Date: 20040127
Docket: A-138-03
Citation: 2004 FCA 40
CORAM: STRAYER J.A.
SEXTON J.A.
EVANS J.A.
BETWEEN:
FAIDY FOUAD NAGUIB
Appellant
and
HER MAJESTY THE QUEEN
Respondent
Heard at Toronto, Ontario, on January 27, 2004.
Judgment delivered from the Bench at Toronto, Ontario, on January 27, 2004.
REASONS FOR JUDGMENT OF THE COURT BY: SEXTON J.A.
Date: 20040127
Docket: A-138-03
Citation: 2004 FCA 40
CORAM: STRAYER J.A.
SEXTON J.A.
EVANS J.A.
BETWEEN:
FAIDY FOUAD NAGUIB
Appellant
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the Bench at Toronto, Ontario, on January 27, 2004)
SEXTON J.A.
[1] The appellant appeals the decision of the Tax Court which dismissed his appeals for the 1992, 1993, 1994 and 1995 taxation years.
[2] It is common ground that the respondent reassessed the appellant beyond the normal reassessment period which is 3 years after the filing of an original assessment. In making the reassessment, the respondent used the net worth method because the appellant had such inadequate financial records.
[3] The appellant's main argument on appeal was that the respondent had failed to establish that the appellant made a misrepresentation that was attributable to neglect, carelessness or wilful default so as to permit a reassessment beyond the normal reassessment period pursuant to section 152(4)(a)(i) of the Income Tax Act (ITA) as set forth below:
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(4) The Minister may at any time make an assessment, reassessment or additional assessment of tax for a taxation year, interest or penalties, if any, payable under this Part by a taxpayer or notify in writing any person by whom a return of income for a taxation year has been filed that no tax is payable for the year, except that an assessment, reassessment or additional assessment may be made after the taxpayer's normal reassessment period in respect of the year only if
(a) the taxpayer or person filing the return
(i) has made any misrepresentation that is attributable to neglect, carelessness or wilful default or has committed any fraud in filing the return or in supplying any information under this Act, or
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4) Le ministre peut établir une cotisation, une nouvelle cotisation ou une cotisation supplémentaire concernant l'impôt pour une année d'imposition, ainsi que les intérêts ou les pénalités, qui sont payables par un contribuable en vertu de la présente partie ou donner avis par écrit qu'aucun impôt n'est payable pour l'année à toute personne qui a produit une déclaration de revenu pour une année d'imposition. Pareille cotisation ne peut être établie après l'expiration de la période normale de nouvelle cotisation applicable au contribuable pour l'année que dans les cas suivants:
a) le contribuable ou la personne produisant la déclaration:
(i) soit a fait une présentation erronée des faits, par négligence, inattention ou omission volontaire, ou a commis quelque fraude en produisant la déclaration ou en fournissant quelque renseignement sous le régime de la présente loi,
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[4] The appellant argued that the onus was initially on the respondent to lead evidence proving compliance with section 152(4)(a)(i).
[5] The difficulty faced by the appellant is that he failed to raise this as a ground of appeal in the Tax Court. Rather he argued that the net worth assessment itself was flawed.
[6] We are of the view that the respondent did not have a duty to raise facts so as to justify the application of section 152(4)(a)(i), in the absence of any challenge by the appellant in his Notice of Appeal or at the trial in the Tax Court to the reassessment on the basis that it was issued beyond the normal reassessment period. While the facts in Crête v. H.M.Q., [1997] F.C.J. no. 214 (F.C.A.) are not the same as the present case in that it involved a motion relating to the pleadings, nevertheless, the statement of the Court is perhaps helpful:
It is clear that the judge erred. He criticizes the Minister for not alleging in the reply to the notice of appeal some facts to show that the reassessment was not out of time. But the Minister, like any other litigant, is never required to reply to an allegation that has not been made and, however you read the taxpayer's notice of appeal, it contains no allegation that the notice of assessment was void for being out of time.
[7] Furthermore, this Court has made it clear that a new argument may not be raised for the first time on appeal where the responding party would be prejudiced by having had no opportunity to adduce evidence that could, if accepted defeat the argument. SMX Shopping Centre Ltd. v. Canada, [2003] F.C.J. No. 1870 (F.C.A.).
[8] We are satisfied that in the present case, the Respondent would be so prejudiced.
[9] The appellant also argues that the Tax Court Judge erred in imposing penalties. Specifically, he argues that the respondent bears the burden of establishing the facts justifying the imposition of a penalty and says the respondent merely relied on the net worth assessment thus putting the onus on the appellant. However, the respondent did not confine her justification for the penalties to the net worth assessment. The respondent relied upon the evidence adduced in cross examination of the appellant. The Tax Court Judge relied upon that evidence in holding that the appellant's failure to report his income in the year in question was wilful, and if not wilful, that it amounted to wilful blindness and gross negligence.
[10] We are not persuaded that the Tax Court Judge did reverse the onus with respect to proof relating to penalties or that he made any palpable or overriding error in his findings of fact.
[11] The appeal will therefore be dismissed with costs.
"J. E. Sexton"
J.A.
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET : A-138-03
STYLE OF CAUSE : FAIDY FOUAD NAGUIB
Appellant
and
HER MAJESTY THE QUEEN
Respondent
PLACE OF HEARING : TORONTO, ONTARIO
DATE OF HEARING : JANUARY 27, 2004
REASONS FOR JUDGMENT
OF THE COURT : (STRAYER, SEXTON, EVANS JJ.A.)
DELIVERED FROM THE
BENCH BY: SEXTON J.A.
APPEARANCES :
Mr. Domenic Marciano FOR THE APPELLANT
Mr. Franco Calabrese FOR THE RESPONDENT
SOLICITORS OF RECORD :
Domenic Marciano
Barrister and Solicitor
Toronto, Ontario FOR THE APPELLANT
Morris Rosenberg
Deputy Attorney General of Canada
Toronto, Ontario FOR THE RESPONDENT
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