*147 Decision will be entered under Rule 50.
Held, that petitioner did not file a false and fraudulent tax return.
*1453 The respondent determined a deficiency for the taxable year 1945 in income tax in the amount of $ 1,846.16, plus a 50 per cent penalty in the amount of $ 923.08. The petitioner contests only one disallowance of expenses and the fraud penalty.
*1454 FINDINGS OF FACT.
Petitioner is an individual, whose residence during 1945 was at Alexandria, Virginia. A return for the year 1945, filed in the name of petitioner, was filed with the collector of internal revenue for the district of Maryland.
Petitioner was employed by Transcontinental Western Airways, Inc. (hereinafter called T. W. A.), from July 1942 through the year 1945, during which later year he was stationed at the National Airport, Washington, D. C. He was employed as a pilot, assigned to the Intercontinental Division, engaged in ferrying supplies and military personnel to foreign countries.
Petitioner was allowed by his employer traveling expenses while outside the United *148 States at the rate of $ 8 per day, the sum of which payments was returned as income. Under the contract between T. W. A. and the Federal government, the United States Army made available to T. W. A. personnel officers' quarters and meals at all foreign bases at a cost of approximately $ 6 per day.
Petitioner did not keep a record of his travel expenses for the year 1945. Finding it impossible to get adequate rest in the quarters provided by the Army, petitioner frequently stayed at hotels and took his meals at restaurants. He estimated that his expenses for food and lodging when not occupying Army quarters amounted to approximately $ 12 per day.
In filing income tax returns for years prior to 1945, petitioner obtained the assistance of an employee of the Bureau of Internal Revenue. He had heard from various of his friends that one Bernard P. Nimro had prepared income tax returns for them and that his services had resulted in large savings. Prior to March 15, 1946, petitioner went to the office of Bernard P. Nimro and furnished him such information as he had, to be used in the preparation of an income tax return for the taxable year 1945. He spent about 15 minutes in Nimro's office*149 and understood from Nimro that he would supplement the information furnished by petitioner by inquiry of petitioner's employer.
A Federal income tax return which bore petitioner's name and stated that it was prepared by Bernard P. Nimro was filed with the collector of internal revenue for the district of Maryland on March 13, 1946. Although the return purports to be signed by petitioner, he never signed the return and did not see the same before it was filed. He first saw the 1945 return in the office of the special agent for the Bureau of Internal Revenue when he was called there during the investigation of the return. He had only the one conference with Nimro. The conference lasted approximately 15 minutes.
The following deductions were claimed in the schedule attached to the return: *1455
| U S. Travel -- 179 days: | ||
| Missouri, Illinois, Ohio, West Virginia, | ||
| Pennsylvania, Va., D. C., Maine -- | ||
| Hotel | $ 1,074.00 | |
| Meals | 895.00 | |
| Cabs | 358.00 | |
| Tel | 179.00 | |
| Tips, Misc | 179.00 | |
| $ 2,685.00 | ||
| Plane Travel | 125.00 | |
| Commercial Ration Travel 8200 mi. at 5 cents | 410.00 | |
| Tel. & Tel. Cables | 75.00 | |
| Uniforms | 69.50 | |
| Navigation Supplies | 75.00 | |
| Equipment Maintenance | 102.00 | |
| Dues | 100.00 | |
| Liability Insurance | 72.00 | |
| Taxes | 48.00 | |
| $ 3,761.50 | ||
| Foreign Travel -- 126 days: | ||
| Newfoundland, Labrador, Azores, Iceland, England, France, | ||
| Italy, Scotland, Greece, Egypt, Iran, India, Tripoli, | ||
| Fr. Morocco | $ 2,160.60 | |
| $ 5,922.10 | ||
| Reimbursement (Traveling) | 1,011.50 | |
| $ 4,910.60 | ||
*150 During the year 1945 petitioner was engaged solely in flights from Washington, D. C., to foreign countries and did not have any travel in connection with his employment in the United States. Petitioner did not pay hotel expenses in the United States in the sum of $ 1,074, nor did he have cab expense of $ 358, nor telephone expense of $ 179, nor tips and miscellaneous expense of $ 179. Petitioner did not recollect that he carried any liability insurance as to which a deduction of $ 72 was claimed.
