The Queen v. Joseph Machacek, [1959] CTC 429

T. O’B. Gore-Hickman:—There are four charges against the accused Joseph Machacek all of the same nature, and being heard and dealt with under the provisions of Part XXIV of the Criminal Code, and this being so I think that the charges might well have been laid on four counts on one information, and thus they could have been dealt with in the judgment. However, in view of the fact that there are four different and separated informations, there will have to be four separate judgments, and at the present time I am about to deal with the information regarding the 1956 returns.

The charge against the accused in this case is that :

“On or about the 30th day of April A.D. 1957 at Turin in the Province of Alberta he did unlawfully make false statements in a return of income required to be filed pursuant to the provisions of the Income Tax Act, Revised Statutes of Canada 1952, as amended, to wit, his T.1 general return for the year 1956 contrary to Section 132(1) (a) of the said Act.”’ Particulars are given following this charge, and of course such particulars are necessary to determine whether a false statement has been made in the return as alleged.

On the T.l general return for the year 1956 the accused has certified as follows: ‘‘I hereby certify that the information given in this return and in any documents attached is true, correct and complete in every respect and fully discloses my income from all sources.” I notice that the Form T.1 in question is signed by Vincil Machacek on behalf of the accused, but I feel that although the signature is the signature of Vincil Machacek, when one considers all the documents attached to the return, which are unquestionably documents relating to the income of the accused, such as charitable contributions to church and service club, then the return must be taken as the return of Joseph, signed by Vincil Machacek on his behalf, with his consent and with a full knowledge of the contents.

It seems to me that I have to direct my attention to the following main points in the procedure and evidence:

(a) Has this Court jurisdiction to deal with the matter at all, or does the limitation section of Part X XIV of the Code outlaw the case because it is a summary conviction matter not instituted within six months of the time of the offence ?

(b) Have the Crown proved beyond a reasonable doubt that the accused made a false return of income received for the year 1956 when he authorized the submission of the Form T.1 for 1956?

(c) If they, the representatives of the Crown, have succeeded in establishing as a fact that the accused is guilty of making false statements in his income tax return T.l for the year 1956, is there anything in the evidence which could exculpate the accused, such as lack of education, inexperience in making returns, lack of intelligence, or any other reason which might explain his action or show a lack of mens real

I will first deal with the question of jurisdiction.

It seems to me that the relative legislation dealing with this question is contained in Section 693 of the Criminal Code and Section 136(4) of the Income Tax Act, 1952.

Section 693 of the Criminal Code reads as follows:

“693. (1) Except where otherwise provided by law, this Part applies to proceedings as defined by this Part.

(2) No proceedings shall be instituted more than six months after the time when the subject matter of the proceedings arose.”

It seems to me that Section 693 of the Criminal Code cannot be applicable in this case because the statute under which the complaint is laid contains its own provisions as to “Limitation”. To hold otherwise would be to make Section 136 meaningless. The latter section reads:

“136. (4) An information or complaint under the provisions of the Criminal Code relating to summary convictions, in respect to an offence under this Act may be laid or made on or before a day five years from the time when the matter of the information or complaint arose or within one year from the day on which evidence sufficient in the opinion of the Minister to justify a prosecution for the offence came to his knowledge, and the Minister’s certificate as to the date that such evidence came to his knowledge is conclusive evidence thereof.’’

I therefore hold that Section 693 of the Criminal Code has no effect as regards a prosecution under the Income Tax Act, 1952, as that statute contains its own provisions as to “Limitation of Action’’ and therefore is one of those exceptions provided for by subsection (1) of Section 693 of the Criminal Code.

Another argument against the Court having jurisdiction to hear this evidence and assume jurisdiction, is that by so doing the Court takes upon itself the jurisdiction to decide matters relating to the assessment of tax liability of the accused. If the Court were doing any such thing I would be in full agreement with this argument, but the Court is not so doing. I feel that the only question before the Court is, ‘‘Did the accused make, or cause to be made, a false statement in his return T.l for the year 1956?’’ This is a question which I think can readily be decided without even considering what tax the accused is liable to pay, something which would more properly be a subject for consideration by the Appeal Board set up under the Income Tax Act, or perhaps, at a later stage, by the Exchequer Court.

I have reached the conclusion that objections to the jurisdiction of the Court must fail.

I now come to the question as to whether the Crown have proved beyond any reasonable doubt that when the accused submitted or caused to be submitted, on his behalf, his return T.1, and signed the declaration thereof or had it signed on his behalf, were such omissions made when rendering an account of monies received by him as income during the year 1956, of such a nature as to make a conviction on the charge of making false statements inevitable?

It seems to me that the governing principle in considering the question is to remember that this is a criminal charge, and I say that it is a criminal charge because if the accused is convicted he can be fined in any amount up to $10,000 and also imprisoned for two years. There is ample authority for the statement that under such circumstances the charge is criminal, this being so all the rules governing criminal trials must be strictly followed and no assumptions may be made against the prisoner except such as may be made from the evidence led, such evidence being evidence properly admitted.

