The opinion
HOLMES, Circuit Judge
(dissenting).
The burden of proof of fraud was on the Commissioner, and as no such proof was offered by him at the hearing, the issue as to fraud was decided in favor of the petitioner. No penalties were imposed by the Board, and the issue of fraudulent understatement of income is not before us. The present inquiry is one of amount, not of intent.
The issue as to whether the taxpayer understated his income is distinct from the issue as to whether he committed a fraud in failing to include the full amount thereof in his returns. The former requires no consideration of his motive, intent, or conduct in making his return. If such income was understated, the deficiency in the tax was due whether or not such understatement was induced by ■ a fraudulent intent to evade the tax.
The determination of the Commissioner that the taxpayer had understated his income is presumed to be correct, and the petitioner has the burden of proving it to be wrong. This burden has not been met. The issue of fraud went out of the case finally when the respondent failed to appeal from the decision of the Board, and it cannot be brought back on appeal for the purpose of relieving the taxpayer of the burden of proving that the deficiencies in his income tax returns were incorrectly determined by the Commissioner.
This court has ruled that the burden of proof placed upon the Commissioner as to fraud is only as to the fraud issue. In Snell Isle, Inc., v. Commissioner, 5 Cir., 90 F.2d 481 , at page 482, this court said: “Clearly it was the intention of Congress to relieve the taxpayer of this burden [of proving freedom from fraud] in cases where there was no actual fraud but the act goes no further. The burden still remains on the taxpayer to overcome the presumption arising from the Commissioner’s ruling as to the amount of taxes *534 actually due. Neither the letter nor intention of the act will support the conclusion that the entire burden is cast upon the Commissioner when he determines fraud and assesses a penalty.”
The majority opinion admits that the income tax returns of the partnership, which purported to show that there were four partners, were the only evidence as to the number of partners, and argues that this was sufficient proof on the question of membership in the partnership. This is equivalent to holding that the presumption of correctness as to the determination of the Commissioner is rebutted by introduction in evidence of the very tax returns upon the basis of which the deficiency was assessed. The burden was on the taxpayer to demonstrate that his returns were correct, and he could not meet this burden merely by introducing the partnership returns in evidence.
It was conceded at the hearing that the partnership returns reflected the full amount of the partnership income, but not that the petitioner’s individual returns reflected his full share thereof. In fact, the gist of the issue was what portion of the income of the partnership should be paid by the petitioner. Were there two partners or four? If only two, was this taxpayer’s portion community income under the laws of Louisiana? Implicit in the determination of the Commissioner is the finding that there were only two partners, that Kastel was one of them, and that he was not domiciled in Louisiana. To put it another way, the Commissioner determined that there was a deficiency in Kastel’s individual returns of a certain amount for 1936 and of another amount for 1937. This determination is presumed to be correct.
In order to meet the burden on him, the petitioner attempted to show that he only had a 30% interest in the net income of the partnership, and that it was community property. To do this, he introduced the partnership returns, which admittedly reflected the net income of the partnership; and Kastel’s individual returns, which were presumed to be incorrect. There is no axiomatic truth in these tax returns, certainly none sufficient to rebut the presumption that the number of partners was incorrectly stated. The refusal of the Board to give any weight to the returns of other so-called partners was warranted because all of these returns were made up by one public accountant and the partnership paid all of the taxes for all of the individuals on all of their returns for 1936; it does not appear who paid the taxes for 1937 — if they were paid at all.
The only remaining issue before us is whether or not the respondent was domiciled in Louisiana during the tax years. The Board decided this against the taxpayer, which was in accordance with the determination of the Commissioner. The question thus presented to us is one of fact. The majority opinion expressly disclaims holding that the taxpayer has met the burden on him for the year 1936; but nevertheless the findings of the Board are set aside as to the taxes for 1936 as well as for 1937. I shall not belabor the point, because it seems clear to me that the decision of the Board should be affirmed as to both years, since the taxpayer was not shown to be domiciled in Louisiana during either year.
