Article 143 (Estimated Decision and Revision)

2. The costs of appeal shall be borne by the Plaintiff.

2. Purport of appeal: The part of the judgment of the court of first instance dismissing the Plaintiff’s claim shall be revoked. On March 10, 2005, the part exceeding KRW 2,82,775,390 of the disposition imposing global income tax of KRW 3,132,010,108 against the Plaintiff on March 10, 2005 by the Defendant shall be revoked.

The reasoning for the court’s explanation concerning the instant case is as stated in Articles 8(2) and 420 of the Administrative Litigation Act, and Article 420 of the Civil Procedure Act, since the reasoning for the court’s explanation is as stated in Articles 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act except for the following addition, deletion,

○ 6 6 to 7 '49 '' and 'No. 51 to 53' are added between 'No. 2' and 'No. 6

○ 12 12 - 7 - 8 '(at present, ..)' deleted.

○ 12. The following shall be added below the 8th page:

(13) In Seoul High Court Decision 2007No2665, the above reversed and remanded Seoul High Court Decision 2007No2665, the Prosecutor deferred the time when the income was reverted to the Plaintiff and the person in charge of the bill discount (e.g., the former income of June 1997) in five consecutive months (e.g., the former income of June 1997) in accordance with the purport of reversal and transmission of the above Supreme Court Decision 845,32,368, the evaded tax amount of KRW 169,06,473, the income tax amount of the Plaintiff and the former 00,686,023, the evaded tax amount of KRW 723,54,924, the income tax amount of the Plaintiff and the former 00, 4105,07, 087, 3681, 197, 367, 287, 2081 and 197).

(14) On June 27, 2008, the court of the above reversal and return trial rendered a judgment of acquittal on the grounds that the statute of limitations has expired with respect to the above act of tax evasion in 1997, on the grounds that all the remaining act of tax evasion between the plaintiff and the Lee ○○ was convicted, and sentenced to a suspended sentence of imprisonment with prison labor for three years, a suspended sentence of imprisonment with prison labor for three years, a suspended sentence of a fine of four years and a fine of ten billion won against the plaintiff, and the above judgment became final and conclusive on August 4, 2008.

○14 Up to seven (7) days after the bill discount is changed to the bill discount money.

○16 11. Added to the following:

(5) In the case of the Seoul High Court Decision 2007No2665, which was the reversal and transmission of the criminal procedure against the plaintiff, the plaintiff asserted that the amount of the tax equivalent to the income amount (105,056,31 won as seen above 1-d.) from January to May 12, 1997 among the disposition of this case is unreasonable, as the plaintiff did not have any act of bill discount during the period from August 1996 to August 12, 1997, since the public prosecutor committed an act of bill discount between August 1997 and August 12, 1997, which occurred when the bill discount was issued by the prosecutor during the amendment of the indictment. However, in light of the aforementioned various circumstances, the plaintiff's assertion that the income from the above act of bill discount between August 1996 to August 12, 197 can also be confirmed.

2. Conclusion

Therefore, all of the plaintiffs' claims of this case shall be dismissed as they are without merit, and the judgment of the court of first instance is just in this conclusion, and all of the plaintiffs' appeals are dismissed, and it is so decided as per Disposition.

[Seoul Administrative Court 2005Guhap32866, 11 June 2008]

2. The plaintiff's remaining claims are dismissed.

3. The costs of lawsuit shall be borne by the Plaintiff.

The following facts shall not be disputed between the parties, or may be acknowledged by considering the whole purport of the pleadings in each entry in Gap evidence 1-1-2, 2, 3, 2, 3, 1-2, 5-1, 5-2:

A. From March 1996 to the end of March 2001, the Plaintiff worked as the representative director of ○○ Construction Co., Ltd. (hereinafter “○○ Construction”) and from January 2002, ○○ representative director and the head of ○ Construction Co., Ltd. (hereinafter “○○ Construction”). From January 2002, the amount reported by the Plaintiff was KRW 2,82,775,390.

B. The Defendant: (a) took advantage of the funds owned by each individual owner from January 1, 1997 to December 2001, the Plaintiff: (b) made a discount in cash at the rate of 2-3% per month from the date of payment; (c) obtained interest income of KRW 1,484,408,616 from the due date of the promissory note; and (d) omitted the Plaintiff’s income from KRW 742,204,308, which is the Plaintiff’s income portion (=1,484,6160, KRW 500, KRW 500, KRW 500, KRW 500, KRW 500, KRW 500, KRW 500, KRW 3750, KRW 397, KRW 5050, KRW 505, KRW 397, KRW 1965, KRW 57, KRW 3095, KRW 505, KRW 509, KRW 297, and KRW 397.54585).

