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

Cheong-gu Office

The imposition of each of the value-added tax (including the additional tax) imposed on the Plaintiff on October 10, 2017 (attached Form 1) by the head of the △△ District Tax Office (hereinafter referred to as “the amount recognized by the Plaintiff”) shall be revoked in excess of the amount indicated in the column of each of the imposition of each of the value-added tax (including the additional tax) for the second to second to two years, 2007 (including the additional tax) on the list of the disposition (attached Form 1). The imposition of each of the global income taxes (including the imposition of the additional tax) for the second to two years, 2016 shall be revoked. The portion in excess of the amount recognized by the Plaintiff shall be revoked. The imposition of each global income tax (including the imposition of the additional tax) on the Plaintiff on October 111, 2017 by the head of the △△△ District Tax Office (hereinafter referred to as the “Plaintiff”). The imposition of each global income tax for the second to 2012 through 2016 shall be revoked.

A. The Plaintiff is the owner of two buildings located in ***** Dong***** two buildings located in 98.88 square meters and 1,158.8 square meters in the parking lot site (hereinafter referred to as “the instant real estate” in combination with the above building and the parking lot site). Since its registration as a rental business operator on October 1, 199, the Plaintiff is running rental business.

B. From December 10, 2003, the Plaintiff leased the instant real estate to the privateA in KRW 50,000,000 for rental deposit, and KRW 6,500,000 for the monthly rent. However, from January 1, 2004 to December 31, 2016, the Plaintiff: (a) prepared a detailed statement of real estate rental price, as if he/she leased the instant real estate in KRW 150,000 for rental deposit without rent from the privateA to December 31, 2016, and reported and paid the value-added tax and comprehensive income tax thereon.

C. As a result, from July 4, 2017 to August 22, 2017, the head of △△ District Tax Office conducted an individual integrated investigation on the Plaintiff (hereinafter “instant tax investigation”), Defendant 26-2(1)1 and Article 47-3(2) of the former Framework Act on National Taxes (amended by Act No. 14382, Dec. 20, 2016; hereinafter the same shall apply), deeming that the Plaintiff conducted a false lease contract and intentionally underreporting the rental income amount based on such a false lease contract, and accordingly, Defendant 2 and 3 of the global income tax office’s disposition on October 10, 207 including Defendant 207 to 204, and 207 to 30 years including the notice of imposition of additional tax on global income (including the aggregate of the value-added tax on underreporting) and 30 years including the notice of imposition on each of the above △△△△△△△△ tax office’s disposition on the Plaintiff’s global income tax base.

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal on December 4, 2017, but the Tax Tribunal dismissed the appeal on March 9, 2018.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, Eul evidence Nos. 2, 7, 8, 9 (including branch numbers; hereinafter the same shall apply) and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

On January 4, 2004, the Plaintiff entered into a lease agreement with the public-private partnership on KRW 150,000,000 for the instant real estate without any rent. However, the Plaintiff did not leak it out to the outside or submit it to the tax authorities, and did not issue a false tax invoice to the public-private partnership. Since it was paid from December 10, 2003 to the bank account in the name of the Plaintiff, the tax authorities could not easily capture the omission of the rental income through the financial inquiry, etc., and the Plaintiff’s act cannot be deemed as a deceptive scheme or other active act that makes it impossible or significantly difficult to impose and collect taxes.

Therefore, the exclusion period of imposition of value-added tax, global income tax, and each additional tax on the Plaintiff shall be five years pursuant to Article 26-2(1)3 of the former Framework Act on National Taxes. As such, each imposition of value-added tax (including additional tax) for the second term from 2007 to 2011 and each imposition of global income tax (including additional tax) for the second term from 2007 to 2011 is unlawful after the exclusion period has expired. In addition, for the same reason, the imposition of general under-reported additional tax shall be limited to the penalty tax calculated by applying the tax rate of 10% to the under-reported amount pursuant to Article 47-3(1) of the former Framework Act on National Taxes. As such, the portion exceeding the general under-reported penalty

B. Relevant statutes

[Attachment 3] The entry is as specified in the relevant statutes.

