Seoul Administrative Court-2016-Gu Partnership-59027 ( November 25, 2016)

Cho Jae-2015-Seoul Government-539 (24 March 2016)

The investigation of this case is exceptionally permitted pursuant to Article 81-4 (2) 1 of the Framework Act on National Taxes.

The investigation of this case is exceptionally permitted pursuant to Article 81-4 (2) 1 of the Framework Act on National Taxes.

2016Nu7909 Total income and revocation of disposition

AA

a) the Director of the Tax Office

Seoul Administrative Court Decision 2016Guhap59027 decided November 25, 2016

April 19, 2018

1. The part of the judgment of the court of first instance against the plaintiff falling under the following shall be revoked:

The Defendant’s disposition on May 11, 2015 on the imposition of the global income taxx (including the additional tax) for the Plaintiff in the year 2009, in excess of thex (including the additional tax) shall be revoked.

2. The plaintiff's remaining appeal is dismissed.

3. Of the total litigation costs, 60% is borne by the Plaintiff, and the remainder is borne by the Defendant, respectively.

The judgment of the first instance shall be revoked. The disposition of the Defendant rendered against the Plaintiff on May 11, 2015 by imposition of the global income taxx won (including additional tax) for the global income tax belonging to the Plaintiff in 2009 shall be revoked.

1. Details of the disposition;

As to this part, the relevant part of the grounds for the judgment of the first instance shall be cited pursuant to Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure

2. Whether the disposition is lawful;

A. The gist of the parties’ assertion and the relevant statutes

As to this part, the relevant part of the grounds for the judgment of the first instance shall be cited pursuant to Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure

C. Determination

1) procedural illegality

A) The existence of the preceding search

From March 14, 2011 to March 18, 2011, the Defendant conducted an investigation on the omission of sales from 2008 to 2010 with respect to the Plaintiff (hereinafter referred to as the “prior investigation”), and issued a disposition to impose global income tax for the Plaintiff on May 19, 201, respectively, KRW 6,134,475, and KRW 208, and KRW 9,63,116, in total, of the global income tax for the year 2008 and the year 2009, respectively, and KRW 2,09, KRW 1,209, KRW 1,63,116, as well as each value-added tax for the year 2010.

B) Whether a prior investigation is a tax investigation

(1) It is reasonable to view that the tax authority bears the burden of proving that a tax investigation or an on-site investigation is conducted for determining or correcting the tax base and amount of tax, as well as for making it necessary to ask questions to a taxpayer or a related person for the verification of factual relations or to order an inspection, investigation, and submission of the relevant books, etc., as in the case of on-site investigation. As such, all of the tax investigation or on-site investigation is not clearly distinguishable from the purpose and method of the investigation or on-site investigation, whether it is a tax investigation or on-site investigation is conducted shall be determined by comprehensively considering the circumstances of the investigation, contents and period of the investigation, and the degree that the taxpayer’s freedom of business or privacy is infringed upon. In light of the fact that on-site investigation is an exceptionally recognized method of an on-site investigation without any legal basis, it shall be deemed that the tax authority has the burden of proving that it constitutes on-site investigation. Whether an on-site investigation by a tax official falls under “the scope and method of an on-site investigation,” data acquired through the investigation, size and period of the tax investigation, etc.

(2) The evidence submitted by the Defendant alone lacks to view the prior investigation of this case as on-site verification, and there is no other evidence to acknowledge it otherwise. Rather, the following circumstances recognized by the Defendant comprehensively considering the overall purport of the entries and arguments in Gap evidence Nos. 9, 10, 25 and Eul evidence Nos. 4 (including the provisional number). In other words, it is reasonable to view that the defendant, at the time of the prior investigation of this case, only comprehensively stated "other on-site verification" as the purpose of confirmation and did not specify the examples of the regulations on the investigation affairs. The defendant appears to have verified the receipt stored in the plaintiff's office and the contents of the case's case's case's case's case's case's case's investigation from 2008 to 2010 by examining the accounts in the name of DD used by the plaintiff as the next account, and it appears reasonable to view that the defendant had three persons conduct the prior investigation after 5 days prior investigation or after the request for submission of explanatory materials, etc. to the plaintiff's freedom of business.

C) Whether the instant tax investigation constitutes a reinvestigation that is not permitted under the Framework Act on National Taxes

(1) Article 81-4(2)1 of the Framework Act on National Taxes provides for a case where a reinvestigation is exceptionally permitted as one of the cases where “where there is clear evidence to acknowledge a suspicion of tax evasion” refers to a case where the existence of evidence is recognized by the materials that support objectivity and rationality of a considerable probability of confirming the occurrence of tax evasion (see, e.g., Supreme Court Decision 2008Du10461, Dec. 23, 2010).