C. The plaintiff was dissatisfied with the above disposition and filed an appeal with the National Tax Tribunal on April 2005, but the National Tax Tribunal dismissed the plaintiff's appeal on September 9 of the same year.

D. After that, on January 5, 2007, while the lawsuit of this case was pending, the defendant changed the nature of income from the discount rate to "business income" and transferred income from discount rate to the plaintiff five months (150 days) after the maturity date of the relevant Promissory Notes, the defendant deemed that the amount of discount discount income for the year 1997, which the plaintiff initially omitted, belongs to the plaintiff (52,72,515 days) (i.e., the above7,204,308 won recognized as the omission amount for the original return + the above 742,204,308 won recognized as the omission amount for the return, + 105,056,331 won - 31 won from August 5, 1997 to December 12, 1997; 3198,300 won for the above discount rate for the year 198,197.

2. Whether the part of the instant lawsuit seeking revocation of the amount exceeding KRW 3,132,010,108 among the disposition imposing global income tax of KRW 3,243,534,958 for the imposition of global income tax of KRW 3,197 is lawful

On March 10, 2005, the defendant issued a disposition to correct an increase in the amount of KRW 3,243,534,958 to the plaintiff on January 5, 2007. In other words, on January 5, 2007, the defendant corrected the reduction in the amount of KRW 3,132,010,108. If the above disposition was corrected or revoked, the part reduced in the original disposition or the initial disposition revoked becomes retroactively null and void. Thus, the plaintiff's filing of a claim for revocation is without a benefit of lawsuit.

Therefore, the part seeking revocation exceeding KRW 3,123,010,108 of the disposition imposing global income tax of KRW 3,243,543,958 among the instant lawsuit is unlawful.

3. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff asserts that the disposition of this case, which the defendant decided and notified to the plaintiff for the following reasons, is unlawful (the nature of income is not "interest income," but "business income," and that the period of income shall be 150 days after the due date of promissory notes, which is 150 days after the due date, shall not be judged separately since the defendant accepted and disposed of the plaintiff's assertion on January 5, 2007)

(1) Article 26-2(1)3 of the Framework Act on National Taxes provides that income tax shall not be imposed at the lapse of five years after the date on which it can be imposed. Thus, the global income tax for the year 1997, which was the day following the reporting and payment period, shall not be imposed after the lapse of five years from June 1, 1998 to May 31, 2003 after the lapse of five years from the calendar. Thus, the disposition of this case imposed on March 10, 2005 is unlawful since it imposed the exclusion period for imposition.

(2) The instant disposition is not based on the field investigation or taxation data on the Plaintiff’s income, but based on the Plaintiff’s presumption statement in the relevant criminal case, the protocol of suspect examination or the statement of witness on-site construction business operator who does not comply with the Plaintiff’s statement or bill discount statement or fact-finding, and the instant disposition based on the data lack credibility is unlawful (in particular, the Defendant issued the instant disposition by deeming that the Plaintiff omitted the return of KRW 105,056,31 from August 1996 to December 12 of the same year, but there was no prosecution on the fact that the bill is to be issued during the pertinent period, and there was no time time limit for the Plaintiff to temporarily accept only the fact that the bill is to be issued from August 1997 to December 201, and thus, the instant disposition by recognizing the Plaintiff’s fact that the bill is to be issued during the said period is unlawful).

(3) The discount rate of a bill converted the above presumption statement into the table shall be calculated on the basis of the total amount of the non-performing funds-raising ingredients and the non-deductible funds-related progress payment, and according to the statements of some field construction business operators, even if the actual bill discount was less than 150 days by the maturity date when the actual bill discount was made through the ○○ Construction and the partner company, the discount rate shall be calculated on the basis of five months after the maturity date, and the disposition of this case is unlawful in calculating the tax base.

(4) Since there is no book and documentary evidence on the Plaintiff’s business income subject to bill discount, the instant disposition, which was made without deducting all necessary expenses, on the pretext of calculating the amount of income through the on-site investigation, should have been calculated by applying the income standard rate of 82.5% in the financial industry.

