Date: 20011114
Docket: 98-1205-IT-G,
98-131-IT-G
BETWEEN:
SHOEL ROSENHEK,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor Judgment
Beaubier, J.T.C.C.
[1] These appeals pursuant to the General Procedure were heard together on common evidence at Windsor, Ontario on October 19, 2001 and at Toronto, Ontario on October 24, 2001. The Appellant testified. The Respondent called Leon Schwartzberg, C.A. a technical advisor with Canada Customs and Revenue Agency ("CCRA").
[2] Appeal number 98-131(IT)G is for the Appellant's 1988, 1989, 1990 and 1991 taxation years. Appeal number 98-1205(IT)G is for the Appellant's 1988 taxation year.
[3] Respecting 1988, the Appellant stated in his Notice of Appeal that in May, 1993 he made a voluntary disclosure of receipts of two amounts, $79,738.95 and $70,476.15 for his 1988 taxation year which he received from two hospitals which he alleges were also reported in his income from Ontario Health Insurance Plan ("OHIP"). On April 7, 1993, he paid the Receiver General $2,000,000 on account of back taxes and interest respecting unreported income during the years under appeal. His appeals are for a reassessment for 1988 reducing his income taxes respecting these amounts which he believes were reported twice - first lumped into OHIP income which he received directly from OHIP and secondly as income he received from the two hospitals. He also wishes to recover the interest charged to him for the succeeding years respecting his failure to pay his 1988 income tax on these alleged duplicate amounts until April 7, 1993, to be reduced accordingly.
[4] CCRA's evidence in reply consisted of an accounting of funds respecting the sums in dispute.
[5] The hearing in Windsor was adjourned to Toronto because the Respondent's accounting record was insufficient to verify the text of Exhibit R-1, Tab 50, page 5 respecting:
(1) The withdrawal of penalties levied respecting -
1990 - $14,461.80
1991 - $6,022.60
(2) The allegation that a refund was issued on September 3, 1998 in the amount of $149,301.34 and the accounting as to what that constituted.
[6] These items were accounted for by Mr. Schwartzberg when Court opened on October 24, 2001, when he testified and used as supporting references R-8, R-9, R-10 and R-11. At that point the Court adjourned to allow the Appellant to reconcile these Exhibits and Exhibit R-12. Thereupon the Appellant cross-examined Mr. Schwartzberg and the aforesaid Exhibits were confirmed to be a correct accounting respecting the interest and penalties at issue. The accounting acknowledged that the penalties described in subparagraph [5](1) hereof remain due to the Appellant upon final judgment issuing in this appeal. The interest at issue is found by the Court to be accounted for and as a result, no interest is owed by the Respondent to the Appellant.
[7] The Appellant argued strongly that this Court should review the Fairness decisions by the Respondent respecting interest and, in particular, interest that he claims to be due on the $2,000,000 which he paid to the credit of his account, on April 7, 1993 of which $1,360,049.70 was repaid to him on June 23, 1994 after the income tax due was taken for 1992 and 1993, but before assessments were made respecting his voluntary disclosure in May, 1993 contained in Exhibit R-1, Tab 5.
[8] Two things arise in law respecting the claim for interest described in paragraph [7]:
1. By the fairness decision to waive interest arrears contained in the reassessments of September and December, 1994, the Minister recognized that payment with respect to the Appellant's tax liability for the 1988, 1989, 1990 and 1991 taxation years was received on April 7, 1993. Accordingly, no obligation arises under section 164 for interest to be paid to the Appellant for the period between April 7, 1993 and the date of the Notices of Reassessment. If interest should be paid to the Appellant for the aforementioned period, there would be a concern with a double benefit being conferred upon the Appellant.
2. This Court has no jurisdiction to review fairness respecting the decision of the Fairness Committee. Respecting this, the Court adopts the reasoning of McArthur, T.C.J in John Laverne Housser v. Her Majesty the Queen [1994] T.C.J. No. 454 (Informal Procedure case) wherein he stated:
9. This Court derives its powers from enabling statutes and is not a Court of equity.
10. The Tax Court of Canada does not have the jurisdiction to substitute its own opinion for that of the Minister in respect of the Minister's finding pursuant to subsection 220(3.1).