The great difficulty which I have found in considering the evidence is that there are three separate parties to which the bulk of the evidence applies, namely (1) the accused, (2) the Machacek partnership, and (3) the accused’s wife, Mrs. Machacek.

There is no evidence before the Court which can be relied upon to show whether or not Mrs. Machacek made a separate return T.l for 1956 nor is there any clear evidence as to whether the partnership made such a return. It is true that Exhibit 2, “Individual Income Tax of Joseph Machacek’’, mentioned the partners, but nevertheless that is not a partnership return but the individual return of the accused on the appropriate form. As to Mrs. Machacek, the questions and answers relating to the matter are as follows :

“Q. Did Mrs. Betty Machacek file an Income Tax to your

knowledge?

A. Not to my knowledge.

Q. And you could know if it had been filed in the investigations that you have been making?

A. I think so.”

I feel that this is hardly conclusive evidence on the question as to whether Mrs. Machacek filed a separate return or not. It has been urged that the accused claimed exemption as a married man, thereby intimating that his wife did not have an income over $250 for the year 1956, and there is no doubt that he did so, but bearing in mind that this is not a civil case but a criminal trial I conclude that I cannot assume that the accused had any particular knowledge of what his wife’s income was, or whether or not she had filed a separate return. It might well be that he should have been more careful in claiming as a married man whose wife’s income was under $250, but carelessness in this regard is not necessarily criminal.

I have studied carefully the particulars surrounding every payment made to all the parties mentioned, and I have gone perhaps a good deal further than I should in giving the benefit of every doubt, however small, to the accused, thereby eliminating any payments which are not clearly the sole property of the accused. Having done this I find that there is a residue of $2,601.75 which is clearly proved to have been income accruing to the accused and which was omitted from the return T.1 the subject matter of this charge.

I have entirely disregarded any items about which there can be any doubt whatever, these items being mainly monies paid to the accused’s wife or to members of the partnership, but although I have disregarded these items when considering the whole matter, I have a grave suspicion that a goodly portion of such monies did actually accrue to the accused as 1956 income.

I may add that I do not think that the fact which has been disclosed in the evidence produced, that the accused has deposited sufficient monies to cover the alleged shortages, should be regarded as an admission of guilt, and I have not so regarded it.

I have also given careful consideration to the third question which I considered I should put to myself, as mentioned in the first part of this judgment. Is there anything in the evidence to lead the Court to believe that the omissions mentioned above as having been made in the T.l return of the accused for 1956 were omitted on account of some disability affecting the accused, such as lack of education, lack of intelligence, ignorance of the requirements of the Income Tax Department when filing in Form T.1 or any other fact regarding the accused which could explain the causes which have put the accused in the unfortunate position in which he finds himself now?

It has been stated by counsel for the defendant that he is of foreign extraction, deaf, and with a limited knowledge of the English language. It is further urged that he made these returns with the assistance of a reputable firm of accountants. Does this submission excuse the accused? I have given it careful consideration, and I cannot agree that there is any evidence to support the claim that the accused, owing to his extraction, health, or difficulties with the language of his adopted country, can be excused on these grounds for submitting a Form T.1 which was false as to the statement it contained.

I think that the evidence led for the prosecution shows that the accused is a very successful farmer and a shrewd business man. There can be no doubt that the firm of accountants who attended to his business acted upon information he gave them. These gentlemen are in much the same position as counsel preparing a case for a client, who must rely largely upon the information obtained from his client in conducting his case. In spite of the difficulties which he is alleged to labour under, the documentary evidence in the case appears to show that he is an exceedingly competent operator in his business, conducting his business affairs in a particularly competent manner when it comes to looking after his own interests, but not so carefully when it comes to rendering income tax returns. His interest payments received are an indication of his shrewdness and business ability.

On consideration of the whole of the evidence presented by the Crown and the defence, and after a careful perusal of all the documents entered as exhibits, I have come to the irresistible conclusion that the accused in making his returns, was endeavouring to becloud the real situation as to his taxable income, that he deliberately omitted from the return at the very least sums amounting to a total of $2,601.75. I have decided that these omissions could not be the result of inadvertence, as the amount is too large to have escaped the memory of the accused.

I FIND THE ACCUSED GUILTY.

The evasion of income tax payment is a very serious offence. So serious do the legislators regard it, that they provide for penalties up to $10,000 for each offence and in addition for 2 years imprisonment. It has been pointed out to me that the accused has been previously convicted of similar offences and at that time received sentences which compelled him to pay very substantial fines. In spite of this warning he still persists in endeavouring to cheat the Government of the country by evading the payment of income tax which he was lawfully bound to pay. This being so I cannot find that it would be reasonable to extend any leniency to him, and I feel that a substantial sentence is necessary to show both the accused and any others who might be of a like mind, that it is unprofitable to make false returns to the Department of Income Tax when making out the annual T.l return.

I sentence the accused to six months in Lethbridge Provincial Gaol.

Guilty.