Parties should be diligent in preparing their stipulations promptly after joinder of issue for the reason that the Board is becoming more reluctant to grant continuances in order that stipulations may be perfected.

Section 64. Order of Evidence.26 The order of introduction of evidence is substantially that which obtains in Federal courts, the Board being lenient, however, in the exercise of its discretion in the admission of evidence after the petitioner has closed his case. In general, the petitioning taxpayer, on whom rests the burden of proof, should introduce in the first instance all his evidence in chief, and then, after the Commissioner has introduced all his evidence in chief, he will be confined to rebuttal evidence.

The Board will generally not interfere to control a party as to the order of proof in support of his case in chief, but will allow him to prove the facts in the order in which he prefers. Where, however, competency of any matter as testimony depends upon proof of certain facts, such proof should be offered before or with the testimony, or some assurance be given the Board that the necessary foundation will be established.

and Canals on Merrimack River, 1 B. T. A. 242, Dec. No. 96, Docket No. 299 (A). The deficiency in tax may be determined by consent of the Commissioner and the taxpayer; see Appeal of Wilbert J. Austin, 1 B. T. A. 18, Dec. No. 12, 28, Docket No. 82. Appeal of Koen Brothers, Inc., 1 B. T. A. 417, Dec. No. 157, Docket No. 712 (A).

For instances in which cases have been settled upon Commissioner's admission, see Appeal of Charles J. Hedwall Company, Dec. No. 20, Docket No. 167; Appeal of Millard Fairland, Dec. No. 21, Docket No. 213.

26 See in this connection Chapter VI, which discusses the Presentation of Cases Before the Board.

Section 65. Documentary Evidence.27 The following rules have been laid down by the Board regarding the receipt of documentary evidence.

Copy of Parts of Document. Where relevant and material matter offered in evidence is embraced in a book, paper or document containing other matter not material or relevant and not intended to be put in evidence, such document shall not be filed but a copy only of such relevant and material matter shall be filed.

Receipt of Documentary Evidence After Hearing. Where agreed upon by the taxpayer and the Commissioner of Internal Revenue at or after the hearing, the division, if it deems advisable, may receive specified documentary evidence as a part of the record within a time to be fixed by it.

Section 66. Best and Secondary Evidence. The Board has in the past been lenient in the application of the general rule, permitting the introduction of carbon copies, press copies and copies made from duplicates. Under the present attitude of the Board, however, it is usually essential to account satisfactorily for the absence of best evidence on seeking the admission of secondary evidence.

Section 67. Admission of Revenue Agent's Report. The Board held in one instance," 28 on objection of counsel for the Commissioner, that an auditor's report was inadmissible, where no original records were offered nor the auditor who prepared the report was

27 Rule 33 of "Rules of Practice," Appendix, p. 141.

28 Appeal of Briggs Hotel Co., 1 B. T. A. 649, Dec. No. 244, Docket No. 1068.

29

called as a witness. In another case, 20 no objection having been made, the deficiency letter and revenue agent's report were admitted in evidence, the accountant and treasurer of the taxpayer corporation having testified.

Where a hearing is continued with the understanding that the Commissioner would authorize a reexamination and audit of the taxpayer's books to be made by the Revenue Agent for the district where the taxpayer resides, the report will be subsequently received in evidence upon submission by counsel for the Commissioner. 30

It may be generally stated, in conclusion, that the Board will rule out a Revenue Agent's report when presented on behalf of the Commissioner and objected to by the taxpayer, unless the Revenue Agent is present for cross-examination. However, the Board will probably admit a Revenue Agent's report when presented on behalf of the taxpayer as secondary evidence of the contents of its books (the absence of the original books being accounted for) merely for the purpose of showing the contents of the books, and not for the purpose of considering any conclusions of the Agent.

Section 68. Book Entries. Books of account are not more than evidential, being neither indispensable nor conclusive. This rule should not, however, be con

31

29 Appeal of Jamestown Worsted Mills, 1 B. T. A. 659, Dec. No. 247, Docket No. 92 (A). See also Appeal of Electrical Supply Co., 1 B. T. A. 658, Dec. No. 248, Docket No. 710. See also Appeal of Estate of Jacob Fish, 1 B. T. A. 882, Dec. No. 320, Docket No. 1337. 30 Appeal of Harry & Kate Canaan, 1 B. T. A. 720, Dec. No. 268, Docket No. 304 (A). But see Chapter V, Sec. 62, "Continuance of Hearing."

31 Doyle v. Mitchell, 247 U. S. 179; Douglas v. Edwards, 298 Fed. 229, 234; Appeal of Even Realty Company, 1 B. T. A. 355, Dec. No. 137, Docket No. 269; Appeal of Chatham & Phenix National Bank, 1 B. T. A. 460, Dec. No. 174, Docket No. 107.

fused with the necessity of first establishing such book entries.31a It does indicate the necessity of supporting such entries, once admitted in evidence, by evidence of the actual facts which are considered controlling.

To establish its invested capital and to evidence the withdrawals of the partners, the taxpayer introduced photostatic copies of ledger sheets. The evidence so submitted was considered clearly inadequate. It was stated that the ledger sheets were incapable of analysis without reference to journal entries or the knowledge of persons familiar with the amounts. The books of original entry were not introduced in evidence. The persons familiar with the accounts were not produced as witnesses. In lieu of such testimony, counsel for the taxpayer attempted to analyse the ledger sheets and to show the amounts of withdrawals, setting forth such analysis in his brief. The Board held that it was unable to determine whether this analysis is correct by comparison with any of the testimony and evidence in the case.32

Section 69. Oral Testimony-Admissibility in Evidence.33 The division holding a hearing is the sole judge of the relevancy and admissibility of evidence. It is its concern to elicit the material facts.

Seetion 70. Hearsay. The rules of evidence relating to hearsay testimony as applied by the courts are now being enforced by the Board with few

31a See Appeal of Spiegel's Housefurnishing Co., Dec. No. 569, Docket No. 2688, relative to minutes of a corporation.

32 Appeal of Gaukler & Stewart, 1 B. T. A. 578, Dec. No. 213, Docket No. 62.

33 Rule 32 of "Rules of Practice," Appendix, p. 141. In connection with the admissibility of evidence see discussion in Chapter VI.

exceptions. Even where admitted, however, the weight given to it varies according to its reasonableness, the standing of the informer and the probable correctness of the statements by the witness.

Section 71. Contradicting Writings by Parole Evidence. The Board has followed the general precedent34 that the rule against varying or contradicting writings by parole evidence obtains only in suits between and is confined to parties to the writing and their privies, and has no operation with respect to third persons nor even upon the parties themselves in controversies with third persons. The taxpayer may therefore introduce oral testimony to contradict or explain away statements contained in agreements between it and other parties.35 But as between the parties, while the taxpayer may introduce oral testimony to contradict or explain away statements in agreements, such testimony will be considered by the Board only for what it is worth, and the Board will not shift to the Commissioner the burden of proving affirmatively that the agreements are not what they appear to be on their face.

In the absence of convincing evidence that the intention of the parties thereto was different from that which the instrument purports, e. g., a sale, the apparent nature of the transaction must be accepted. The intention must be established by clear and con

34 Peugh v. Davis, 96 v. j. 332; Sigua Iron Co. v. Greene, 88 Fed. 207; O'Shea v. New York, N. Y. C. and St. L. R. Co., 105 Fed. 559; Mitchell v. McShane Lumber Co., 220 Fed. 78.

35 Appeal of J. W. Solof, 1 B. T. A. 776, Dec. No. 288, Docket No. 482.