Article 80 of the Income Tax Act shall be decided and corrected.

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

The following facts are not disputed between the parties, or can be acknowledged in full view of the purport of the whole pleadings in Gap evidence 1-2, Gap evidence 2-3, Eul evidence 1-1, 2-3, Eul evidence 2-2, Eul evidence 9-1 through 4.

A. The Plaintiff worked as the president of ○○○○ Company’s representative director, and took overall charge of the business of ○○○ Corporation, an affiliate company, etc.

B. The defendant paid 30 won to a large number of field construction business operators (one day, one hundred and fifty-eight; hereinafter referred to as "site construction business operators") from January 1, 1997 to December 202, 15, 200, 30% of the above promissory notes at a discount of 2% to 30% or 3% of the above promissory notes at a rate of 150, 484, 408, 616, 1997 to 30, 46% of the total amount of income belonging to 49% of the total amount of income belonging to 96% of the total amount of income belonging to 1,48, 194, 684, 421 (the amount of income belonging to 40% of the total amount of income belonging to 50% of the total amount of income belonging to 96% of the 197, 40% of the total amount of income belonging to 94% of the plaintiff and 198.

On the other hand, in imposing the above tax, the defendant deemed that the income of this case was reverted to the plaintiff with discounted interest income calculated at a certain discount rate in the relevant month when the promissory note was issued as construction cost to the field construction business operator.

C. The plaintiff was dissatisfied with the above disposition and filed an appeal with the National Tax Tribunal on January 12, 2006, but the National Tax Tribunal dismissed the plaintiff's appeal on July 27 of the same year.

D. After that, the Defendant changed the nature of the instant income to “business income” ex officio on January 5, 2007, while the instant lawsuit was pending, and deemed that the instant income was reverted to the Plaintiff five months (150 days) after the maturity date of the relevant promissory note, the comprehensive income tax for the year 1997 reverted to 441,258,927 (196 through 12, the income for the year 1997 is reverted to the year 197, and the income for the year 214,481,793 won was reverted to the year 198, and the total income for the year 1998 was returned to 197, the amount of income for the year 1998 and the amount of income for the year 190,543 won (19, 197) was reverted to the Plaintiff. < Amended by Presidential Decree No. 155582, Aug. 12, 1997; Presidential Decree No. 15970, Aug. 197, 1997>

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(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 is assessable. Thus, the global income tax for the year 1997 from June 1, 1998, and the global income tax for the year 1998, from June 1, 1999 to June 31, 2003 and from May 31, 2004, the exclusion period for imposition expires after the lapse of five years from June 1, 1999 to May 31, 2003 and May 31, 2004. Thus, the disposition of this case imposed on November 4, 2005 is unlawful with the exclusion period for imposition.

(2) The Defendant calculated the tax amount of the instant disposition on the ground of the suspect interrogation protocol or bill discount statement, which lacks the free will of the originator due to a unilateral and suppression interview and coercion by the investigative agency without any lawful on-site investigation or taxation data on the Plaintiff’s income, and other statements by the partner company related to the subcontractor. The Plaintiff’s statement or materials submitted to the investigative agency by this ○○, lack of external appearance, and objectively lack of its establishment or authenticity, and thus, the instant disposition is unlawful.

(3) The instant income falls under the absence of accounting books and documentary evidence to calculate the tax base, and thus, the Defendant estimated the instant income amount by applying 82.5% of the sales income of the instant income, but calculated the instant income amount on the basis of data lacking external appearance, and thus, the instant disposition of taxation was unlawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

The following facts may be acknowledged in full view of each evidence mentioned above, Gap evidence 4 through 9, Gap evidence 10 (the same as Eul evidence 4), 11 through 26, Gap evidence 33 (the same as Eul evidence 5), Gap evidence 34 (the same as Eul evidence 6), Gap evidence 35 (the same as Eul evidence 7-1), Gap evidence 36, 37, 38, Gap evidence 41, Eul evidence 41, Eul evidence 3, Eul evidence 8, Eul evidence 8, and witness's testimony (excluding the part which is not trusted in front and rear) and the whole purport of the arguments.

