Date: 20010410
Docket: 2000-3397-IT-I,
2000-3398-IT-I
BETWEEN:
BERNARD BÉLANGER,
LES CONSTRUCTIONS BERNARD BÉLANGER LTÉE,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Tardif, J.T.C.C.
[1] The parties agreed to proceed on evidence common to both appeal cases.
[2] The two cases concern income that was allegedly not reported. The individual appellant, who signed both Notices of Appeal ("the Notices")-in his personal capacity as regards his own appeal and as president of Les Constructions Bernard Bélanger Ltée as regards that appellant's appeal-stated the following in those Notices:
Bernard Bélanger's appeal, 2000-3397(IT)I
[TRANSLATION]
(a) The amounts referred to in the decision of May 15, 2000, concerning benefits conferred by Les Constructions Bélanger Ltée and estimated at $4,000 for 1996 and $8,500 for 1997, when I was a shareholder in the said company, are wrong and unfounded and merely reflect assumptions that the auditor made without proof concerning unexplained deposits in my personal bank account;
(b) I deny having borrowed money from or become indebted to the corporation by reason of my status as a shareholder in connection with the above-mentioned amounts;
(c) As the auditor, Mr. Marois, was told, our strongbox was stolen in November 1996 (see copy of invoice and copy of police report proving the theft); he asked us to provide documents that were inside the said box, which I could not do, of course; we always co-operated fully with the said auditor;
(d) The said auditor estimated amounts without any proof, which is why I am contesting the said decision;
(e) I therefore request the Tax Court of Canada to cancel the interest and the assessment for the said amounts;
(f) I am also filing a copy of correspondence, a conditional withdrawal notice and an amendment form concerning the Ministère du Revenu of Quebec so that they can be taken into account.
Les Constructions Bernard Bélanger Ltée's appeal, 2000-3398(IT)I:
[TRANSLATION]
(a) The $8,500 referred to in the Minister's notice of confirmation dated May 15, 2000, which states that this amount is business income for the 1998 taxation year, is wrong and unfounded and is merely pure conjecture based on allegations without proof;
(b) In his letter dated September 17, 1999, the auditor, Miville Marois, refers to unreported income in connection with unexplained deposits in the shareholder's personal bank account, a copy of the said letter being attached hereto as Exhibit A-1;
(c) I request that those amounts not be included in my income and that they be cancelled along with the interest;
(d) As the said auditor was told, our strongbox and equipment were stolen in 1996; he asked us to provide documents that were inside the said strongbox, which we could not do, of course; we always co-operated fully with the said auditor;
(e) The said auditor estimated amounts without any proof, which is why I am contesting the said decision;
(f) As Exhibit A-2, I am filing in evidence a copy of the purchase invoice for a new strongbox and a copy of the report from the Service de la Sécurité publique proving the theft of the strongbox;
(g) I am also filing a copy of correspondence, a conditional withdrawal notice and an amendment form concerning the Ministère du Revenu of Quebec so that they can be taken into account.
[3] According to the two Notices of Appeal, the respondent acted in error and without justification and the amounts involved merely reflect assumptions that the auditor made, without any proof, concerning unexplained deposits in the individual appellant's personal bank account.
[4] In support of the appeals, Bernard Bélanger argued basically that he had always liked $1,000 bills and that he was in the habit of keeping small bills and then exchanging them for $1,000 bills, which were the source of the deposits upon which the assessments were based.
[5] To explain the origin of the $22,500 deposited in his personal account, Mr. Bélanger stated that it was money obtained from sales of lots in previous years. He filed two contracts in this regard, one dated June 2, 1994, and the other July 14, 1997 (Exhibit A-1).
[6] He never identified or specified exactly how much of the proceeds from the sales of lots went into the $22,500 total deposits. Mr. Bélanger also argued that he had made loans to his children, who had repaid him during the same period. His children had allegedly signed IOUs, which disappeared when the strongbox in which everything had been placed was stolen. After the theft, Mr. Bélanger and his children did not see fit to draw up anew the documents attesting the existence of the loans.
