The scope of outflow from the company among the omitted amount of a corporation not entered in the account book (=total omitted amount) and the burden of proving the outflow from the company (=corporation)

Where a corporation fails to record its sales in an account book despite the fact of sales, the total amount of the omitted sales, including the cost of raw material purchase, shall be deemed to have been leaked out, except in extenuating circumstances. In such cases, the special circumstance that the omitted sales are not leaked, shall be proved by the corporation's side that asserts it.

Article 32 of the Corporate Tax Act, Article 94-2 of the Enforcement Decree of the Corporate Tax Act

[Plaintiff-Appellant-Appellee] Plaintiff 1 and 1 other (Law Firm Gyeong, Attorneys Park Jae-soo et al., Counsel for plaintiff-appellant-appellee)

Suwon Industrial Corporation

Head of Eastern Tax Office

Busan High Court Decision 88Gu261 delivered on April 13, 1990

The part of the judgment of the court below concerning Class A earned income and the detailed and disposition of the defense related thereto are reversed, and this part of the case is remanded to the Busan High Court.

The defendant's remaining appeals are dismissed.

The costs of appeal dismissed shall be assessed against the defendant.

1. Regarding ground of appeal No. 1

According to the reasoning of the judgment below, the court below recognized the plaintiff's total sales amount by the method of on-site investigation of each business year based on evidence such as evidence No. 1, and determined that the defendant, in calculating the plaintiff's total sales amount by each business year, imposed the tax disposition in this case by adding the total sales amount to gross income, but under Articles 8 and 9 (1) of the Corporate Tax Act and Article 12 (2) 2 of the Enforcement Decree of the same Act, Article 12 (2) 2 of the same Act, the above total sales amount should be deducted from the above total sales amount in order to calculate the business income amount by each business year, under the premise that the corresponding purchase price should be deducted from the above total sales amount, and then, the court below determined that the above tax disposition was unlawful in addition to the above total sales amount by adding the sales amount to gross income, the purchase price and its difference by each business year as stated in the statement of omission in monthly sales in the attached Table No. 1 of the judgment below, and thus, the defendant should determine the tax base for the plaintiff's business income by each business year.

In light of the records, the above recognition and judgment of the court below are just, and there is no error of law such as misconception of facts or incomplete deliberation. The arguments are groundless.

2. Regarding ground of appeal No. 2

As seen earlier, the lower court recognized that the Defendant’s disposition of the amount included in the above amount of gross income added to the above amount of the business income for each business year after adding it to gross income is unclear, and determined that the Plaintiff imposed annual Class A earned income and defense taxes on the Plaintiff as bonus reverted to the representative of the Plaintiff, but that the Plaintiff did not impose the annual sales income and defense taxes on the Plaintiff during the business year from January 23, 1982 to May 23, 1982. However, the lower court determined that the Defendant’s disposition of the above amount of the annual sales income was unlawful on the basis of the annual sales income and the annual sales income of KRW 1,183,340 during the business year from June 5, 1982 to May 12, 1983, and the annual sales income of KRW 6,914,595, and the annual sales income of KRW 2,471,896 during the business year from June 2, 1983 to November 6, 1983).

However, if a corporation fails to enter its sales in an account book despite the fact of sales, the total omitted sales, including the cost of raw material purchase, shall be deemed to have been leaked out to the company, barring any special circumstances, and in such case, special circumstances should be proved by the legal entity asserting the omission of sales (see, e.g., Supreme Court Decisions 85Nu556, Sept. 9, 1986; 85Nu807, Apr. 14, 1987; 85Nu807, Apr. 14, 1987). Thus, the court below erred by misapprehending the legal principles of Article 32(5) and Article 9-2(1) of the Corporate Tax Act and Article 9-2(1) of the Enforcement Decree of the same Act, which affected the conclusion of the judgment, without examining and determining special circumstances as to the omission of sales in each business year, only the remaining amount after deducting the purchase amount corresponding to the omission of sales in each business year.

3. Therefore, among the judgment of the court below, the part of the defendant's complaint regarding the detailed and disposition of Class A employment income and the defense detailed and disposition based thereon are reversed, and these parts of the case are remanded to the court below, and the defendant's remaining appeal is dismissed, and the costs of appeal as to the dismissed part are assessed against the losing party. It is so decided as per Disposition by