2. The imposition of KRW 1,272,88,310 (including additional taxes) of global income tax for the year 2009 on December 2, 2013, including a claim extended in the trial, and the imposition of KRW 1,272,88,310 (including additional taxes) by the head of the Suwon Tax Office on December 2, 2013 and the imposition of global income tax for the year 2009 against the Plaintiff △△△△△ in December 2, 2013 shall be revoked.

3. The total costs of the lawsuit shall be borne by the defendants.

The purport of appeal is to revoke the first instance judgment. The imposition of KRW 981,982,210 of the global income tax for the year 2009 and the imposition of KRW 54,420,960 of the global income tax for the year 2009 and the imposition of KRW 54,420,960 against the Plaintiff △△△△△△ on December 2, 2013 shall be revoked, respectively.

A. The Plaintiffs, as of May 25, 2006, transferred 230,00 shares issued Aaaaa (hereinafter “the shares of this case”) to BBB2, a stock company (hereinafter “the shares of this case”) as of May 25, 2006 (Evidence 1, 2), and transferred 6,413,780,000 won total of the transfer proceeds from BBB to BB2 on the same day (Evidence 3), and transferred 6,413,780,000 won from May 29, 2006 to 4) as loan title (Evidence 1, 2,3) (Evidence 4-1, 400,000 won on May 29, 2006). On July 2006, Plaintiff ○○○, 906,096, Plaintiff 231,231,71,751,714, and 17).

B. Aaa opened a board of directors on May 30, 2006, to purchase the shares of this case from bbbb, and bbb made a decision to purchase the shares of this case at the same amount as the amount purchased from the plaintiffs (Evidence A4, 5, 3-2, bbb and its contract) and then remitted the purchase price of this case to 6,413,780,000 won as the amount that the plaintiffs remitted to Aaaa for a loan (Evidence A4-3, 15-1, 2, 27-27).

C. After that, Aaa adopted a resolution on the retirement of the shares of this case by holding a special shareholders' meeting on March 2, 2009 and implemented the retirement of shares (Evidence A No. 23, Evidence A No. 24-2, Evidence B No. 6).

D. After that, on March 2, 2009, the Defendants determined that the instant shares were deemed to have received constructive dividend income from the Plaintiffs on March 2, 2009, the Defendants imposed imposition of global income tax for the year 2009, on December 2, 2013, on Plaintiff ○○○○, the head of the Suwon District Tax Office imposed imposition of the total final tax amount of KRW 1,272,88,310 (including additional tax) on the Plaintiff ○○○, and the head of the Suwon District Tax Office imposed imposition of the total final tax amount of KRW 76,185,970 (including additional tax) on the Plaintiff △△△△, respectively (hereinafter “instant disposition”).

2. Investigation up to the disposition of this case.

As above, the Plaintiffs transferred the instant shares on May 25, 2006, and reported and paid the transfer income tax on July 2006, and the Defendants conducted an investigation by the East Triwon District Tax Office and the Central Tax Office on four occasions as follows until the Defendants imposed the comprehensive income tax on the Plaintiffs on December 2, 2013.

A. On February 1, 2010, the head of the same orchard Tax Office sent a statement of guidance to submit explanatory data on the acquisition of treasury stocks to aaa. The content was to submit a written contract related to the acquisition of treasury stocks, a written resolution by the board of directors, a major minutes of the resolution by the board of directors, the major minutes of the resolution by the reduction of capital, and other documents related to capital reduction (hereinafter referred to as “the primary investigation”).

B. In addition, on December 9, 2010, the head of the same orchard Tax Office sent a notice of tax investigation to aaa and the plaintiffs on December 9, 2010 (hereinafter “the second investigation”).

1) The notice against the plaintiffs was included in the investigation tax item, the investigation period, the gift tax, and the December 31, 2006 from January 1, 2004 to December 31, 2006. However, the reason for the investigation was that the plaintiffs were selected as a person subject to investigation to verify the appropriateness of the change in stocks in the business year Aaa-2008-209 (Evidence 13, Evidence 19-1, 2, and 3).