C. Relevant legal principles

Article 26-2(1) of the former Framework Act on National Taxes provides that, in principle, the exclusion period of national taxes other than inheritance tax and gift tax shall be five years from the date on which the relevant national tax may be imposed, and that, in cases where a taxpayer evades national taxes, obtains a refund or deduction by fraudulent or other unlawful means prescribed by Presidential Decree, the taxpayer shall be ten years from the date on which the national tax may be imposed. Article 47-3 of the former Framework Act on National Taxes provides that, where a taxpayer files a return of tax base of national tax under tax-related Acts by the statutory due date of return under paragraph (1) and where the taxpayer files a return of tax amount less than the amount to be paid, the amount equivalent to 10/100 of the underreported paid tax amount shall be the general penalty tax for underreporting, notwithstanding paragraph (1). Article 26-2(1) of the former Framework Act on National Taxes provides that an amount equivalent to 40/100 of the underreported paid tax amount due to unlawful acts shall be made as additional tax for underreporting, or Article 26(3) of the former Enforcement Decree of National Tax Act.

“Fraud or other unlawful act” prescribed in each of the above provisions refers to a deceptive scheme or other active act that makes it impossible or considerably difficult to impose and collect taxes, and it does not constitute a mere failure to file a return under the tax law or making a false return without accompanying any other act. However, in cases where the circumstances showing the intention of concealment, such as failure to file a return or underreporting taxable objects and intentionally failing to enter revenues or sales in the books, are added, it may be deemed that the imposition and collection of taxes are impossible or considerably difficult (see, e.g., Supreme Court Decisions 2013Du7667, Dec. 12, 2013; 2014Du2522, Sept. 15, 2015). In such cases, whether the active concealment of taxes can be objectively seen as objectively revealed, should be determined by comprehensively taking into account not only whether the basic book stating revenues and sales, etc. is prepared, but also whether the pertinent method of declaration is the most unlawful method of taxation or the method of filing a false return, and whether the pertinent tax return was made differently from the relevant tax base.

(d) Facts of recognition;

1) From December 10, 2003, the Plaintiff leased the instant real estate to the privateA in KRW 50,000,000 for rental deposit, KRW 6,500,00 for each month of rent. However, from January 1, 2004 to December 31, 2016, the Plaintiff: (a) prepared a detailed statement of real estate rental price, as if the Plaintiff leased the instant real estate from the privateA to December 31, 2016, by receiving KRW 150,000,000 for rental deposit without rent, and reported and paid the value-added tax and the comprehensive income tax thereon.

2) On January 4, 2004, the Plaintiff prepared a false lease agreement (No. 2-3, hereinafter referred to as the "the double contract of this case") that entered as "150,000,000 won" with respect to the real estate of this case without any rent, and sent the said contract to the civilA by facsimile.

3) On the 10th day of each month during the term of the above lease, the privateA transferred most of the amounts of KRW 6,50,000 to the bank account in the name of the Plaintiff through the bank account in the name of the Plaintiff.

4) From June 15, 2016 to June 21, 2016, in order to verify whether the Plaintiff’s adequate return of rental income, etc., the head of the tax office conducted on-site verification of the instant real estate (hereinafter referred to as “on-site verification”). At the time, the Defendant made a false statement to the officer in charge of the △ tax office on December 10, 2003 (rental deposit KRW 50,000,000, monthly rent KRW 6,500,000, monthly rent) to the instant double contract (rental deposit KRW 150,000,000, and no rent) and submitted the instant double contract with the Plaintiff’s consent, and the Plaintiff also made a false statement to the effect that the Plaintiff did not complete the confirmation of the instant real estate rent KRW 150,000,000,000, and the Plaintiff did not sell the instant real estate to the public official on-site 15, 2016.

