The costs of appeal by Plaintiff AA are assessed against the Defendants. The costs of appeal by the Defendants are assessed against the Defendants.

1. Determination on the grounds of appeal regarding the donation of August 10, 2007

A. As to Plaintiff AA’s grounds of appeal Nos. 1, 2, and 3

For the reasons indicated in its reasoning, the lower court determined that a tax investigation conducted on the donation of shares by BB (hereinafter “B”) on August 10, 2007 in violation of Article 81-4(2) of the former Framework Act on National Taxes (amended by Act No. 12162, Jan. 1, 2014; hereafter the same shall apply in this paragraph) cannot be deemed an illegal reinvestigation.

In light of the relevant legal principles and records, the lower court’s reasoning was partially inappropriate, but its conclusion that the said tax investigation constituted a tax investigation permissible under the former Framework Act on National Taxes is justifiable. In so doing, contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on the interpretation of exceptional reasons

B. As to Plaintiff AA’s ground of appeal No. 4

1) citing the reasoning of the judgment of the first instance, the lower court acknowledged the following facts: ① (a) on August 10, 2007, the CCC donated 758,980 shares of BB owned in the name of DD, which were owned by CCC, to Plaintiff AA on August 10, 207; (b) on March 17, 2008, Plaintiff AA reported the gift tax based on the gift tax, including additional tax, to the donor on the network DD; and (c) on January 11, 2013, the director of the tax office reported the increase in the amount of the gift tax and the additional tax on the total amount of the principal tax due to the increase in the amount of the gift tax and the re-donation of BB shares, etc. on the grounds that the penalty tax should be imposed on June 19, 2014.

2) On the grounds delineated below, the lower court determined that Defendant OO head of the tax office may impose general non-declaration penalty tax on the increased portion arising from the revaluation of donated property after the due date on the ground that Defendant OO head of the tax office failed to fulfill the duty to report the donation of stocks BB on Plaintiff AA on August 10, 207.

(1) Since a return after the due date is only a system introduced to ensure the convenience of taxpayers and facilitate the imposition and collection of national taxes, the fact that the taxpayer did not file a return within the statutory due date of return even if the principal tax and additional taxes were paid upon the due date of return.

(2) The main sentence of Article 47-2(1) of the former Framework Act on National Taxes (amended by Act No. 8830, Dec. 31, 2007; hereinafter the same) provides that the criteria for imposing penalty taxes without filing a report shall be calculated under tax-related Acts, and there is no limitation on imposing penalty taxes without filing a report only when the tax authority first determines the amount of penalty taxes at the time of the first determination, or when the amount of penalty taxes without filing a report is increased after the first determination.

(3) From August 10, 2007, Plaintiff AA did not report the tax base of gift tax from August 10, 2007, to November 10, 2007, which is within the statutory due date of return under Article 68(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter “former Inheritance Tax and Gift Tax Act”). In such a case, there is no provision that the amount of gift tax increases due to the difference in the assessment method of the previous Inheritance Tax and Gift Tax Act with respect to the penalty tax imposed on the non-declaration of return.

(4) The mere fact that Plaintiff AA paid part of the penalty tax without filing a return after the due date cannot be deemed to be subject to the imposition of under-reported penalty tax after the due date, since the status of Plaintiff AA, which is subject to the penalty tax without filing a return after the due date, cannot be deemed to be changed to the subject of the imposition of under

(5) Therefore, even if there was an increase or decrease due to the revaluation of BB stocks after the due date, the head of Defendant OOO head may impose the general non-reported penalty tax on the Plaintiff AA regarding the total amount of gift tax calculated.

3) Examining the records in light of the relevant legal principles, although the lower court’s reasoning was somewhat inappropriate, the conclusion that Defendant OOO head’s imposition of penalty tax on Plaintiff AA by Defendant OO head is legitimate is justifiable. In so doing, contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine on the meaning and validity of

C. As to Plaintiff AA’s ground of appeal No. 5

In light of the circumstances stated in its reasoning, the lower court determined to the effect that it is difficult to view that Plaintiff AA’s failure to fulfill its duty to report on donation of BB stocks on August 10, 2007 was a justifiable ground for failing to comply with the duty to report.

In light of the relevant legal principles and records, the lower court did not err by misapprehending the legal doctrine on justifiable grounds for exempting from additional duties, contrary to what is alleged in the grounds of appeal.

D. As to the ground of appeal No. 2 by Defendant OO director

1) Article 47-2(2)1 of the former Framework Act on National Taxes provides that an amount equivalent to 40/100 of the amount calculated by multiplying the calculated tax by the ratio of the amount equivalent to the unreported tax base to the amount of the tax base without filing a return by unjust means shall be either added to the amount of tax payable without filing a return, or deducted from the refundable tax amount.

In addition, Article 47-2 (2) of the former Framework Act on National Taxes defines the meaning of "unfair method", which is the requirement for an unfair non-declaration penalty tax, as the method prescribed by Presidential Decree, based on the fact that a taxpayer conceals or disguises all or part of the fact that serves as the basis for calculating the tax base or the amount of national tax, and Article 27 (2) 6 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 20622 of Feb. 22, 2008) stipulates "any other fraudulent or other unlawful act to evade or receive a refund or deduction of national tax" as one of the "unfair method."

