[1] Whether the method of establishing a standard income rate is unconstitutional (negative)

[2] The existence of the burden of proof as to the legality and rationality of the method of establishing the standard income rate, and the necessity of proof as to the illegality of the specific contents

[1] Article 120 (1) of the former Income Tax Act (amended by Act No. 4520 of Dec. 8, 1992) provides that when the tax base and tax amount cannot be determined on the spot, the standard rate for income by type of business shall be determined on the basis of the standard rate for income by type of business. Article 124 (1) of the same Act provides that the Government shall determine the standard rate for income by type of business through the deliberation of the standard rate for income. Paragraph (2) of the same Article provides that the "Income Standard Council" shall be established in the National Tax Service. Paragraph (3) of the same Article provides that the matters necessary for its operation shall be determined by the Presidential Decree. Article 175 through 181 of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 13802 of Dec. 31, 1992) provides that the standard rate for income by type of business shall not be determined on the basis of the standard rate for income by stipulating the standard rate for income by type of business and its characteristics.

[2] The burden of proving the legitimacy and validity of the estimation should be borne by the tax authority, so that it can reflect the actual amount of income near the truth, as well as the method and contents of the estimation in a reasonable and reasonable manner because it is impossible to conduct an investigation of actual amount. If there is a dispute over the legitimacy of the estimation, the burden of proving the legitimacy and validity of the estimation shall be borne by the tax authority. The burden of proving that the estimation is legitimate even if the estimation of income is made based on the standard amount of income. However, if the determination of the standard amount of income is proved to have been made in accordance with the method and procedure stipulated in the relevant provision, it is necessary to prove that the taxpayer is not suitable to reflect the actual amount of income because the specific contents are considerably unreasonable

[1] Articles 38 and 59 of the Constitution of the Republic of Korea, Articles 120 (1) (see current Article 80 (3)) and 124 (see current Article 145 of the Enforcement Decree of the Income Tax Act) of the former Income Tax Act, Article 169-2 (1) (see current Article 143 (3)) of the former Income Tax Act (amended by the Presidential Decree No. 13802 of December 31, 1992) / [2] Articles 120 (1) (see current Article 80 (3)), 124 (see current Article 145 of the Income Tax Act), and 124 (see current Article 145 of the Enforcement Decree of the Income Tax Act), the former Income Tax Act (amended by the Presidential Decree No. 13802 of December 31, 192), Article 169-2 (1) (see current Article 143 (3)) of the former Income Tax Act)

[1] Supreme Court Decision 76Nu38 delivered on November 23, 1976 (Gong1977, 9635) Supreme Court Decision 92Nu12582 delivered on March 26, 1993 / [2] Supreme Court Decision 82Nu36 delivered on September 14, 1982 (Gong1982, 1020), Supreme Court Decision 81Nu244 delivered on February 8, 1983 (Gong1983, 516), Supreme Court Decision 81Nu48 delivered on April 10, 1984 (Gong1984, 834), Supreme Court Decision 83Nu28 delivered on March 26, 198 (Gong1985, 631), Supreme Court Decision 198Nu68789 delivered on September 16, 1986 (Gong1986, May 16, 1986)

Plaintiff (Attorney Kim Ba-young, Counsel for the plaintiff-appellant)

The director of Busan District Office

Busan High Court Decision 93Gu7662 delivered on June 20, 1996

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

We examine the grounds of appeal.

1. On the first ground for appeal

The court below recognized the fact that the plaintiff newly constructed and sold five houses, stores, etc. of this case between 1987 and 1990 and newly constructed and sold a building four times during the period from 1982 to 1987. In light of the plaintiff's scale, frequency, period of possession, mode of transfer, etc., the court below held that the sale and purchase of each real estate of this case of this case cannot be deemed as temporary and preferred, and that it is for profit-making purposes and has continuity and repetition to the extent that it can be viewed as business activities. In light of the records, the court below's fact-finding and determination are just, and there are no errors in the misapprehension of legal principles, incomplete deliberation, and violation of the rules of evidence, etc. as asserted in the grounds for appeal.

2. As to the grounds of appeal Nos. 2 and 3

A. Article 120(1) of the former Income Tax Act (amended by Act No. 4520 of Dec. 8, 1992; hereinafter the same) stipulates that the standard rate for income by type of business shall be examined and determined according to the standard rate for income by type of business if it is impossible to conduct a field investigation. Article 124(1) of the same Act provides that the Government shall determine the standard rate for income by type of business after deliberation by the Income Standard Council. Paragraph (2) of the same Article provides that the "Income Standard Council" shall be established in the National Tax Service. Paragraph (4) of the same Article provides that the matters necessary for its operation shall be determined by the Presidential Decree. Articles 175 through 181 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 13802 of Dec. 31, 192; hereinafter the same shall apply. 169-2) provides that the standard rate for income by type of business and the standard rate for income by the Government shall be determined by the Presidential Decree No. 197.

B. However, since 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 serves as the basis for the determination of the tax base and amount of tax, or where it is impossible to impose tax by the method of base taxation because the details are incomplete or false, it should be reasonable and reasonable to reflect the estimated amount of income near the truth in the method and contents of the estimation. If there is a dispute over the legality of the estimated tax, the burden of proving the reasonableness and validity shall be imposed on the defendant who is the tax authority (see Supreme Court Decisions 83Nu28, Mar. 26, 1985; 81Nu248, Feb. 8, 1983; 81Nu244, Feb. 8, 1983; 8Nu36, Sept. 14, 1982; 2000).

According to the reasoning of the judgment below, the court below did not have any evidence to view that the standard rate of income applied to the taxation of this case is determined without examining the matters determined by the Commissioner of the National Tax Service, and determined the rate of income based on the size of the amount of income without considering the period of holding the land for the construction business or real estate sales business in 1987 through 191, which was determined by the Commissioner of the National Tax Service, and it cannot be deemed that it violates Article 169-2 of the former Enforcement Decree of the Income Tax Act, which provides for the method of determining the differential rate, or that it is not reasonable, and the evidence of the plaintiff's proof alone is insufficient to view that the standard rate of income for the construction business or real estate sales business in 1987 through 191 is much higher than the actual income rate, and there is no other evidence to deem it unlawful.

However, even after examining the record, in this case where it is not possible to find any evidence by the defendant as to the fact that the estimation method chosen by the defendant is reasonable and reasonable, the reasonableness and validity of the estimation taxation cannot be recognized merely by applying the income standard rate set by the Commissioner of the National Tax Service. However, even though the court below erred by misapprehending the legal principles as to the burden of proof as to the rationality and validity of the estimation taxation, which the court below judged on the premise that the estimation taxation is illegal to the plaintiff. The argument pointing this out is with merit.

3. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Im-soo (Presiding Justice)