(1) On April 19, 2004, in the investigation by the ○○○ Investigation Division of the Public Prosecutor’s Office, “○○” paid, in cash, promissory notes and cash to on-site construction business operators at a certain rate. On the ground that on-site construction business operators paid wages to human beings in cash, they knew that a promissory note would incur a large amount of damage by using the promissory note at a discount of 4% per month on a bond market, and provided a discount of a discount rate of 2% between a month and 2.5% at a discount rate of 2.5% by personal means of personal funds. The said discount funds begin with the first 10 million won, and came to gain profits of approximately 30 billion.”

On the other hand, in accordance with the above investigation, ○○○ submitted ○○’s discount of ○○’s non capital, which was administered through ○○○○○○, to the field construction business operator who received the promissory note from the said investigation, including the details of discount of ○○○’s non capital, i.e., monthly bill discount table (annual) and monthly bill discount table, and i.e., monthly bill discount table (Ga evidence 11; hereinafter referred to as “bill discount data”), according to the bill discount statement, 417,18,494 won, 197, 2,438,570,876 won, 198, 5,412,758, 046 won, 199, 10, 412,35, 304, 208, 205, 2084, 298, 2098 won, 305, 2098.

(2) On April 27, 2004, the ○○ Prosecutor’s Office (hereinafter “○○ Office”) conspired with the Plaintiff with the Plaintiff to establish a disguised subcontractor, and then received KRW 27,022,276,959 in total from 150 in order to use it for personal purposes, and embezzled 7,404,79,94,956 in total by receiving a tax invoice as if it had been paid more than the construction cost actually spent by the disguised subcontractor. The ○○○○○ Office filed a public prosecution for the crime of violating the Act on the Aggravated Punishment, etc. of Specific Economic Crimes (Embezzlement), the Act on the Aggravated Punishment, etc. of Specific Economic 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 Punishment of Tax Evaders Act (hereinafter “○○○○○○○○”) under the following circumstances: (a) filed a public prosecution for the crime of violating the Punishment of Tax Evaders Act.

(3) Investigations after prosecution

(A) On May 4, 2004, ○○○○○○○’s subcontractor’s field construction business operator, ○○○○ and Gab○○○○ stated in the above ○○○ Investigation Division’s written statement to the effect that, on the same day, ○○○, and Ma○○○○ stated that, on the 6th day of the same month, part of the construction performed by ○○○○○○ was subcontracted, supplied equipment rental or goods, etc., and received a discount from ○○○, etc., with cash, 150’s promissory notes, the maturity of which is 150 days’ maturity.

(B) However, on May 18, 2004, ○○ began to reverse part of the previous statement by making a statement to the effect that “The amount of profit is different from the previous statement,” although there was a fact that ○○ discounted a promissory note against on-site construction business operators from around 1985 to 2002.”

(4) After that, on May 27, 2004, the ○○ Prosecutors’ Office conspired with the Plaintiff and this○○○○○○○○ Construction Work, which was being implemented by the Plaintiff and the Plaintiff and this○○○○ Construction Work, and a part of the construction work of the apartment construction work on which ○○○○○○ Construction Works had been implemented under the direct management of the said apartment construction work, as if they were given a subcontract to a disguised subcontractor established by making full investments in ○○○ Construction Works, and paid part of the progress portion to the site construction work with a promissory note with a maturity of 150 days at the maturity rate of 2%, and received a promissory note at the maturity rate of 196,702,983,940 won from January 1, 1996 to December 2002, including the amount of interest income equivalent to KRW 150,186,7940,7540 and 404, etc. of the said Act on the Aggravated Punishment of Specific Crimes (hereinafter “○○○”).