2) citing the reasoning of the judgment of the court of first instance, the lower court: (a) citing the reasoning of the judgment,: (b) drafted a gift agreement with the effect that the Plaintiff AA made on August 10, 2007, stating the wife and children of DD along with DD as the observer and received 758,980 shares of B from DD on August 10, 207 (hereinafter “instant gift agreement”); and (c) acknowledged the fact that the Plaintiff AA submitted the instant gift agreement upon reporting after March 17, 2008.

In full view of the following circumstances, the lower court determined that: (a) it is difficult to view that the Plaintiff AA prepared the gift contract of this case in which the donor was falsely entered; (b) it did not report the taxable value and tax base of gift tax by fraudulent or other unlawful means; and (c) the act of the Plaintiff AA and the network DD cannot be assessed to the same extent as the “act of failing to report the tax base by improper means, such as fraud and other unlawful acts of the Plaintiff AA, the taxpayer for the payment of the gift tax,” and thus, (d) it cannot impose penalty tax on the Plaintiff AA on the ground that the Plaintiff failed to report the gift tax on the gift of BB stocks of

(1) It is difficult to readily conclude that, when changing the title of the shares held in title trust in the name of the donee, the title truster, who is the de facto shareholder, did not take the form of recovering the title trust shares and donate them to the donee immediately, and the title trustee, prepared a share transfer contract as if he/she immediately transferred them to the donee (see, e.g., Supreme Court Decision 2004Do817, Jun. 29, 2006). Here, the same meaning can be interpreted as “in cases where taxes are evaded by fraud or other unlawful acts,” which are subject to criminal punishment under the Punishment of Tax Evaders Act, and “in cases where there exists a tax base without filing a report by unlawful means, such as fraud or other unlawful acts,” which are the requirements for imposing penalty

(2) Although the actual shareholder pretended that the shares were actually donated by CCC, a title truster, to the extent that the shares were actually donated by the title truster, the Plaintiff AA did not manipulate the donation of shares BB on August 10, 2007, in preparing the instant donation agreement, as a trade, etc.

(3) The gift contract of this case states that the donee, who is the principal taxpayer with respect to the above BB shares, is the plaintiff AA.

(4) As a result, the principal gift tax on the donation of shares BB on August 10, 2007 was collected by making payment of shares BB upon reporting after the due date by Plaintiff AA.

(5) Unless there is any evidence that CCC and DD constitute Plaintiff AA’s agent or performance assistant, etc., it shall not be considered in determining whether Plaintiff AA’s unfair non-declaration of gift tax reporting was made by actively concealing and causing CCC and DD to conceal the title trust of shares BB.

3) Examining the record in light of the foregoing provision and related legal principles, the lower court did not err in its judgment by misapprehending the legal doctrine on unfair non-declarational penalty tax under Article 47-2(2)1 of the former Framework Act on National Taxes, contrary to what is alleged in the grounds of appeal. Meanwhile, the Supreme Court precedents cited in the grounds of appeal are different from the case,

2. Determination on the grounds of appeal regarding the gift of September 28, 2002

A. As to the Defendants’ ground of appeal No. 1

With reference to the reasoning of the judgment of the court of first instance, the court below: (1) on September 28, 2002, the CCC donated 300,000 shares of F Housing Industry Co., Ltd. (hereinafter referred to as “F Housing”) held in the name of EE, which were owned by the Plaintiffs on September 28, 2002; (2) on December 26, 2002, the Plaintiffs reported a donor on gift tax to EE; and (3) on December 26, 2002, the tax amount calculated as KRW 18,456 per share of F Housing stocks was paid in cash to the Plaintiffs; and (3) on August 23, 2004 and August 4, 2005, the head of the competent district tax office re-reported the value per share of F Housing stocks of each F Housing to the Plaintiffs; (4) on November 1 and 4, 2013, the Plaintiffs recognized the effect of the total amount of gift tax and the additional gift tax paid as e.

Based on its stated reasoning, the lower court determined that: (a) as long as the Plaintiffs filed a return on the taxable value and tax base of the gift tax on the FF house donation within the statutory due date of return; and (b) thus, the Defendants’ imposition of the additional tax on the negligent return of each gift tax as of November 1, 2013 and November 4, 2013 against the Plaintiffs, the imposition of the additional tax on the negligent return of each gift tax as of November 1, 2013 and the imposition of the additional tax in good faith (the portion exceeding the additional tax amount that exceeds the penalty tax that was paid in bad faith on August 4,

Examining the record in light of the relevant legal principles, such determination by the lower court is justifiable, and contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine on non-reporting

B. As to the Defendants’ ground of appeal No. 3

The ground of appeal on this part is that, since the plaintiffs under-reported and paid gift tax by fraudulent or other unlawful acts, a long-term statute of limitations should apply to the penalty tax not paid, the court below erred by omitting judgment on the defendants' assertion pointing this out and failing to exhaust all necessary deliberations.

Examining the record in accordance with the relevant regulations and relevant legal principles, it is difficult for the Plaintiffs to view that they underreporting gift tax by fraud or other unlawful act, and even if the lower court failed to exhaust all necessary deliberations, this may not affect the conclusion of the judgment, and thus, cannot be a ground for reversal of the lower judgment.

3. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal by Plaintiff AA are assessed against Plaintiff AA, and the costs of appeal by the Defendants are assessed against the Defendants. It is so decided as per Disposition by the assent of all participating Justices on the bench.