Carneal v. United States, 6668.

• Decision Date: 05 April 1954
• Docket Number: No. 6668.,6668.
• Citation: 212 F.2d 20
• Parties: CARNEAL v. UNITED STATES.
• Court: U.S. Court of Appeals — Fourth Circuit

212 F.2d 20 (1954)

CARNEAL v. UNITED STATES.

No. 6668.

United States Court of Appeals Fourth Circuit.

Argued March 17, 1954.

Decided April 5, 1954.

Alexander W. Neal, Jr., Richmond, Va., and David Nelson Sutton, West Point, Va. (W. Gibson Harris, Richmond, Va., on brief), for appellant.

James R. Moore, Asst. U. S. Atty., Richmond, Va. (L. S. Parsons, Jr., Norfolk, Va., U. S. Attorney, on the brief), for appellee.

Before PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.

DOBIE, Circuit Judge.

This is an appeal from the United States District Court for the Eastern District of Virginia which found appellant, William B. Carneal, guilty of income tax evasion for the years 1947 and 1948, in violation of Section 145(b), Internal Revenue Code, 26 U.S.C. § 145 (b).

Carneal was indicted under four counts of income tax evasion, one count for each of the years 1945 through 1948. The case was heard without a jury and it was found by the Court that the evidence for the years 1945 and 1946 was not sufficient to carry a conviction.

For the years 1947 and 1948, however, the Court found the evidence so strongly indicative of fraudulent intent to evade income taxes that appellant was found guilty on the counts for these two years. The single question before us is whether there is sufficient substantial evidence on the record as a whole to sustain the conviction. Jelaza v. United States, 4 Cir., 179 F.2d 202.

Carneal is a man sixty-six years of age, who, since 1928, has been an automobile dealer in Tappahannock, Virginia, trading as W. B. Carneal Chevrolet Sales. Until the year 1945, Carneal operated as a sole proprietorship, but, because of ill health in the latter part of that year, he decided to take in a former employee, William C. Beazley, as a partner.

Carneal had never had a formal set of books and used what, in his accountant's words, was a hybrid system. When making out his tax returns, which were prepared on the cash basis, it was his partice to go through his bank statements and run a total of his deposits during the year in his business bank account. From the total so arrived at, Carneal deducted certain amounts which he allegedly believed to be proper deductions and the resulting figure was entered as the gross receipts from his business on his income tax return.

In 1947, Chevrolet, because of the increase in size of Carneal's agency, requested him to file monthly reports of his operations on a standard General Motors form, supplied by the Regional Manager. While these forms were of a complicated nature and Carneal was required to hire a bookkeeper to prepare them, yet they clearly indicated the net profit for the agency for the years 1947 and 1948.

Carneal, however, professing complete ignorance of the content or substance of these reports, continued to use his hybrid system for determining his income for purposes of taxation. The discrepancies between partnership income, as clearly evidenced by the General Motors forms, and the incomes reported by Carneal and Beazley on their income tax returns were heavily relied upon by the Court below to...