(5) On June 9, 2004, ○○○ stated to the effect that the funds deposited with the discount of notes from January 1, 1996 to December 12, 2002 in the ○○ District Court 2004Da445, 2004Kahap628 (Joint Trial) stated to the effect that the funds are against its own personal funds and the remainder is acquired with the discount of non-funds. However, the amount of the discount is not consistent with the discount amount, and it is different from the fact that the bill discount attached to the indictment is not required to be deducted (the Plaintiff stated to the effect that detailed statement on the fact that the bill discount attached to the indictment is to be issued by ○○○).

(6) Statement of July 18, 2004 at ○○○○ District Prosecutors’ Office

(A) On July 18, 2004, the Plaintiff entered into a subcontract construction contract with 11 collaborative companies registered on the basis of the construction cost excessively appropriated through ○○○ through the subcontractor from February 18, 1996 to March 2001, and managed approximately KRW 27 billion in borrowed-name accounts by lending 150 of funds in the name of the on-site construction business entity, etc. Around 1996, the Plaintiff received a report from ○○○○○ Office to raise funds for ○○○○○’s non-financing by using a discount of promissory notes paid out of construction capital from ○○○○○○ Office. The Plaintiff stated that the details of the accurate discount of promissory notes were unaware of the fact that it was managed by ○○○○○○○○○○○, but it was necessary to use the discounted discount to the Plaintiff and ○○○○○, including an affiliate company. The Plaintiff made a request to use the discounted discount of funds as one’s own funds.

(B) On July 18, 2004, this is nothing more than 27 billion won due to the excessive appropriation of construction cost from construction business operators under their names through 11 disguised collaborative companies. However, it is not true that the portion of the discount of promissory notes against the construction site business operators using the above funds and the portion of the discount of promissory notes against the construction site business operators using personal funds is not part of the discount of 00,000. ○○ ○ ○ LLC 5% of the discount of promissory notes, but it is difficult to specify the amount of discount of 60% of the amount of 60% of the amount of 60% of the amount of 60% of the amount of 60% of the amount of 70% of the amount of 90% of the amount of 970% of the amount of 970% of the amount of 90% of the amount of 94% of the amount of 90% of the amount of 90% of the amount of the discount on the market.

(7) On July 21, 2004, in the case of the above 2004 High 445, 2004 High 204 High 628 (Joint) cases, the plaintiff and Lee○○○○ was liable to evade the total income tax of KRW 18,671,593,574 (the above 2004 High 628) by putting the funds owned by the individual into the name account and jointly managing the income of KRW 204 high 45,204 high 204 high 5,204 high 628 (Joint). The plaintiff and Lee○○ resolved to avoid the total income tax of KRW 18,671,593,574 (the above 200 high 628) by putting at a discount of 204 high 2,000 high 2,000 high 20 high 20 high 5,000 high 2 high 197.

(8) In the fifth trial procedure of this case, ○○○○, which was held on July 21, 2004, 2004, 445 Ma445, 2004 Ma628 Ma628 (Joint), 50% of the promissory notes paid to senior collaborative enterprises for construction work, was discounted by 1,484,408,616 won in 1997, 2,835,684,421 won in 1998, 6362,760,038 won in 199, 200, 200, 204 Ma4,537,729, 616 won in 201, 204 Ma17,5714,5716 won in 198, 200, 300, 34,000 won in 20,000 won in 1,714, and 314.

(9) On August 13, 2004, the ○○ District Court found the Plaintiff guilty of all the facts charged against the Plaintiff and ○○○○○○ in the above 2004Da445, 2004Gahap628 (Joint), and sentenced the Plaintiff to a suspended sentence of 5 years and a fine of 12 billion won, and a suspended sentence of 4 years and a fine of 12 billion won in 2 years and six months, respectively. The Plaintiff and ○○○ filed an appeal. The ○○ High Court, which is the appellate court, dismissed all of the allegations by the Plaintiff, ○○○○○ and ○○○○○○○ on the ground of erroneous facts as of December 8, 2004, and sentenced the Plaintiff to a suspended sentence of 3 years and 12 billion won, and suspended the fine of 12 billion won as of 12060,006.

