*656 In this proceeding a redetermination is sought of deficiencies determined by the Commissioner for the years 1917, 1918, 1919, and 1920 in the amounts of $391.85, $8,006.57, $3,828.25, and $25,386.29, respectively, together with fraud penalties thereon.
FINDINGS OF FACT.
Petitioner filed joint income-tax returns for himself and wife, Minnie A. Humphreys, for the years 1918, 1919, and 1920, but for the year 1917 separate returns were filed. On January 16, 1925, respondent notified E. C. Humphreys that "an examination of the joint income tax returns of you and your wife" for the years 1917 to 1920, inclusive, disclosed deficiencies and fraud penalties for each year and granted 30 days in which to file a protest against such determination. On January 10, 1925, respondent notified E. C. Humphreys Co., a corporation of which E. C. Humphreys was president and Minnie A. Humphreys, secretary, that a jeopardy assessment (under section 274(d), Revenue Act of 1924) of a deficiency and fraud penalty for the fiscal year ended November 30, 1917, had*2535 been made. No claim in abatement of said jeopardy assessment or bond was filed by E. C. Humphreys Co. On March 5, 1925, respondent notified E. C. Humphreys that a jeopardy assessment under section 274(d), Revenue Act of 1924, of a deficiency and fraud penalty for the year 1919 had been made. No claim in abatement of said jeopardy assessment or bond was filed by E. C. Humphreys. On April 10, 1925, respondent mailed to E. C. Humphreys a deficiency letter wherein notice was given that deficiencies and fraud penalties for the years 1917, 1918, and 1920, as shown in the letter of January 16, 1925, would be assessed. It does not appear that a deficiency letter for any of the years was mailed to Minnie A. Humphreys individually. On May 8, 1925, E. C. Humphreys filed with the Board a petition purporting to be the joint petition of himself, Minnie A. Humphreys, and E. C. Humphreys Co., signed by himself alone, and unverified, appealing from the determination of respondent.
*657 By order dated December 18, 1925, on motion of respondent, filed July 23, 1925, the Board dismissed that portion of the appeal relating to Minnie A. Humphreys and E. C. Humphreys Co., and ordered E. C. *2536 Humphreys to file an amended petition "which shall clearly and distinctly set forth the basis of his appeal from the Commissioner's letter of April 10, 1925, whether involving the year 1919 or not." On May 15, 1926, separate amended petitions on behalf of E. C. Humphreys, Minnie A. Humphreys, and E. C. Humphreys Co. were filed. On June 16, 1926, respondent filed his answer to the amended petition of E. C. Humphreys. On June 30, 1926, on motion of respondent made June 10, 1926, the Board ordered the amended petitioners of Minnie A. Humphreys and E. C. Humphreys Co. stricken from the records of the Board.
At the hearing on the merits of the case E. C. Humphreys, respondent moved to vacate so much of the orders of the Board dated December 16, 1925, and June 30, 1926, as affected the appeal of Minnie A. Humphreys for the years 1918, 1919, and 1920, on the ground that the orders were in error as to said Minnie A. Humphreys.
In the course of the hearing respondent conceded that the statute of limitations had run against the deficiencies assessed against E. C. Humphreys for the years 1917 and 1918 if the Board should find no fraud. Respondent introduced in evidence a certified copy*2537 of the assessment list showing that a jeopardy assessment and a deficiency in tax and a fraud penalty thereon for the year 1919 had been assessed on March 6, 1925, against E. C. Humphreys, and E. C. Humphreys admitted, upon cross-examination, that no claim for abatement or bond was filed. Just before the conclusion of the hearing the parties stipulated the amount of the deficiencies for each of the years involved and submitted to the Board the sole question of whether the evidence established fraud on the part of petitioner.
Petitioner's wife, Minnie A. Humphreys, was the sole owner of E. C. Humphreys Co., of which company E. C. Humphreys was the president. They were engaged in the ore and metals brokerage business. On the books of the company various sums were shown as payments to E. C. Humphreys. Various checks were drawn by the company in the name of E. C. Humphreys in payment of corporate obligations to third parties and the moneys so received were paid by E. C. Humphreys to the appropriate persons.
Petitioner's returns were not filed with intent to defraud or intent to avoid payment of taxes.
OPINION.
VAN FOSSAN: The record of this case contains proof of very few*2538 facts. Petitioner at the outset denied that he had received any sums *658 in excess of those shown on his returns and throughout maintained this position. The questions of Government counsel as to various other sums alleged to have been paid to petitioner were met by a categorical denial of receipt or by an explanation that in some instances checks drawn in petitioner's name were in fact corporate obligations to third parties, in which cases petitioner acted merely as a conduit and paid over the sums to the proper persons.
One fact only gives us pause. After the hearing had consumed the better part of two days' time and the record was filed with reiterated denials by petitioner of receipt of additional income, petitioner and respondent signed a written stipulation agreeing that an order be entered approving the deficiencies as found by the respondent and submitting to the Board only the question of whether the fraud penalties should be approved. No adequate explanation of the reason for the apparent change of attitude was made and no further evidence was introduced.
On the record before us the evidence does not sustain the charge of fraud. Though the two positions*2539 assumed by the petitioner appear inconsistent and were not reconciled, this fact is not enough to prove fraud. The usual presumption of correctness attached to the finding of the Commissioner is fully overcome by the uncontradicted testimony of petitioner.
There being no fraud, the statute of limitations barred respondent from assessing deficiencies for the years 1917 and 1918. The deficiency for 1920 is stipulated to be $25,484.29. No fraud being proven, no penalty attaches for this year.
Under the record in the case the year 1919 is not before us for determination and the action of the Commissioner in respect to that year may not be disturbed. The motion of the Commissioner for setting aside the orders of the Board as to Minnie A. Humphreys is denied.
Judgment will be entered on 15 days' notice, under Rule 50.
Considered by MARQUETTE and PHILLIPS.