(b) Related statutes;

Article 26-2 (Period for Excluding Assessment of National Taxes)

Article 19 (Business Income)

Article 80 (Determination and Correction of Income Tax Act)

Article 143 (Estimated Decision and Revision)

Article 145 (Standard Income Rate)

(c) Fact of recognition;

The following facts are not disputed between the parties, or may be acknowledged by taking into account the whole purport of the pleadings in each entry in Gap evidence 1, 2, 6, 11 through 49, Eul evidence 2, Eul evidence 3-1, 2, and 3:

(1) On April 19, 2004, the Plaintiff stated to the effect that, upon being investigated by the ○○ Prosecutor’s Office on April 19, 2004, ○○○○ Office, ○○ received a discount at a rate of 4% per month from around 1985, and that, in order to pay the wages of the employees, ○○○ received a discount at a rate of 10 million won per month from the corporate bonds market, ○○○○ Office received a discount at a rate of 2% to 2.5% per month from the personal funds and received a discount of promissorysory notes at a rate of 2% to 2.5% per month, and that the said profits were combined with the funds managed by ○○○○○○, etc., where ○○○○○ had a vice head from around 1996.

(2) At the time of the foregoing investigation, the Plaintiff submitted the following supplementary materials: (a) the details of the bill discounted by ○○○○○○○○○○○○○, etc., monthly, annual, annual, and monthly, including the statement of the revenue bill discount calculation table; and (b) monthly bill discount statement. The Plaintiff stated that the said materials were prepared based on the current status, etc. of the promissory note out of the amount of construction work paid by ○○○○○○○○○○○○○○○○○.

(3) According to the above data, the Plaintiff acquired 417,184,494 won in 196, 2,438,570,876 won in 197, and 5,412,758,046 won in 198, 1999, and 6,508,341,573 won in 200, 200, and 4,593,889,489,480 won in 207,650,000 won in 199, and thereafter, during the prosecution investigation, the Plaintiff stated that 00 won in 27,650,000 won in 20,000 won in 20.

(4) On April 27, 2004, the Seoul Central District Prosecutors' Office established the plaintiff, Lee ○, and Lee ○○ in collusion with the plaintiff and Lee ○○, and received KRW 27,022,276,959 in the aggregate by receiving the construction cost in excess of the actual construction cost, and then receiving it for personal purposes, and embezzled 150 separate accounts for personal purposes, and evaded corporate tax of KRW 7,404,794,956 in aggregate by receiving tax invoices, as if the construction cost was paid in excess of the actual construction cost, and the case of ○○○○ was charged for violating the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement), the Act on the Aggravated Punishment, etc. of Specific Crimes (tax) and the Punishment of Tax Evaders Act (tax) and the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (tax) and the crime of violating the Punishment of Tax Evaders Act. The case was tried by the ○○○ District Court.

(5) On May 4, 2004, ○○○○○○○’s subcontractor’s field construction business operator, ○○○○○ and Gab○○○ stated in the above ○○ Investigation Division’s investigation on the same day, that “The ○○○○ and Gab○○” made a subcontract for part of the construction work performed by ○○○○○○ and Dob○○○, in the same month and the above ○○ Investigation Division’s investigation on the same day, and supplied the leased equipment or goods, etc., and made a discount on part of the construction work performed by ○○○○ and Dob○○○ through the Plaintiff.”

(6) However, in the investigation of the above ○○ Investigation Division on May 18, 2004, the Plaintiff made a statement from around 1985 to around 2001 to to the effect that the amount of profit was different from the previous statement, and the Plaintiff’s ground for reversal begins to reverse part of the previous statement. As to the grounds for reversal, the Plaintiff only recognized that the Plaintiff was all of the facts since ○○ and ○○○○○○ employees prepared the data based on various books in the company, and that it was subject to global income tax of approximately KRW 27 billion on May 14, 2004 on the basis of its own statement.

(7) After that, on May 27, 2004, the ○○○○○ District Prosecutors’ Office conspired with the Plaintiff and this○○○○○○○○○○○ Construction, which became an executory company or a pilot company, to conduct construction works under the direct supervision of the Plaintiff’s and this○○○○○○ Construction, and that some of the construction works were conducted by means of entering into a subcontract with a disguised subcontractor established by making full investments in ○○○○○ Construction, and paid some of the progress payments into a promissory note, the maturity of which comes 150 days after the maturity of 2% discount rate and receiving a promissory note face value on the maturity date. From January 1, 1996 to December 2, 2001, including the charges of tax evasion under the Act on the Aggravated Punishment, etc. of Specific Crimes and the charges of tax evasion under the said Act including 186,702,983,940 won, and the charges of tax evasion under the Act on the Aggravated Punishment, etc. of Specific Crimes (hereinafter “○○○”).