D. Determination

(1) The exclusion period portion

(A) According to 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, a "Fraud or other unlawful act" refers to a deceptive scheme which makes the imposition and collection of tax impossible or considerably difficult, or other affirmative act which makes it considerably difficult, and it does not constitute a mere failure to report under the tax law or making a false report without accompanying any other act (see Supreme Court Decision 2001Do3797, Feb. 14, 2003).

(B) The Plaintiff, along with this case, evaded the enormous amount of tax because it did not file any tax return, even though it obtained income from the personal funds, etc. from January 1, 1997 to December 2002 from the date of discount of promissory notes issued by the field construction business operators by using personal funds, etc. for a period of six years from the date of 197 to December 2002. This constitutes an affirmative act that makes it impossible or considerably difficult for the tax authorities to impose and collect taxes, and constitutes fraud or other unlawful act under Article 26-2(1)1 of the Framework Act on National 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 time limit for return and payment of income tax in the pertinent taxable period. Thus, the Plaintiff’s global income tax for the years 1997 and 1998 shall be until the day following the due date for return and ten years from June 1, 1998 and June 1, 1999 and May 31, 2008 and May 31, 2009 after the due date for return and ten years from June 1, 1999. The instant disposition for imposition imposed on November 4, 2005 within that period is lawful. The Plaintiff’s assertion in this part is without merit.

(2) Whether the grounds for taxation are reliable

(A) The data produced in the course of the investigation or tax investigation cannot be considered as taxation data on the ground that there are reasons that can serve as the basis of taxation. However, in a case where the preparation process and its contents are not prepared against the free will of the parties or persons concerned, and its contents are also recognized as being reasonable and correct as taxation data, they may be considered as taxation data (see, e.g., Supreme Court Decisions 91Nu4997, Dec. 10, 1991; 98Du2928, May 22, 1998).

(B) In light of the fact that ○○○○○○○○○ and its de facto ○○○○○○○○○ and its de facto 400 shares issued by the Plaintiff and its de facto 2 were 40 billion won at the original 4002222, the Plaintiff and its de facto 400 shares issued by the 40-6th 7th 7th 7th 6th 7th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6th 6002 6th 6th 6th 2004 6th 7204.

(C) Accordingly, the statements made by the Plaintiff and ○○○’s prosecutor’s office and criminal trial procedure and the written discount on the bill presented by ○○○.

The disposition of this case based on the disposition of this case cannot be viewed as an unlawful act as alleged by the plaintiff, and this part of the plaintiff's assertion is without merit.

(3) Whether the income amount is estimated

In principle, the tax base and tax amount of global income tax shall be determined by the actual amount revealed by the method of the on-site investigation, and in order to determine it by the method of the on-site investigation, it shall be exceptionally permitted only when there is no taxpayer’s account book or documentary evidence, etc., or when there is no other way for the tax authorities to disclose the actual amount of income, and there is no other way for the taxpayer to prove the actual amount of income. Thus, even if the taxpayer keeps and keeps the account books as prescribed by the Income Tax Act, if it is possible to calculate the tax base based on other documentary evidence, such as a contract, the tax base and tax amount shall be determined by the method of the on-site investigation, and the taxpayer shall not be deemed to have satisfied the requirements of the on-site investigation on the sole ground that the taxpayer voluntarily wants to investigate and determine the tax base based on the method of estimation. In addition, the burden of proof of tax base based on the method of taxation in a lawsuit seeking revocation of tax disposition shall be the tax authority. However, since the tax base is deducted from the revenue tax base, the necessary expenses are favorable to the taxpayer.

