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201 (5th Cir. 1958), affg. T.C. Memo. 1955-319; Parsons v.
Commissioner, 43 T.C. 378 (1964). While this indicia of fraud is
less compelling than are petitioner's false representations and
pattern of underreported income, it further solidifies the
inference of fraudulent intent in the instant case. Balash
testified that during her initial meeting with petitioner on
December 12, 1984, petitioner informed her that he did not
maintain business records. Balash further testified that
petitioner subsequently told her that he had given his records of
the alleged Schedule C expenses to his accountants. No records
have been produced, however; nor is there credible evidence in
the record that explains their absence. Petitioner contends that
all such records were relinquished to the possession of the
Government for use by the grand jury during the criminal phase of
the investigation against him. Respondent, however, informed the
Court that she requested and received all evidence used by the
grand jury and that no such records were among the materials she
received. We find respondent's statement credible. Moreover,
petitioner's accountant and preparer of his 1983 return testified
that he could not recall whether petitioner provided him with
records of the alleged expenses at issue.
The circumstantial evidence and inferences drawn from the
record clearly and convincingly established that petitioner filed
fraudulent returns for each taxable year at issue. Accordingly,
respondent is sustained on this issue.
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