(2) In full view of the overall purport of the statements and arguments in subparagraph 3, Nos. 8, 1, and 2, the defendant was informed by the informant that "the plaintiff did not issue a tax invoice for 600 million won even after he accepted several recommendations from BB from 2006 to 2010." The informant at the time submitted the content certification and the receipt, the receipt, the case acceptance details, and the deposit details of the amount forwarded to the plaintiff. On the other hand, the receipt (No. 3) states that the plaintiff received the above money from BB on July 29, 2009 as "the attorney's fee," and it is reasonable to deem that the above money was reasonable to acknowledge the plaintiff's tax evasion evidence as an exceptional evidence to prove that the above money was deposited from BB on Aug. 7, 2009.

In this regard, the Plaintiff asserts that the above receipt (No. 3) was evidence already examined at the time of the prior investigation, and, based on its main basis, the Plaintiff cited the part of July 29, 2008, which was the date of the contract (hereinafter referred to as 'the dispute part') among the 1st page of the tax investigation data (Evidence No. 9-1) in 2011. The above materials cannot be accurately known about the subject, timing, and purpose of the preparation, and the above materials consisting of 3 pages, which are different from 2 and 3 pages. However, it is difficult to view that at the time of the prior investigation, the Plaintiff currently paid the above money to the CCC attorney. However, in light of the above materials, it is difficult to view that there was no other evidence that the Plaintiff and the 30th anniversary of the receipt as the joint attorney’s appointment of 200,000,000 won, which was written on Jan. 19, 2010.

Therefore, we cannot accept this part of the plaintiff's assertion.

2) substantial illegality

A) Part of the fee of KRW 30 million

On August 11, 2016, the Plaintiff made a statement in the preparatory brief as of August 201, 2016, and led to the confession of the fact that the said money was the Plaintiff’s fee (the Plaintiff asserted that there was no confession, but the details of the preparatory document as of August 11, 2016, the Plaintiff’s assertion that “the Plaintiff was omitted at the time of filing a value-added tax return, rather than to conceal the fact that the money was the Plaintiff’s fee.” This assertion is reasonable to deem that the Plaintiff is the Plaintiff’s person liable to pay value-added tax, namely, that the said money was based on the premise that it was his/her own fee, and that the Plaintiff stated that “the fact of omitting sales” itself is not disputed at the date of the second trial (Seoul Administrative Court Decision 2015Guhap7509) of the case on revocation of disposition to impose value-added tax on the said money, and that the Plaintiff is the Plaintiff’s fee to be accepted in full view of the following facts:

According to Article 288 of the Civil Procedure Act applicable to the instant case pursuant to Article 8(2) of the Administrative Litigation Act, confession against the truth may be revoked only when it is proved that it has been caused by mistake. According to the purport of the whole entries and pleadings as to evidence Nos. 25-25, No. 46, and No. 34 through 36 (including paper numbers), the Plaintiff’s assertion that the confession against the truth was delivered to the CCC attorney-at-law on July 30, 2009, based on the case fees for BB criminal cases, was without merit, taking into account the following circumstances as a whole: (i) KRW 1,100,500,000 won on September 16, 2019; (ii) KRW 5 million on February 25, 2010; and (iii) KRW 10,000,000 from March 29, 2010; (iii) evidence No. 261 to 25-21, supra, and evidence No. 271 of the Plaintiff’s.

○ The Plaintiff’s assertion that: (a) after the instant disposition, the Plaintiff was filed at the time of filing an objection and a petition for trial; or (b) before the closing of argument at the first instance court on August 19, 2016, the Plaintiff’s fee is the fee for another attorney

장을 전혀 하지 아니하다가 돌연 제1심 법원에 2016. 9. 12. 변론재개신청서를 제출하면서 '원고는 너무도 억울하여 사건 기록을 살펴보며 곰곰이 기억을 더듬어보니 위 ①돈이 다른 변호사의 수임료였다'라고 주장하였는데, 위 ① 돈이 다른 변호사의 수임료라는 것은 이 사건 처분의 위법성에 관한 핵심 주장임에도 이를 기억해내지 못한 채 그동안 다른 주장을 하여 왔다는 것은 쉽게 납득하기 어렵다.

