstances in which any one of the small cash gifts was made.
[30] The appellant repeated throughout her testimony that she had in fact made the gifts in return for which the receipts were issued. She was however unable to produce any document or witness to confirm or support her lone testimony, which, it should be pointed out, was very vague on a number of points. The appellant very frequently said that she did not remember exactly, and a number of her explanations were unclear and very sketchy.
[31] When the accuracy of the facts became uncertain or questionable, the appellant fell back on her religious principles, asserting that her conscience was clear. What is more, she said she was shocked and deeply distressed by the deceitful and fraudulent tactics of the Ordre libanais des Maronites. When certain highly relevant questions were put to her, she allowed herself to become aggressive.
[32] While it is theoretically a possibility-and I stress the word "possibility"-that the appellant's explanations are true, on a balance of probabilities the evidence does not support that view. If in fact the appellant was an innocent victim, as she repeated a number of times that she was, she should instead consider blaming those responsible for the fraud, if she was truly a victim thereof. What is more, saying she was angered by the swindle, the appellant even made so bold as to criticize Revenue Canada for not taking the necessary steps to put an end to the scheme of the Ordre libanais des Maronites from the moment it was first suspected.
[33] The circumstantial evidence adduced by
the respondent was substantial and coherent. Such evidence is of
course more fallible and more easily disputed or rejected than
direct evidence. In the instant case, however, the evidence was
substantiated and supported by various highly revealing tables.
Those tables and compilations, resulting from very elaborate
analyses, in my view form the basis for the conclusion that, on a
balance of probabilities, the appellant was involved
in and indeed benefited from the system put in place by the
Ordre libanais des Maronites. As a consequence, the appeal should
be dismissed.
Signed at Ottawa, Canada, this 14th day of August 2001.
|
"Alain Tardif" |
J.T.C.C.
Translation certified true
on this 12th day of February 2003.
Erich Klein, Revisor