A. Whether Article 169-2(2) of the former Enforcement Decree of the Income Tax Act (Presidential Decree No. 9229, Dec. 30, 1978) goes against the Income Tax Act and becomes invalid (negative)

B. Responsibility to prove the legality of the estimated taxation

(c) Whether the estimated taxation disposition is appropriate, provided that the actual amount of income falls under 150 percent of the average income level of an enterprise solely based on the fact that it has been determined to conduct the estimated investigation for not less than three years;

A. Under Articles 120 and 124 of the Income Tax Act, the standard rate for income by type of business determined by the Government is a method of estimating the actual amount of income in cases where it is impossible to grasp the actual amount of income. It is determined to reflect the actual amount of income as much as possible, and it is in violation of the purport of the above provisions of the Act to determine the standard rate for income solely for the purpose of collecting the amount of income for the defaulted taxpayer. Thus, it is difficult to conclude that the purpose of determining the standard rate for income by type of business, regardless of all the requirements for determining the amount of income under the above provisions, is only for the purpose of collecting the amount of income, regardless of whether it is necessary to determine the basic rate for the average company by taking account of the degree of good faith such as withholding, collection of transaction, report on data, transaction training, etc. for the pertinent taxable period, and therefore, it cannot be viewed that the grounds for determining the rate of income by type of business listed in the above provisions can be a basis for the accuracy of the determination of income amount for the relevant company.

B. The estimated taxation under Article 120 of the Income Tax Act is exceptionally acknowledged in cases where there is no tax base and documentary evidence of a taxpayer who is the basis for the determination of the tax base and amount of tax, or where it is impossible to impose tax by the basis of the taxation because the details are incomplete or false. Thus, the estimated taxation cannot be conducted by the method of estimation because it is impossible to investigate the actual amount of tax, as well as where the method and contents of the estimation are reasonable and reasonable to reflect the actual amount of income near the truth. In a case where the legitimacy of such estimated taxation is disputed, the burden of proof for the reasonableness and validity

C. The fact that the Plaintiff was subject to the determination of the tax base and tax amount of corporate tax for each business year for three years or more even though it was the Plaintiff that there was no book and documentary evidence or that there was a lack of essential part of the books and documentary evidence, and thus, there was a reason for making it impossible to determine the tax base of corporate tax on the spot investigation, is unlawful as it lacks rationality and feasibility.

(a) Articles 120 and 124 of the Income Tax Act; Article 169-2(2) of the former Enforcement Decree of the Income Tax Act (Presidential Decree No. 9229, Dec. 30, 1978); Article 120 of the Income Tax Act; Article 32(3) of the Corporate Tax Act; Article 93 of the Enforcement Decree of the Corporate Tax Act

Supreme Court Decision 82Nu36 delivered on September 14, 1982

Attorney Park Young-chul et al., Counsel for the defendant-appellant

Head of Eastern Tax Office

Seoul High Court Decision 80Gu752 delivered on July 29, 1981

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. On the first ground for appeal:

The standard rate of income for each type of business determined by the Government pursuant to the provisions of Articles 120 and 124 of the Income Tax Act is a method of estimation in cases where there are no books and documentary evidence necessary for calculating the tax base and the amount of tax, or where it is impossible to grasp the amount of income because the contents are incomplete or false and so it is a method of estimation investigation so that the amount of income can be reflected as much as possible in the amount of income. On the contrary, to determine the standard rate of income for the sole purpose of responding to unfaithful taxpayers regardless of whether the amount of income is reflected in the amount of income.

However, the purport of Article 169-2(2) of the former Enforcement Decree of the Income Tax Act stipulating that a differential rate may be determined by taking account of the degree of good faith in collecting withholding taxes, collecting transactions, reporting data, and training transactions for the pertinent taxable period, is difficult to readily conclude that the purpose of determining the amount of income is solely for the purpose of responding to a defaulted taxpayer without any relation. Rather, it is difficult to conclude that the fiduciary duty, such as withholding, collecting transactions, reporting on data, and transaction training, can be the basis for measuring the accuracy of the determination of the amount of income for the pertinent enterprise, and thus, it is difficult to view that it is not a reason that is not related to reflection of the actual

Therefore, it cannot be viewed that the above provision itself, which provides for the estimation of income amount by taking account of these reasons, is in violation of the Income Tax Act or that it is invalid without any legal basis (see Supreme Court Decision 82Nu36 delivered on September 14, 1982). Therefore, the argument that the above provision is an invalid provision of Article 169-2 (2) of the former Enforcement Decree of the Income Tax Act cannot be adopted.

2. On the second ground for appeal:

The estimated taxation under Article 120 of the Income Tax Act is exceptionally granted in cases where there is no taxpayer's account books and documentary evidence, which are the basis for the determination of tax base and amount of tax, or where it is not possible to impose tax by the basis of taxation because the details are incomplete or false. Thus, the estimated taxation cannot be conducted by the method of estimation because it is impossible to investigate the actual amount of tax, as well as where the method and contents of the estimation are reasonable and reasonable to reflect the actual amount of income close to the truth. In a case where the legitimacy of such estimated taxation is disputed, the burden of proof for its rationality and validity shall be borne by the defendant who is the tax authority (see Supreme Court Decision 82Nu36 delivered on September 14,

According to the judgment of the court below, since the plaintiff, who is a domestic corporation that carries on a non-regular transportation supporting business with the remaining rent of trucking 1,000 won, paid the tax base and tax amount on income for the business year 1979.3.2, 1978, the court below recognized that the amount of business revenue is 62,321,298 won and deducted the amount of tax base for the corporate tax from 14,395,003 won and paid the tax base amount for the current business year based on such fact that the above tax base return submitted by the plaintiff was inappropriate, and as a result, the defendant recognized that the amount of tax base for the current business year is 14,39,000 won and the amount of tax for the total amount of tax revenue for the current 7 years, 40,000 won and the amount of tax for the current 7,07,000 won calculated by applying the prescribed rate of tax base amount for the corporate tax for the total amount of tax base for the business revenue amount for the plaintiff 1, 4,06,5,5,0,5, 7, respectively.

However, only the above facts indicated by the judgment below, it is difficult to readily conclude that the defendant's additional imposition disposition of this case by the above high rate against the plaintiff is reasonable and reasonable, and there is no evidence to acknowledge it differently even after examining records, and therefore, the defendant's additional imposition disposition of this case by the above high rate cannot be deemed unlawful as an estimated imposition disposition lacking rationality and feasibility. Therefore, there is good reason to discuss this point.

Therefore, the judgment of the court below is reversed, and the case is remanded to the Seoul High Court, which is the court below, and it is so decided as per Disposition by the assent of all participating Justices.

Justices Lee Chang-chul (Presiding Justice)