[7] In addition, the explanations concerning the various repayments obtained by Mr. Bélanger from his children were vague, imprecise and confused as regards both the payment periods and the amounts repaid. He said that the amounts had been invested so as to earn interest, which was disputed by the auditor, who noted that only one child had reported interest income and had done so on just one occasion.
[8] Mr. Bélanger also asserted that he had done various estimates, in circumstances that were poorly explained, for which he again received payments in cash. The extent, frequency and dates of that income were, once again, not established. In addition, he denied that he had been willing to admit to the auditor, Mr. Marois, that he had received $10,000 for those estimates.
[9] The evidence submitted by Mr. Bélanger is in keeping with the very poor quality of his bookkeeping as noted by Mr. Marois.
[10] Mr. Bélanger accuses the respondent of drawing conclusions without having satisfactory proof to support those conclusions.
[11] Yet he would like the Court to do exactly what he has criticized the respondent for, namely render judgment without there being any conclusive evidence or even a preponderance of evidence, solely on the strength of his having been a good, hard-working taxpayer and having raised a fine family without the help of any government money.
[12] I do not doubt Mr. Bélanger's qualities as a businessman and good father, which moreover, in light of the facts brought out by the evidence during the trial, benefited him at the time of the audit. To succeed in this case, he would have had to adduce coherent, precise and plausible evidence. Instead, he referred to a multitude of possibilities, such as loan repayments by his children, the sale of a tractor, the sale of a car, the sale of assorted stock, land sales, the preparation of estimates and his habit of having large amounts of cash in his possession and, in the end, he concluded that the $22,500 must have come from just about all of this.
[13] Such evidence is certainly not conclusive, especially when the most important information, namely the loan repayments by Mr. Bélanger's children, was never mentioned during the audit, that explanation having suddenly materialized after the proposed assessment.
[14] The appellants cannot criticize the respondent for having drawn hasty conclusions without supporting documents, since the obligation to provide such documents was theirs and not the respondent's; in other words, the appellants themselves brought about the result they are contesting.
[15] The burden of proof was on the appellants; the evidence basically confirmed the respondent's finding that the appellants' bookkeeping was deficient and incomplete. The evidence they adduced was just as deficient, so much so that the appellants have been unable to discharge their burden of proof.
[16] The assessments that were issued resulted from an audit made difficult by the fact that the appellants' bookkeeping was very perfunctory and very poorly documented.
[17] As a result of the audit, a proposed assessment was submitted for discussion purposes. Following the discussions, the respondent reduced the assessments initially made to take account of the explanations given.
[18] Mr. Bélanger therefore repeated the same explanations in court and denied any statements or admissions he may have made during the negotiations, even though those negotiations had led to a substantial reduction in the assessments initially made.
[19] Since the appellants have not discharged their burden of proof, the appeals must be dismissed.
Signed at Ottawa, Canada, this 10th day of April 2001.
|
"Alain Tardif" |
J.T.C.C.
Translation certified true on this 25th day of October 2002.
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
2000-3398(IT)I
BETWEEN:
LES CONSTRUCTIONS BERNARD BÉLANGER LTÉE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on common evidence with the appeals of
Bernard Bélanger (2000-3397(IT)I)
on March 14, 2001, at Sherbrooke, Quebec, by
the Honourable Judge Alain Tardif
Appearances
Agent for the Appellant: Bernard Bélanger
Counsel for the Respondent: Alain Gareau
JUDGMENT
The appeal from the assessment made under the Income Tax Act for the 1998 taxation year is dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 10th day of April 2001.
|
"Alain Tardif" |
J.T.C.C.
Translation certified true on this 25th day of October 2002.
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
2000-3397(IT)I
BETWEEN:
BERNARD BÉLANGER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on common evidence with the appeal of
Les Constructions Bernard Bélanger Ltée(2000-3398(IT)I)
on March 14, 2001, at Sherbrooke, Quebec, by
the Honourable Judge Alain Tardif
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Alain Gareau
JUDGMENT
The appeals from the assessments made under theIncome Tax Act for the 1996 and 1997 taxation years are dismissed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 10th day of April 2001.
|
"Alain Tardif" |
J.T.C.C.
Translation certified true on this 25th day of October 2002.
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]