Although there was no original book related to the occurrence of the instant income, as seen earlier, the Plaintiff and ○○○ Office’s statement was specific and reliable in the prosecution investigation process, and the bill discount data submitted by ○○○○ contain detailed and specific contents. Based on these data, it is possible to sufficiently specify the time when the instant income accrues, cause, amount, and object of the instant disposition by the method of the on-site investigation, and thus, it is lawful for the Defendant to determine the tax base and tax amount of the instant disposition by the method of the on-site investigation rather than by the estimation investigation, and otherwise, unless the Plaintiff asserted and prove necessary expenses incurred in the process of acquiring the instant income, the necessary expenses for the instant income do not exist.

The plaintiff's assertion on this part is without merit.

(4) Meanwhile, the Plaintiff asserted that the nature of the instant income is the business income of the Plaintiff and the period of attribution is the due date of a promissory note discounted to the field construction business operator. However, as seen earlier, the Defendant changed the nature of the instant income to the business income ex officio on January 5, 2007, while continuing to belong to the Defendant, deeming that the instant income was reverted to the Plaintiff after five months (150 days) from the due date of the relevant promissory note, and that the instant income was reverted to the Plaintiff after the due date of the relevant promissory note, and received the Plaintiff’s assertion by reducing and revising the comprehensive income tax reverted to the year 197 and 1

(5) Therefore, the instant disposition is a legitimate disposition under the relevant laws and regulations.

3. Conclusion

If so, the plaintiff's claim of this case is without merit, and it is dismissed. It is so decided as per Disposition.

Details of bill discount

1. The year 196;

C.

Construction Costs

Payment for Bills

Discount on Promissory Notes

Discount Rates

Discount interest; and

7

71,931,920 won

540,352,344 won

270.176.172

2%

27,017,617 won

8

798,201,352 won

58,740,946 won

279,370,473 won

27,937,047 won

9

1,662,154,519 won

1,163,508,163 won

581,754,082 won

58,175,408 won

10

0 won

0 won

0 won

0 won

11

1,756,352,070 won

1,229,446,449 won

614,723,225 won

61,472,322 won

12

1,786,510,970 won

1,250,57,679 won

625,278,840 won

62,527,884 won

Total

6,775,150,831 won

4,742,605,582 won

2,371,302,791 won

237,130,279 won

The difference between the sum of * per month is derived from the disposal of the sum of the monthly bill payments calculated according to the payment rate of the construction cost (hereinafter the same shall apply) below the decimal point of the monthly bill payments.

2. The year 1997;

C.

Construction Costs

Payment for Bills

Discount on Promissory Notes

Discount Rates

Discount interest; and

1

2,367,512,220 won

1,657,258,554 won

828,629,277 won

2%

82,862,928 won

2

2,495,659,465 won

1,746,961,626 won

873,480,813 won

87,348,081 won

3

1,842,427,695 won

1,289,699,387 won

644,849,693 won

64,484,969 won

4

3,422,326,360 won

2,395,628,452 won

1,197,814,226 won

19,781,423 won

5

6,624,165,655 won

3,236,915,959

1,618,457,979 won

161,845,798 won

6

4,585,014,850 won

3,209,510,395 won

1,604,755,198

160,475,520 won

7

4,815,247,125 won

3,370,672,988

1,685,336,494 won

168,533,649 won

8

4,187,539,540 won

2,931,277,678 won

1,465,638,839 won

146,563,884 won

9

5,067,160,635 won

3,547,012,445 won

1,773,506,222

177,350,622 won

10

2,200,969,305 won

1,540,678,514

70,339,257 won

7,033,926 won

11

3,816,646,710 won

2,671,652,697

1,335,826,349 won

133,582,635 won

12

2,987,005,180 won

2,090,903,626 won

1,045,451,813 won

104,545,181 won

Total

42,411,674,740 won

29,688,172,318

14,844,086,159 won

1,484,408,616 won

3. The year 1998;

C.