11. The Court was referred to the case of Floyd Estate v. M.N.R. 93 D.T.C. 5499., This was an application under the Federal Court Act for judicial review. The Court stated at page 550:
"At the outset, I should point out that it is not for the Court to decide whether the interest otherwise payable by the taxpayer ought to be waived or cancelled. It is within the discretion of the Minister. The function of the Court in this judicial review, as I understand it, is to determine whether or not the Minister failed to observe procedural fairness or erred in law in making his decision, as outlined under subsection 18.1(4) of the Federal Court Act."
The Court refused to analyze the substantive question of whether or not the decision was fair to the taxpayer.
12. This Court will not second guess the Minister's decision. The decision, on the merits of the Appellant's application under subsection 220(3.1) is at the discretion of the Minister.
[9] The Appellant also disputed the detailed accounting rendered to him in Court and in particular suggested that two cheques paid to him of $149,301.34 (See Exhibit R-9) and of $31,422.47 (See Exhibit R-8, page 9), did not add up to the total which he considered due to him of the sums of
$83,105.44
$37,529.36
$13,096.00 and
$65,470.28
(See Exhibit R-8, page 9). However these figures are accounting entries by the Respondent contained in different columns, which arise from numerous entries due to the Appellant's original failure to report income and consequent payments, credits and debits over in excess of 10 years. The Respondent's accounting is in balance and the Appellant did not succeed in refuting it in any way. The Appellant argued that he suffered illness and professional reversals during the years in question. But there is no evidence that these existed during his very first years of failure to report income. The accounting by the Respondent is accepted by this Court as it is recorded in Exhibits R-8 to R-12 inclusive.
[10] Finally,
respecting the Appellant's alleged duplicate report of income
for 1988 described in paragraph [3] herein, the Appellant has
failed to lead any evidence that there was a duplication. Indeed,
in his original disclosure to Revenue Canada, he was quite
specific that he had failed to report these receipts.
In the last paragraph of page 1 of that letter (Exhibit R-1, Tab 5) in May, 1993, he stated:
With regards to the 1988 tax year, the actual total of Gross Professional Income for that year amounted to $1,116,046.00. On my tax return, I reported a Gross Professional Income of $965,832.00. I did not include an additional $150,214.00 in Gross Professional Income which is accounted for in the two T4A Supplementary information slips I have now disclosed to Revenue Canada, one representing the amount of $79,738 and the other representing the amount of $70,476. Hence, for the 1988 tax year, there exists a total undeclared Gross Professional Income of $150,214.00 representing the difference between the actual Gross Professional Income of $1,116,046.00 and the previously reported figure of $965,832.00.
Thus, in his own words, he refuted his current allegations at a date much closer to the failures in question than the date of this hearing. It is on that letter of disclosure that the reassessments were based.
[11] Based upon the advice of counsel for the Respondent and the testimony of the Respondent's witness, the Appellant is entitled to withdrawal of the penalties for 1990 of $14,461.80 and for 1991 of $6,022.60, but that is all.
[12] The assessments before the Court are referred to the Minister of National Revenue for reassessment and reconsideration accordingly.
[13] The Respondent is awarded a full set of costs respecting each appeal, but only one set of costs is to be taxed for the actual hearing of these appeals.
Signed at Ottawa, Canada, this 14th day of November, 2001.
"D. W. Beaubier"
J.T.C.C.
COURT FILE NO.: 98-1205(IT)G and 98-131(IT)G
STYLE OF CAUSE: Shoel Rosenhek v. The Queen
PLACE OF HEARING: Windsor, Ontario and Toronto, Ontario
DATE OF HEARING: October 19 and 24, 2001
REASONS FOR JUDGMENT BY: The Honourable Judge D. W. Beaubier
DATE OF JUDGMENT: November 14, 2001
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Roger Leclaire
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
98-1205(IT)G
98-131(IT)G
BETWEEN:
SHOEL ROSENHEK,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on common evidence on October 19, 2001 at Windsor, Ontario
and on October 24, 2001 at Toronto, Ontario
by the Honourable Judge D. W. Beaubier
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Roger Leclaire
JUDGMENT
The appeals from the assessments made under the Income Tax Act for the 1988, 1989, 1990 and 1991 taxation years are allowed, and the matter is referred to the Minister of National Revenue in accordance with the attached Reasons for Judgment.
The Respondent is awarded costs.
Signed at Ottawa, Canada, this 14th day of November, 2001.
|
"D. W. Beaubier" |
J.T.C.C.