○ The Plaintiff issued a receipt from BB to receive the above money, stating that the details of the receipt is “the attorney’s fee”, and the rubber sealed as “AAA” in the issuer column. As such, there is sufficient room to regard the said money as the Plaintiff’s fee due to the interpretation based on the face of the receipt.

In this regard, when the plaintiff receives the retainer fee or the successful fee, the plaintiff has issued the case number without using the word "legal fees" as "legal fees", "payment fees", "payment fees", and "sexual public fees". The plaintiff asserts that ① the above receipt details for the money are only "legal fees" without the case number, and this is also stated in the meaning of "payment fees to other attorneys-at-law without the case number". However, the plaintiff's claim that the above "legal fees" are not his case fees from the appeal to the first instance of the trial, and that the above "legal fees" are not paid to the plaintiff, and the plaintiff's receipt fees are not paid to the above attorney-at-law in light of the fact that the plaintiff's receipt fees are not paid to the above attorney-at-law without the case number, and the plaintiff's claim that the above "legal fees" are not paid to the above attorney-at-law 1B" and the above receipts are not submitted to the plaintiff without the reasons that the above "legal fees are not paid to the above attorney-at-law."

○ The Plaintiff appears to have received the above money in cash from BB, and if it received the money from other attorneys as a commission fee, it appears that there is no reason to receive a large amount of money from 30,000,000 won (in ordinary cases, it is deemed that the client does not pay a large amount of commission fees in cash unless there is a special request by the attorney-at-law). The total sum of the money that the Plaintiff transferred to CCC attorney does not coincide with the said money.

○ The Plaintiff accepted several recommendations from BB and claimed that the Plaintiff himself had a monetary relationship different from BB. As such, it cannot be readily concluded that the said money was immediately transferred to CCC attorneys. In this regard, the Plaintiff asserted that, at the time of the prior investigation, the said money was transferred to CCC attorneys without asserting that it was ① the said money, and that it was the money related to a separate appointment agreement in 2010 (Evidence 25-8, 12).

○ In particular, on July 30, 2009, the day when the Plaintiff paid KRW 11 million to the CCC attorney-at-law, the Plaintiff received KRW 60,000,000 from the large timber industry development related to BB to the account under the name of DDR (Evidence A 13 and 14) and there is sufficient possibility that part of this money has been delivered to CCC attorney-at-law.

○ Even based on the table of “other than the expenses for certified judicial scrivener” submitted by the Plaintiff (Evidence A No. 32-1 of the evidence), the said money is written as “election fee” for the Plaintiff in BB-related development.

B) Interest income KRW 20 million

In full view of the evidence Nos. 7, 16, and 18 evidence and the purport of the entire pleadings, the plaintiff alleged that the director of a tax office at the time of re-audit against the plaintiff that the money was transferred to the director of a tax office according to the "personal monetary transaction relationship, not attorney fees," and that the money was transferred to the director of a tax office at the time of making the re-audit against the plaintiff. The plaintiff submitted the confirmation document of May 3, 201 and the loan certificate as of May 10, 207, and the above loan certificate will be repaid at the time of the completion of the lawsuit, and the interest will be paid at 6% per annum at the time of the repayment date (Seoul High Court). The plaintiff alleged that the above money was lent to BB as litigation costs, and did not specify the circumstances, date, interest, etc. of the loan and other terms and conditions of the loan and did not receive the money from the Seoul High Court from the above 201B.

However, in principle, the taxation requirement of interest income of KRW 60 million among the above amounts is merely the tax authority's proof. When applying the interest rate of KRW 60 million per annum as stated in the above loan certificate, the plaintiff's interest income of KRW 8,087,671 [=60,000 x 0.06% x 0.06% x 820 (from May 10, 2007 to August 7, 2009)] and it is difficult to conclude that the interest income of KRW 20,000 is not significantly less than KRW 60,000,000,000, and it is hard to conclude that the above interest income of KRW 60,000 was 23,000,000,000 from the above loan certificate and KRW 60,000,000,000,000 were 20,000 other reasons between the plaintiff and the above.

D. Sub-committee

According to the purport of the statement and the entire argument of the evidence No. 15 as above, since the amount of political party tax based on the above judgment is xx members, the part exceeding the above amount of political party tax among the dispositions in this case is unlawful

3. Conclusion

Therefore, the part of the disposition in this case exceeding x won shall be revoked, and since the part against the plaintiff falling under the above part of the judgment of the court of first instance which has different conclusions is unfair, it shall be accepted in part and revoked, and the remaining appeal of the plaintiff shall be dismissed as it is without merit.