Delmer E Taylor:—This is an appeal against the penalty levied on the taxpayer under subsection 163(2) of the Income Tax Act, SC 1970-71-72, as amended, for the 1972, 1973, 1974 and 1975 taxation years. The notice of appeal read, in part, as follows:
In 1971 I have disposed of a piece of property in Oliver, BC and I have moved to Penticton, BC. I gave the agreement for sale to the Imperial -Bank of Commerce, Oliver, BC, who collected and recorded the payments
and disbursed the money partly to pay on another agreement what I have owed on the same property. I paid the handling costs to the bank as I wanted the agreements to be handled and recorded properly. Since I have moved from Oliver and got a job in another city, I have been completely distracted from this matter and I have forgotten to include the taxable portion of the interest earned on the agreement in my income tax return. I have been making up my returns myself in those years and there was nobody to remind me and there was no T5 slips issued by the bank either.
When the district office asked for, information on the interest income from the agreement, I was shocked and when relaized (sic) that I have forgotten about it. I got the records from the bank and the district office received a properly kept accounting in respect of my interest income and expenses.
I have been reassessed and I have agreed with it, except, I did not feel that the imposition of a 25% penalty under subsection 163(2) of the Income Tax Act is proper.
The reporting of my income was incomplete for those years, but, I have never ever made an ommission knowingly and I do not feel that I was grossly negligent in conducting my affairs, as I retained the bank to keep proper records.
In reply the respondent while not admitting the above, contended that:
—in 1971 the appellant sold the Bellflower Motel in Oliver, British Columbia to Carl Lutz under an agreement for sale in the amount of $65,500 at 7% interest, to be repaid at $500 per month including interest;
—he received these payments of interest and principal until he disposed of the agreement in 1976;
—until March 15, 1974 he was making monthly payments of principal and interest under an agreement for sale with the previous owner, Richard L Nyholt;
—as a result of an audit carried out the following net interest income was found to be unreported for the years 1971 to 1975:
| 1971 | 1972 | 1973 | 1974 | 1975 |
| $1,662.08 | $4,086.34 | $4,210.30 | $4,124.91 | $4,073.57 |
—the appellant was reassessed for each of the above years, except 1971, adding the unreported net interest income to the incomes for each year;
—penalties were imposed pursuant to subsection 163(2) to all of the above years reassessed.
In verbal evidence the appellant reiterated that the matter had been neglected since the transactions were all handled through the bank, and that he expected his accountant to make out his tax returns properly. He had not actually handled any money and received no T5 slips in connection with the matter. During all the time in question, his full-time occupation had been as a baker with Safeway Canada Ltd in Penticton, British Columbia, although he had lived in Oliver, British Columbia, travelling back and forth each day.
Essentially the position of the Minister (holding the onus for supporting the assessment) was that the appellant could not possibly have been unaware of the taxable nature of the interest portion of the funds paid into his account at the bank. Further, it was the Minister’s position that since the appellant had reported other interest income in the year 1972, he was cognizant of the fact that interest income was taxable.
The Board can find no reason to reject the Minister’s conclusion in the matter. The appellant was competent and experienced, and certainly well aware of business matters generally. In addition, a matter brought out at the hearing was of significance to the Board—that the appellant had retained the same accountant to prepare his tax returns while he operated the hotel in Oliver, during the sale, and for a period of one or two years thereafter. Obviously the circumstances during this entire period were uninterrupted and well known to both parties.
The appeal is dismissed.
Appeal dismissed.