INCOME TAX |
Penalties |
Canada (Attorney General) v. Villeneuve
A-26-03, A-27-03, A-29-03
2004 FCA 20, Létourneau J.A.
20/1/04
4 pp.
Three applications for judicial review heard together-- Reasons disposing of all three cases--Judicial review of Tax Court of Canada decision that cancelled penalties imposed on respondents under Income Tax Act (Act), s. 163(2) on ground that action taken stemmed from thoughtlessness, unawareness or error of judgment, not from wrongful intent--Judge failed to consider concept of gross negligence that may result from wrongdoer's willful blindness--Even wrongful intent may be established through proof of willful blindness--In this case, there are misrepresentations and payment of rebates--Before cashing refund cheques, respondents were either made aware of misrepresentations or had strong suspicions as to existence of misrepresentations or legitimacy of refunds themselves-- By cashing refunds and paying rebates, respondents acquiesced and participated in scheme established to defraud Canada Customs and Revenue Agency--Their free and voluntary participation was essential link in realization of that scheme and they benefited economically from it--Impossible not to conclude that this was willful blindness and consequently gross negligence--Applications allowed-- Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. (2) (as am. by S.C. 1994, c. 7, Sch. VII, s. 17).