2) On January 28, 2011, the head of the Dongwon District Tax Office sent a written request for attendance and a written guidance for the presentation of data to the plaintiffs. The contents of the written request for attendance were to attend the meeting with reference to the investigation of stock change in the KCAa, which is currently being conducted in our book, according to the provisions of Article 170 (Question and Investigation) of the Income Tax Act, which had been owned by you in 2004 to 2006 (Question and Investigation) of the Act (Evidence No. 20).

3) The report on the completion of the investigation of stock change prepared after the investigation is written that the plaintiffs remitted 6,413,780,000,000 won out of the total purchase price of the shares of this case remitted from bbb on May 25, 2006 to aaaa (Evidence 7).

C. On June 2013, the head of the same orchard Tax Office again sent a notice of revised return and explanation of taxation data to Aaa. This is to confirm the content of corporate tax in 2009. As such, inasmuch as there was a suspicion of fictitious dividend in relation to the acquisition and disposition of treasury stocks, it was required to submit explanatory data and submit it until July 3, 2013, and if it is recognized that the return was omitted (hereinafter referred to as “third investigation”).

D. After that notification, the director of the Central Regional Tax Office of China sent a prior notice of tax investigation to the Plaintiffs on August 21, 2013. The notice indicates as follows: (a) gift tax; (b) from January 1, 2006 to December 31, 2009; (c) from January 1, 2009 to December 31, 2009; and (d) indicated as the reasons for the investigation (Article 81-6 and (3) of the Framework Act on National Taxes (hereinafter referred to as “4th investigation”). Since it is reasonable to make a subsequent notice of tax investigation to the Plaintiffs on August 21, 2013, it is reasonable to conclude that the Plaintiffs were subject to the said tax investigation and the period of investigation; and (b) from January 1, 2006 to December 31, 2006 to the effect that the Plaintiffs were subject to the said tax return and that the Plaintiffs were subject to the said tax return, as stated in Section 1ba (b) of the Income Tax Act.

3. Judgment on double tax investigation

(a) Relevant legal principles;

1) The principle of due process under the Constitution ought to be complied with not only in criminal proceedings but also in administrative actions that impose a burden on the people (see, e.g., Supreme Court en banc Decision 2010Du12347, Oct. 18, 2012). In the tax investigation conducted as a kind of administrative investigation to realize the State’s right to impose taxes, compliance with such principle of due process is clearly required (see, e.g., Supreme Court Decision 2012Du911, Jun. 26, 2014).

2) Accordingly, Article 81-4(2) of the former Framework Act on National Taxes (amended by Act No. 12162, Jan. 1, 2014; hereinafter the same) prohibits double tax investigations by stipulating that “tax officials shall not re-inform the same items of tax and the same taxable period unless any of the following is applicable.” This is, in principle, prohibited under Article 81-4(2) of the same Act, “tax officials shall conduct a tax investigation to the minimum extent necessary to realize appropriate and fair taxation, and shall not abuse their right of tax investigation for any other purpose,” along with the provision that “The tax officials shall not abuse their right of tax investigation to the minimum extent necessary to ensure fairness and objectivity of tax investigation and prevent the tax investigation from being used for any other purpose or being abused and abused by exercising their right of tax investigation.”

3) In light of such provisions, in principle, the right to ask questions and to ask questions under individual tax-related Acts, which had been previously prescribed prior to the enactment of the above provisions under the Framework Act on National Taxes, shall be deemed to have been permitted only within the requirements and limits of the tax investigation under the Framework Act on National Taxes (see Supreme Court Decision 2012Du911, Jun. 26, 2014). In examining the scope of tax investigation conducted, the purpose of Article 81-11 of the Framework Act on National Taxes, which provides that “In principle, the tax investigation shall be conducted by combining the items of tax subject to reporting and payment in relation to the taxpayer’s business, except in cases prescribed by Presidential Decree, such as where it is necessary to investigate specific items of

4) In addition, in light of the background and purport of the introduction of the prohibition of duplicate tax investigation, if a certain tax investigation constitutes a duplicate tax investigation and is not subject to exceptional permission, it is in violation of due process and thus, the taxation disposition based on such tax investigation is deemed unlawful, barring any special circumstances (see, e.g., Supreme Court Decisions 2012Du911, Jun. 26, 2014; 2013Du6206, Sept. 10, 2015).