5) The Plaintiff and the privateA did not divulge the instant dual contract to the outside or submit it to the tax authority before the instant site verification, and the Plaintiff and the privateA did not issue and receive the tax invoice on the basis thereof (the privateA was a person with bad credit standing at the time, and was not registered as a business operator).

6) Defendant 1 received a tax evasion report and conducted the instant tax investigation from July 4, 2017 to August 22, 2017. The Defendants were subject to the instant disposition based on the findings of the investigation.

[Reasons for Recognition] Facts without dispute, entry in Eul evidence Nos. 1, 2, 4, 6, 7, 10, 11 and the whole pleadings

purport of this chapter

E. Determination

In light of the following circumstances revealed in the above facts, the Plaintiff’s active concealment intent to evade the comprehensive income tax, such as preparing the instant double contract, can be deemed to have been objectively revealed. Thus, it constitutes a case of underreporting the tax base and tax amount due to a fraud or other unlawful act under Article 26-2(1)1 of the former Framework Act on National Taxes or a case of underreporting the tax base and tax amount due to an unlawful act under Article 47-3(2) of the former Framework Act on National Taxes. Therefore, it is legitimate to impose the Plaintiff the tax within the exclusion period of 10 years from February 2, 2007 to February 2016 and the additional tax for underreporting calculated by applying the tax rate of 40% to the underreporting payment. Thus, the Plaintiff’s aforementioned assertion on different premise is not acceptable.

1) The value-added tax and global income tax at issue in the instant case are the tax return method in which the taxpayer voluntarily filed a tax base and the amount of tax are fixed by filing a tax return, so long as the taxpayer does not voluntarily file a tax return, it is not easy for the tax authority to impose taxes by taking advantage of the omission. Although the Plaintiff was paid the Plaintiff to a bank account in the name of the Plaintiff, other than the borrowed-name account, it is difficult for the privateAA to take advantage of the fact of omission as the tax authority took over most of the transfer via the bank account in the name of the Plaintiff, and thus, it is difficult for the tax authority to capture the omission.

2) On January 4, 2004, the Plaintiff prepared a false contract on the instant real estate, stating that “150,000,000 won for rent without rent,” with respect to the instant real estate, and sent the said contract by facsimile to the public-private partnership. However, the Plaintiff did not provide any explanation to the public-private partnership as to the reasons why the false contract was prepared and the reasons why the contract was sent to the public-private partnership.

3) The Plaintiff and privateA have disclosed the instant dual contract to another place prior to the instant on-site verification, or did not submit it to the tax authority, and did not issue and receive tax invoices on this basis. However, the Plaintiff has continued to file a tax return with the same content as the instant double contract for a long time, and the Plaintiff has prepared the instant double contract with the false content of omitting the leased income amount under the agreement with the privateA, a lessee of the instant real estate prior thereto, and had the privateA keep the copy of the contract. In light of the fact that the instant double contract is the core disposal document of the relevant transaction, it is sufficient to view that the Plaintiff’s act itself constitutes “the preparation and receipt of a false document,” “the manipulation or concealment of income transactions,” which is one type of “Fraud or other unlawful act” under Article 3(6) of the Punishment of Tax Evaders Act, and there is sufficient reason to view that the active intent to evade tax was objectively revealed.

4) At the time of the on-site verification, the private sector stated that the instant double contract was not false to the staff in charge of △ tax administration at the time of the instant site verification, and submitted the instant double contract as supporting materials with the consent of the Plaintiff. On June 15, 2016, the Plaintiff also leased the instant real estate to the staff in charge of △ tax administration on January 4, 2004, and the deposit was KRW 150,000. Accordingly, the head of △△ Tax Office deemed that the Plaintiff did not omit the lease revenue and completed the on-site verification. In light of the overall progress, the Plaintiff objectively expressed the intention of active concealment to evade taxes through the preparation and receipt of the instant double contract.

3. Conclusion

Therefore, each of the claims against the Defendants against the Plaintiff is dismissed as it is without merit. It is so decided as per Disposition by the assent of all participating Justices.