(8) In the second procedure of the case of ○○○○ District Court 2004 high 445 and 628 (combined) on June 9, 2004, the Plaintiff obtained profits from the discount of a bill at the Plaintiff’s individual’s own funds from 1985 to 1995, and from January 12, 1996 to December 2001, the amount of the discount of a bill was mixed with the Plaintiff’s personal funds and the ○○○○○○○○○○○○○’s funds managed by the ○○○○○○○○○○○○○○○ branch. Since the funds of the ○○○○○○○○ branch at the time of undergoing an investigation at the prosecution, the amount of the funds at the ○○○○ branch made a discount of the Plaintiff’s individual funds, the amount of the funds at the ○○ branch made a statement to the effect that it is difficult to separate it, but it is difficult to find any material calculated as an average amount of 6 billion won.

(9) On July 18, 2004, the Plaintiff borrowed the name of 11st collaborative companies from 204 to 27 billion won for the excessive appropriation of construction cost. However, there is no part of the fact that the Plaintiff offered a promissory note discount to 200 billion won for the on-site construction business operators using the above non-funds, and that it offered a discount of 300 won for the on-site construction business operators using personal funds. Although there is a fact that the promissory note discount was imposed on the on-site construction business operators of 200, it is impossible to specify the amount of discount and evidence as 60% of the previous 60-70% of the construction cost, 50-70% of the discount amount, and 9-70% of the discount rate of 9-60% of the discount rate of 19-60% of the total amount of 97-60% of the discount rate of 9-60% of the total amount of 9-600% of the total amount of the discount rate of the 9-6-600-6.

(10) On July 21, 2004, the Plaintiff and ○○○○○○○○○○○○○○○○○○○○○○○○ upon deposit of the funds owned by the individual account, with KRW 18,671,593,574 as the total income amounting to KRW 46,702,983,940 at the original Plaintiff and this○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ KRW 628) obtained at the discount of the field construction business operators and received at the maturity of KRW 46,702,93,97,96,97,97,96,97,96,97,96,97,97,96,97, 206, 197, 206, 360, 196, 197, 306, 1964, 297, 197, 196,

(11) On July 21, 2004, at the fifth trial proceedings in the case of ○○○○ District Court 2004 high 445,628 (Joint), the Plaintiff made a statement to the effect that, on the 1997, KRW 50% discount of the promissory notes paid to the construction work-related subcontractor, 2,835,684,421 won, KRW 662,760,038 won on 1999, KRW 4,000, KRW 436,59, KRW 139, KRW 2737,729, KRW 6169, KRW 147, KRW 14757, KRW 1481, KRW 297, KRW 147, KRW 4757, KRW 297, KRW 148, KRW 47, 200. The Plaintiff made a specific statement to the effect that the Plaintiff had consented to this effect.

(12) On August 13, 2004, the ○○○ District Court found the Plaintiff and ○○○○○○ as guilty of all the facts charged against the Plaintiff and ○○○○○○○ in the above case on August 13, 2004, sentenced the Plaintiff to a suspended sentence of five years and a fine of 12 billion won for a period of two years and six months, a suspended sentence of four years and a fine of 12 billion won for the Plaintiff, respectively, and filed an appeal with the ○○○○ High Court on the condition that the Defendants and the Prosecutor would have evaded the tax of KRW 205Nu2864 on the global income at the ○○○○○ High Court on the condition that it would be 100,000,000,0000,000 won, and thus, the lower court reversed the Defendants’ respective arguments on the facts charged against each of the instant High Court on December 8, 2004, on the ground that the sentencing of ○○○○○○ was too unreasonable.

D. Determination

(1) Determination on the first argument

(A) Under Article 26-2(1)1 of the Framework Act on National Taxes, where a taxpayer evades a national tax, or obtains a refund or deduction by fraudulent or other unlawful means, a taxpayer may impose a national tax for 10 years from the date on which the national tax can be imposed. Here, “Fraud or other unlawful acts” refers to a deceptive scheme which makes the imposition and collection of tax impossible or considerably difficult (see Supreme Court Decision 2001Do3797, Feb. 14, 2003).

(B) On the other hand, even though the Plaintiff obtained income from the discount of a promissory note issued by an on-site construction business operator using personal funds, etc. over a six-year period from January 1, 1996 to December 2001, the Plaintiff evaded a huge amount of tax due to the Plaintiff’s failure to file a tax return by distributing it to the borrowed account and depositing it in the borrowed account, and concealing income. This constitutes a fraud or other unlawful act under Article 26-2(1)1 of the Framework Act on National Taxes, which makes it impossible or considerably difficult for the tax authorities to impose and collect taxes.

