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Investigation Division. He was involved with petitioner’s grand
jury investigation and testified that he had prepared reports and
computations of petitioner’s tax liabilities exclusively for use
in the grand jury proceedings. He also testified that he was
unaware that any of those reports or computations were used by
respondent in the course of the audit underlying the notice of
deficiency. The second witness, one of respondent’s revenue
agents, provided no testimony that would support petitioner’s
allegation.
On the record before us, we are unpersuaded that respondent
relied on any grand jury material in the formulation of the
notice of deficiency. We hold that the notice of deficiency is
valid. Accordingly, we sustain respondent’s determination as to
the deficiencies and the additions to tax under section 6661(a).
We turn next to respondent’s determination that petitioner
is liable for the additions to tax for fraud under section
6653(b) and an accuracy-related penalty for fraud under section
6663. Respondent must prove this determination by clear and
convincing evidence. Sec. 7454(a); Rule 142(b); Castillo v.
Commissioner, 84 T.C. 405, 408 (1985); Rowlee v. Commissioner, 80
T.C. 1111, 1113 (1983). An addition to tax (or accuracy-related
penalty) for fraud is a civil sanction “provided primarily as a
safeguard for the protection of the revenue and to reimburse the
Government for the heavy expense of investigation and the loss
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