B. The instant disposition

1) Examining the instant case on the premise of the foregoing legal doctrine, first, it is difficult to view that the head of the same orchard tax office’s demand to submit explanatory data about aaa with respect to the acquisition of treasury stocks on February 2, 2010, and again made a request for a revised return and for the explanation of taxation data for the first time around June 2013 as a re-audit against the opposite contractual party under Article 81-4(2)2 of the Framework Act on National Taxes is permissible. In light of the purport that re-audit against the opposite contractual party is allowed under Article 81-4(2)2 of

2) However, on December 9, 2010, the second investigation of which the head of the Dongwon District Tax Office sent a notice of tax investigation to the plaintiffs on December 9, 2010 was indicated as "Gift tax" and "Gift tax" from January 1, 2004 to December 31, 2006. However, it was clearly stated that the reasons for the investigation were "the person to be subject to the investigation in order to verify the appropriateness of the changes in shares in the business year 'aaa-2008-2009, the head of the Dongwon District Tax Office was selected as "the person to be subject to the investigation in order to verify the appropriateness of the changes in shares in the business year 'a-2008-2009," and the second investigation was made in relation to the request for attendance and the notification of data list sent to the plaintiffs on January 28, 201, the part related to the transfer of shares in accordance with Article 170 (Question and Investigation) of the Income Tax Act.

3) However, on August 21, 2013, the fourth investigation that was conducted by the director of the Central Regional Tax Office after sending a prior notice of tax investigation to the plaintiffs on August 21, 2013 is also indicated as "Gift tax" and "Gift tax" from January 1, 2006 to December 31, 2006, from January 1, 2009 to December 31, 2009, or from December 31, 2009 to December 31, 2009, and judged as deemed dividend income by investigating the plaintiffs' income tax portion related to the sale of the shares in relation to Aaaaaaaa as to the sale of the shares and its incineration. Thus, it constitutes a duplicate tax investigation identical to the second tax investigation of the head of the East District Tax Office in terms of the taxable period, and there is no data to view

4) The Defendants asserted that “the change of shares for the business year of 2008-2009” in the second investigation of the head of the same orchard is a clerical error in the “2004-2006 business year”. However, at the time, at the request of the Plaintiffs for the attendance of the Plaintiffs, an investigation was conducted in relation to “the change of shares in Aaa” in our book, and at the time of the first investigation, the Defendants demanded the submission of a total minutes, etc. related to a capital reduction resolution against Aaa as at the time of the first investigation, and it is difficult to accept in that the general meeting of shareholders related to the capital reduction in Aaa was in the year of 209.

5) In addition, the Defendants asserted that, at the time of the fourth investigation of the Director of the Regional Tax Office, the initial investigation was conducted from January 1, 2006 to December 31, 2006; from January 1, 2009 to December 31, 2009, the revised advance notice (No. 10-2, 3) which deleted the part of 2006 from the investigation period, was issued again to the Plaintiffs as of September 4, 2013, and then the receipt (No. 11-2, 3) was received. As such, the Defendants asserted that the initial advance notice did not constitute the second investigation in terms of the investigation period, and that it was difficult to receive the Defendants’ prior notice as of August 22, 2013 as of August 22, 2013 (Evidence 15). However, the Defendants did not appear to have received the Defendants’ prior notice, other than the Defendants’ submission of the revised advance notice as of September 1, 2013.

6) Ultimately, the second investigation by the director of the tax office of the same orchard and the fourth investigation by the director of the regional tax office of the Central District Tax Office constitute a double tax investigation prohibited in relation to the plaintiffs, and the instant disposition based thereon is unlawful in that it violates the due process under the aforementioned legal principles.

4. Conclusion

Therefore, the plaintiffs' claim seeking the cancellation of the disposition of this case is well-grounded, so the judgment of the court of first instance different from this conclusion is revoked, and it is so decided as per Disposition by the plaintiffs to cancel the disposition of this case upon their extended claims in the trial.

Judges Woo-ok

Judges Song Il-young