[2] The person who bears the burden of proving that the corporation's profits not entered in the account book were not disclosed from the company (=the corporation)

[3] In a case where the tax authority recognized the amount not reported as expenses at the time of filing corporate tax base return as expenses, whether the expenses paid by the representative, etc. out of the company from the amount of income accrued to the representative, etc. should be deducted as a matter of course from the amount of income accrued to him/her (negative), and whether the income constitutes earned income in a case where the

[4] In a case where the taxation authority, separate from the disposition of income which is deemed to have paid the prescribed amount of income under the Corporate Tax Act, the withholding tax imposed on the representative director, etc. by the corporation pursuant to the provisions of the Income Tax Act, where the person to whom the income accrued from the corporation was not clearly identified, whether such income can be presumed to have been actually reverted to

[2] Where a corporation fails to enter its sales in the account book despite the fact of sales or appropriates the cost of processing in the account book, barring any special circumstance, the corporation's profit equivalent to the omitted sales or the cost of processing shall be deemed to have been leaked out of the company, and in this case, there is a need to prove the special circumstance that the total amount omitted sales is not leaked out of the company.

[3] Even if the tax authority recognized the amount not reported as expenses at the time of filing a corporate tax base return as expenses of a corporation and deducted the amount from the corporate income calculation, the expenses paid as expenses by the representative, etc. out of the company shall not be deducted as a matter of course from the amount of income accrued to the representative, etc., and if the representative director, etc. of a corporation discharges the corporation's profits out of his/her status to be distributed as expenses, such income constitutes bonus to the representative director or a temporary salary

[4] In addition to the disposition of income which the tax authority deemed to have paid the prescribed amount of income under the Corporate Tax Act, in order to collect the withholding tax from the corporation for the representative director, etc. under the Income Tax Act, it shall claim and prove the actual attribution of the income to the representative director, etc. and the type of the income. In case where the person to whom the income accrued from the corporation was not clearly identified, it cannot be presumed that it has been actually reverted to

According to the reasoning of the judgment below, the court below determined that the non-party 1, who held office as the representative director of the plaintiff from October 6, 1981 to July 20, 1987, as one shareholder who held office as the whole of the plaintiff's issued stocks, in collusion with the staff in charge of accounting, etc., keep and enter the internal accounting books and the accounting books for filing tax returns doublely from October 1982 to 1987, and included the actual sales revenue in the accounting books or processing expenses in the internal accounting books, and made withdrawal of the plaintiff's income under the pretext of provisional payment, etc. in the internal accounting books and used them for raising personal funds (non-party 1) by deposit in the other person's old account or provisional account books, and that the defendant's disposal of the above internal accounting books and the amount omitted sales (including non-party 1's omitted sales revenue) after adding them to the above internal accounting books and the tax base for corporate tax of the representative director for each business year from 1987 to 387 years 1987.7.7

2. Judgment on the Plaintiff’s appeal

A. The dismissed part of the lawsuit

The Plaintiff appealed to the part of the lower court’s dismissal of the lawsuit, but there is no indication in the grounds of appeal as well as in the appellate brief separately submitted by the Plaintiff.

B. Ground of appeal No. 2

In light of the records, the court below recognized that the plaintiff's internal-use account books and tax return account books were kept and recorded twice from 1982 to 1986 as well as from 1987. Furthermore, the appraisal result of the appraiser of the court below determined that the manufacturing cost of processing 1987 was insufficient to recognize that the manufacturing cost of processing 196,194,84, and general management cost 216,504,320 won was actually paid, and there is no error of law such as misconception of facts due to violation of the rules of evidence, as alleged in the grounds of appeal.

C. Ground of appeal Nos. 1 and 3

According to Articles 142(1) and 143 of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994), a person who pays interest income, dividend income, wage and salary income of Class A, other income, etc. to a resident or non-resident in Korea shall withhold income tax from the Government and pay it to the Government. Thus, separate from the disposition of disposal which is deemed to have been paid pursuant to Article 94-2 of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998), the tax authority may collect withholding tax from the corporation pursuant to the Income Tax Act by asserting and proving the actual attribution of income and the type of income for the representative director, etc. separately from the disposition of disposal which is deemed to have been made by the representative director, and thus, it is reasonable that the disposition of tax on the income accrued under the reality of tax items of Class A, which is identical with the tax base, has no illegality in the judgment below's determination that it is legitimate (see Supreme Court Decision 97Nu297Nu384, etc.

Meanwhile, where a corporation fails to enter its sales in the accounting book despite the fact of sales or appropriates the processing expenses in the accounting book, barring any special circumstance, it shall be deemed that the revenue of the corporation equivalent to the omitted sales or processing expenses has been leaked out, barring special circumstances. In this case, there is a need to verify the whole amount omitted sales, etc. on the part of the corporation claiming it (see, e.g., Supreme Court Decisions 85Nu556, Sept. 9, 1986; 97Nu47, Oct. 24, 1997). Although the tax office recognized the amount not reported as expenses at the time of filing a corporate tax base return as expenses and deducted the amount from the corporate income amount, it shall not be deemed that the income was distributed to the representative of the corporation, etc. as a matter of course (see, e.g., Supreme Court Decision 97Nu19151, May 25, 199). Thus, it shall not be deemed that the income was distributed from the representative director of the corporation to 197.

Therefore, the court below held that the above omitted amount of sales and processing costs until July 20, 1987, which were the representative director's holding office, were out of the company and actually reverted to the non-party 1 as earned income. In addition, the court below held that the loan of 400,000,000 won to new leap companies, which was paid by the plaintiff, and the loan of 300,000,000,000 won to the Director Fostering Foundation, and the loan of 1,002,283,010 won to the Director Fostering Foundation, and 147,40,000,000 won for the Olympic Site Development Institute, and 1,849,683,010 won for the Olympic Site Development Institute and 147,40,000 won for the defendant's corporate tax base were actually paid to the non-party 1, as alleged in the ground of appeal, it did not err in the misapprehension of legal principles as to the type of income distribution.

The plaintiff's grounds of appeal cannot be accepted.

3. Judgment on the Defendant’s grounds of appeal

In addition to the disposition of income which the tax authority is deemed to have paid the prescribed amount of the Corporate Tax Act, in order to collect the withholding tax from the corporation for the representative director, etc. under the provisions of the Income Tax Act, the actual attribution of the income to the representative director, etc. and the type of the income must be asserted and presented. In case where the person to whom the income accrued from the corporation was not clearly identified, it cannot be presumed that it was actually reverted to

The court below is justified in holding that the disposition of collecting Class A earned income and defense tax on the part of the plaintiff's outflow from the company was unlawful on the ground that there is no proof that it was attributed to the above non-party 2 among the plaintiff's outflow from the company after August 15, 1987, and there is no error of law such as misunderstanding of legal principles as to the allocation of burden of proof.

4. Therefore, each appeal shall be dismissed, and all costs of appeal shall be assessed against each party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Cho Cho-Un (Presiding Justice)