In the notice of deficiency respondent disallowed deductions claimed in the amount of $ 4,910.60 and also included in income the amount of $ 252 representing the difference between $ 6 per day and $ 8 per day for reimbursement of foreign travel expenses. When petitioner employed Nimro he believed him to be a qualified and capable tax advisor.
The records of the District Court of the United States for the District of Columbia show that Bernard P. Nimro was indicted for embezzlement on September 29, 1933, found guilty as charged, and sentenced to serve from 15 to 30 months, also that as a result of the conviction for the above crime involving moral turpitude the same court ordered Nimro *151 disbarred from the practice of law in October 1937 and that in 1947 Nimro was convicted of larceny and embezzlement *1456 and sentenced to serve a term for the misappropriation of funds entrusted to him for tax purposes by an employee of the Department of State.
Petitioner did not file a false and fraudulent tax return for 1945 with intent to evade taxes due. No part of the deficiency is due to fraud with intent to evade tax.
OPINION.
In this case we find another chapter in the Nimro saga of fraudulent tax practice with its impingement on the taxpayers who sought his services. Here there is one unusual feature. Although it bears his name and purports to bear his signature, petitioner did not sign the return nor did he see such return after it was prepared previous to its being filed. According to the record, his first knowledge of the contents of the return came when he was shown the return by the examining agent. The schedule of deductions claimed follows the same pattern and, in at least one instance, coincides with the amount of expense charged by another taxpayer who employed Nimro to prepare his return. See .*152
Confronted with the return with its baseless deductions, petitioner does not undertake to justify the deductions claimed but frankly states that he never had the claimed expenses aggregating approximately $ 5,000. With the exception of a very minor item of expense, he concedes the correctness of the respondent's action in restoring same to income. Petitioner, however, strongly urges that he was not guilty of fraud -- that in fact he was the victim and not the perpetrator of fraud.
As to the minor item of expense amounting to $ 252, suffice it to say that the record is wholly insufficient for us to make a finding in favor of petitioner. The proof of amounts spent for living accommodations in foreign countries is so generalized and so lacking in specific information that we would not be justified in hazarding an approximation as suggested in . Accordingly, we affirm respondent's action in disallowing the item of $ 252.
In the matter of fraud we have concluded and found as a fact that the petitioner did not file a false and fraudulent tax return with the intention of evading taxes due. The circumstances here*153 present justify an explanation and discussion of this finding.
The petitioner employed, unwittingly, so far as the record proves, an agent to prepare his tax return, who, judged by appearance, was a reputable person capable of affording clients proper tax advice. He spent but 15 minutes in his company, giving him such information as was asked for and being told by Nimro that he would get accurate information from the employer company. As stated above, petitioner did not see the return prepared by Nimro until confronted with it by *1457 an agent of the respondent. He did not sign the return in blank or at any time. Albeit a more cautious or better informed person might have been put on his guard by Nimro's conduct, petitioner saw nothing to make him believe that Nimro was intending to prepare a false and fraudulent return. Certain it is also that respondent, on whom rested the burden of proof of fraud, has not proven that it was within the actual or apparent scope of Nimro's authority as petitioner's agent to prepare and file a false and fraudulent return.
It is a time honored concept that fraud is personal and must be brought home to the individual charged. If a party is*154 forewarned of the intended fraud or if he knowingly accepts the fruits thereof, he has no ground to complain if held to account. Here on the record made, we are unable to find that petitioner was forewarned of the intended fraud or, having knowledge, accepts the fruits. We are not unmindful of the fact that every taxpayer is, in the first instance, his own tax assessor and owes a duty of preparing and filing a fair and honest return. Nor are we oblivious to the fact that a taxpayer may not automatically shield himself by claiming lack of knowledge of a return's contents. Here, however, the burden of proof rested on the respondent and he must suffer the consequences of a failure of proof that the taxpayer was consciously indifferent to his duties in these respects. Under the law the proof of fraud must be clear and convincing. There is no such proof here. Petitioner may have been negligent but there is no proof of intention of petitioner to defraud the Government of taxes due. Such important elements cannot be left to conjecture. They should be made the subject of proof. Such being the posture of proof in the case, we hold that the Government has failed to establish its case*155 of fraud. No part of the deficiency is due to fraud with intent to evade tax.
Decision will be entered under Rule 50.