Therefore, the exclusion period for the Plaintiff’s evasion of income tax under Article 26-2(1)1 of the Framework Act on National Taxes shall be ten years from the date following the end of the period for filing income tax return and payment. Thus, the Plaintiff’s global income tax for the year 1997 shall be until May 31, 2008 after the lapse of ten years from June 1, 1998, the day following the due date for filing the return, and the disposition of this case imposed on March 10, 2005, which is within the said period, is lawful.

Therefore, this part of the plaintiff's assertion is without merit.

(2) Judgment on the second argument

(A) In calculating the tax base, the data prepared in the course of the investigation or tax investigation shall not be considered as one of the calculation data immediately on the ground that the reasons for taxation are stated. However, in a case where the process and contents of the preparation are not prepared contrary to the free will of the parties or persons concerned, but the content thereof is recognized as being reasonable and correct as taxation data, it shall be deemed as one of the data that can serve as the basis for the on-site investigation (see Supreme Court Decision 91Nu4997, Dec. 10, 1991).

(B) In light of the following circumstances, i.e., (i) the Plaintiff’s presentation of a promissory note at a discount rate of 4% per month by the on-site construction business operator, and (ii) the Plaintiff’s presentation of a discount rate of 30 billion won per month by personal funds, etc., i.e., the Plaintiff’s presentation of a discount rate of 9% per month, based on the following facts: (i) the Plaintiff’s presentation of a discount rate of 9% per month; (iii) the Plaintiff’s presentation of a discount rate of 9% per month by its own funds; and (iv) the submission of a written bill at a discount rate of 9% per month by its own funds; and (v) the submission of a written bill at a discount of 9% per month by its own funds; and (v) the Plaintiff’s presentation of a written bill at a discount of 9% per month by its own funds to clarify the specific contents of the bill; and (v) the submission of a written statement at a discount of 9% per month by its own funds.

Therefore, the plaintiff's assertion on this part is without merit.

(3) Judgment on the third argument

Until the investigation process and trial process, the Plaintiff stated to the effect that ○○, etc. issued bills at the maturity of 150 days from the date of issuance and discount of bills. Income from the Plaintiff’s discount of bills was calculated on the basis of the annual discount of bills and the monthly discount of bills submitted by the Plaintiff, stating that ○, etc. issued bills at the maturity of 150 days from the date of issuance, and that income from the Plaintiff’s discount of bills was all issued by ○, etc. on each of the corresponding months from 196 to 201, without specifying the specific dates, and on the basis of the annual discount of bills and the monthly discount of bills. In particular, the above discount of bills is not erroneous in calculating the above discount, taking into account the following: (a) a working person, who was in charge of the relevant work, was investigated by the prosecutor’s office at the time, and was prepared and submitted based on the books, etc. kept in ○○ and ○○.

Therefore, the plaintiff's above assertion is without merit.

(4) Judgment on the fourth argument

The disposition of this case is based on the plaintiff's statement at the investigative agency and the court of law about the time of occurrence, cause, amount, and counterpart of the discount of bill discount income, and taxation data on the bill discount amount submitted by the plaintiff, and thus, the disposition of this case was duly conducted through a lawful field investigation. Meanwhile, in the course of creating the off-site funds in such a way that the plaintiff paid the subcontractor with the excessive construction cost appropriated to the subcontractor and received the excessive refund of the over-paid portion, the plaintiff paid the over-paid portion of the construction cost, as in the process of creating the off-site funds by means of the above disguised collaborative company's employees, the necessary expenses are most within the area controlled by the plaintiff, so it is reasonable to view that the defendant is difficult to prove that there is a need to prove it to the plaintiff as the necessary expenses for the business income of the trade type of revenue from the above special type of payment business, unlike the business income from the general price sales business as above.

However, in light of the fact that the Plaintiff cannot at all assert and prove necessary expenses incurred in relation to the above business income, unlike the general price business, and that it is difficult to deem that the bill payer took the form of fund management by ○○○○○ through ○○ building or the company organization of ○○○○○, and thus, separate necessary expenses have been incurred to the Plaintiff, the mere fact that the Plaintiff asserted necessary expenses deduction based on the estimation method to apply the standard income rate cannot be deemed as satisfying the requirements for the estimation investigation, or accordingly, that necessary expenses should be deducted.

Therefore, the plaintiff's assertion on this part is without merit.

4. Conclusion

Therefore, the part of the instant lawsuit seeking revocation of the amount exceeding KRW 3,132,010,108 among the disposition imposing global income tax of KRW 3,243,534,958 for the imposition of global income tax of KRW 3,197 is unlawful, and thus, the remainder of the Plaintiff’s claim is dismissed as it is without merit. It is so decided as per Disposition.