Let us examine the five facts that the majority opinion says showed domicile in Louisiana. The evidence is overwhelming that petitioner had a prior domicile in New York or Connecticut, and filed his income tax return in New York, before coming to New Orleans in October, 1935. Upon his arrival in New Orleans he gave his address as New York, and afterwards registered repeatedly at hotels as being from New York City. The mere leasing of hotel rooms and apartments,, without proof of actual occupancy, is insufficient to establish residence, and a. fortiori is insufficient to prove abandonment of an old domicile and the acquisition, of a new one.
The taxpayer was said to be presently in the City, and wrote of himself as late as March 6, 1937, as presently engaged in business in New Orleans. The letter-is quoted in full in the majority opinion. The use of the word presently in both the-letter and the report strengthens the natural inference that the credit manager-got his information from the taxpayer. The word presently in both instances means at this time, and clearly indicates temporary rather than permanent residence. Since the only reference in the letter to the year 1937 is qualified by the word presently, the Board gave the letter no weight or value whatever favorable to the taxpayer. The balance of the letter contains only self-serving declarations as to past events. How, then, can this court *535 say that the Board acted arbitrarily m rejecting such declarations?
The second listed fact in the opinion was “the location of the main business of the taxpayer in New Orleans”. It does not appear to what extent he gave this business his personal attention. Many people have their domiciles in one state and their businesses in other states. Although it appears that the Bayou Novelty Company did not operate outside of Louisiana, it does not appear that the petitioner did not have other business interests in New York and other places.
The third and fourth listed facts are the letter of March 6, 1937, written to the Collector of Internal Revenue, and the filing of income tax returns in Louisiana. It has previously been pointed out that, except as to the self-serving declarations in this letter, its use of the word presently is an admission against interest, and further that evidence of the mere filing of a partnership return is insufficient to rebut the presumption arising from the determination of the Commissioner as to a deficiency in the return of one of the partners. At least the Board may decline to give weight to such evidence.
The last of the five circumstances mentioned in the opinion was the opening and use of charge accounts with merchants in New Orleans. Any transient temporarily residing in a large city may find it convenient to establish his credit with retail stores, but this does not necessarily indicate a purpose to make the place his home. One may have local charge accounts, wherever presently residing, without the slightest intention of abandoning one’s domicile. There is no evidence of petitioner’s intention to abandon his earlier domicile and acquire a new one in Louisiana, except the shreds above mentioned, which it was well within the function of the Board to reject.
It is not for us to say that the five circumstances relied upon to prove domicile in Louisiana were trifles light as air, but this was well within the province of the Board, and in effect this is what it has said. Implicit in the decision of the Board are the findings that there were only two partners, that the taxpayer was one of them, and that his income was understated in the amounts determined by the Commissioner. Further implicit therein was the finding that no evidence in the record was of sufficient weight or value to rebut the presumption of correctness arising from the Commissioner’s determination. These were the findings of an administrative board of such excellence that it was soon to be known as The Tax Court.
Neither this nor any court should usurp the functions of a fact-finding tribunal whose decisions are under review. There is of course no intention to do so in this instance, but the fact remains that the determination of the Commissioner, the findings of the Board, and even a prior decision of this court, are of no avail to prevent a reversal of this entire case. As to the 1936 deficiency, the decision of the Board is not even held to be erroneous. It is reversed as to this item, “since it appears that the facts were not adequately developed on the whole case”. Let us scrutinize this ruling to ascertain whether or not it is erroneous and gratuitous:
The hearing and consideration of this case extended over a period of more than six months. The petitioner was represented by able counsel from beginning to end. Evidence both oral and documentary was offered, introduced, and filed. The hearing was not cut short at any point, but continued until the petitioner’s counsel voluntarily rested. Then time was allowed to file briefs. The Board’s decision was entered nearly a year ago. There has been no indication that either side has further testimony to offer on the 1936 deficiency. There has been no showing as to what further testimony is available. Neither the taxpayer nor his wife testified as to his intention to make his home in Louisiana, nor did they take the witness stand for any other purpose. This was their right and privilege; they doubtless had good reasons for so doing; and there is no basis for saying that the case was not fully developed before the Board. The parties themselves were the best judges of this. In these circumstances the law is clear: If after a full trial the affirmative of the issue is not carried by the party having the burden, judgment should be rendered against him.
Accordingly, with deference, I dissent.