Construction Costs

Payment for Bills

Discount on Promissory Notes

Discount Rates

Discount interest; and

1

2,877,610,017

2,877,610,017

1,438,805,009 won

3%

215,820,751 won

2

0 won

0 won

0 won

0 won

3

1,777,199,271 won

1,777,199,271 won

88,599,636 won

133,289,945 won

4

1,880,915,383 won

1,880,915,383 won

940,457,692

141,068,654 won

5

2,314,764,539 won

2,314,764,539 won

1,157,382,270 won

173,607,340 won

6

2,392,523,660 won

2,392,523,660 won

1,196,261,830 won

179,439,275 won

7

3,263,839,995 won

3,263,839,995 won

1,631,919,998

244,788,00 won

8

1,102,512,120 won

1,102,512,120 won

51,256,060 won

82,688,409 won

9

5,669,390,825 won

5,669,390,825 won

2,834,695,413 won

425,204,312

10

3,129,757,395 won

3,129,757,395 won

1,564,878,698

234,731,805 won

11

5,518,200,170 won

5,518,200,170 won

2,759,100,085 won

413,865,013 won

12

7,882,412,238 won

1,882,412,238 won

3,941,206,119 won

591,180,918

Total

37,809,125,613

37,809,125,613

18,904,562,807 won

2,835,684,421 won

Related Acts and subordinate statutes

[Framework Act on National Taxes]

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

(1) National taxes may not be levied after the period as provided in the following subparagraphs expires: Provided, That where mutual agreement procedures are in progress under the provisions of a treaty concluded for the avoidance of double taxation (hereinafter referred to as “tax treaty”), Article 25 of the Adjustment of International Taxes Act shall apply:

1. Where a taxpayer evades a national tax, or receives a refund or deduction by fraudulent or other unlawful means, for ten years from the date on which the national tax is assessable;

3. If it does not fall under subparagraphs 1 and 2 above, for five years from the day on which the national tax is assessable; and

[Income Tax]

Article 19 (Business Income)

(1) Business income shall be the following incomes, which have accrued during the current year (amended by Act No. 6292 of Dec. 26, 2000):

10. Incomes accruing from the banking and insurance businesses;

(2) The business income shall be the amount obtained by deducting the necessary expenses required therefor from the gross income amount in the current year.

Article 80 (Settlement and Correction)

(3) Where the head of a regional tax office or the head of a regional tax office having jurisdiction over the place of tax payment determines or revises the tax base and amount of tax in the current year under paragraphs (1) and (2), he shall make it based on the books and other documentary evidence: Provided, That if it is impossible to calculate the amount of income by books and other documentary evidence for

[Enforcement Decree of the Income Tax]

Article 143 (Determination and Revision through Estimation)

(1) The term "reasons prescribed by Presidential Decree" in the proviso to Article 80 (3) of the Act means the cases falling under any of the following subparagraphs:

1. Where necessary account books and documentary evidence are missing or important parts are incomplete or false in the calculation of the tax base;

2. Where the contents of the entry are obviously false in light of the scale of facilities, number of employees, raw materials, market prices, various charges, etc. of commodities or products.

3. Where the contents of the bookkeeping are obviously false considering the quantity of raw materials used, electric power used and other operational conditions.

(3) The estimation, determination or correction of the income amount under the proviso of Article 80 (3) of the Act shall be made according to the methods falling under each of the following subparagraphs (amended by Presidential Decree No. 17032, Dec. 29, 2000):

1. The method of determining or revising the amount of the income tax calculated by multiplying the amount of income by the standard income rate;

Article 145 (Standard Income Rate)

(1) The standard income rate under the provisions of Article 143 (3) shall be determined by the Commissioner of the National Tax Service through the deliberation of the deliberate committee on the standards of income in consideration of the standard rate which the Commissioner of the National Tax Service determines in consideration of the characteristics of the enterprise of which business scale and conditions are normal (amended by Presidential Decree No. 17032, Dec. 29, 200).