[1] Where a tax authority received a certificate from a taxpayer that a certain portion of a transaction is a processing transaction in the course of a tax investigation, the evidence of the certificate shall be attached

[2] The scope of a corporation's omission in sales which was not entered in the account book to be deemed an outflow from the company (=total omitted amount) and the burden of proving the special circumstance that the omission in sales was not an outflow from the company (=the corporation)

[1] If a tax authority received a written confirmation from a taxpayer that a certain portion of a transaction is a processing transaction in the course of a tax investigation, it cannot be readily denied the evidence of the written confirmation, barring special circumstances, such as where the written confirmation was drafted compulsorily against the intent of the originator, or it is difficult to consider the written confirmation as evidence of the specific fact due to lack of the content thereof, etc.

[2] Where a corporation fails to enter its sales in its account book despite the fact of sales, the total amount omitted from sales, including the cost of raw material purchase, shall be deemed to have been leaked out of the company, except in extenuating circumstances. In this case, the special circumstance that the omission in sales is not leaked out of the company shall be proved by the corporation asserting it.

[1] Article 16(1) of the Framework Act on National Taxes; Article 32(3) of the former Corporate Tax Act (amended by Act No. 4804 of Dec. 22, 1994; see current Article 66(3)); Article 92(3) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14468 of Dec. 31, 1994; see current Article 103(2)); Article 202 of the Civil Procedure Act / [2] Article 32(5) of the former Corporate Tax Act (amended by Act No. 4804 of Dec. 22, 1994; see current Article 67); Article 94-2(1)1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 1468 of Dec. 31, 1994); Article 103(1)3(c) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 1468(1) of the Income Tax Act);

[1] Supreme Court Decision 92Nu1438 delivered on November 13, 1992 (Gong1993Sang, 154), Supreme Court Decision 98Du2928 delivered on May 22, 1998 / [2] Supreme Court Decision 85Nu556 delivered on September 9, 198 (Gong1986, 1401) Supreme Court Decision 90Nu3751 delivered on December 26, 1990 (Gong1991, 661), Supreme Court Decision 93Nu630 delivered on May 14, 1993 (Gong193Ha, 1750), Supreme Court Decision 97Nu19151 delivered on May 25, 199 (Gong1999, 197Du37364 delivered on May 23, 209)

Aar Code Co., Ltd. (Law Firm Doz. and one other, Counsel for the plaintiff-appellant)

head of Sung Dong Tax Office

Seoul High Court Decision 2000Nu2633 delivered on February 22, 2001

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

1. As to the omission of sale

Unless there are special circumstances, such as that if a tax authority received a written confirmation from a taxpayer that a certain part of a transaction is a processing transaction during the course of a tax investigation, it is difficult to readily deny the evidence of such written confirmation only by means of evidence of the fact that the written confirmation was forced against the will of the originator or it is difficult to be deemed as evidence of the specific fact due to insufficient details (see Supreme Court Decision 98Du2928, May 22, 1998).

The defendant violated the principle of applicable taxation by unilaterally recognizing the omission of sales from the records prepared by the plaintiff without a field investigation by books or documentary evidence kept and kept by the plaintiff, and the transaction between the plaintiff and the new Liber distribution company (hereinafter referred to as "new Liber distribution"), which was recorded in the secret book for issuance of bills, was merely a loan bill for financing, but it was illegal to recognize the omission of sales by the plaintiff. The court below acknowledged the facts as stated in its holding. The court below found that the disposition of this case was unlawful, based on the payment of money seized in the investigation process by the prosecutor's office against △△△△△△△△△△, a non- religious organization, and the personal bill issuance confidential records, etc., and as a result, it was found that the defendant purchased the records without obtaining a tax invoice from the plaintiff, and the representative director, the defendant, based on the above data, omitted sales from the plaintiff's lawful distribution and delivery of the records.

In light of the above legal principles and relevant statutes and records, the above recognition and determination by the court below is just, and there is no error of law by misunderstanding facts in violation of the rules of evidence as to the omission of sales by a corporation, and there is no error of law by misunderstanding the legal principles as to the actual reversion of income.

In addition, the Supreme Court decision cited in the appellate brief is inappropriate to be invoked in the instant case, since it differs from the case.

2. As to actual reversion

Where a corporation fails to record its sales in the 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 this case, the special circumstance that the omitted sales are not leaked out, shall be proved by the corporation asserting it (see Supreme Court Decisions 93Nu630 delivered on May 14, 1993; 97Nu19151 delivered on May 25, 199, etc.).

Even if the plaintiff was omitted in sales in the plaintiff company for domestic affairs, the disposition imposing the tax on earned income on the premise that the omitted sales amount is not attributed to the non-party who is the representative director, and thus, is also illegal. The court below acknowledged the facts as stated in its reasoning. The court below found that the non-party, the representative director of the plaintiff company, stated that all of the non-party, used the omitted sales amount found as a result of the tax investigation on the plaintiff company for his own personal use and prepared a confirmation document. Since March 3, 1987, the non-party was working as the representative director of the plaintiff company, and determined that the non-party, the representative director of the plaintiff company, was actually attributed to the non-party.

In light of the above legal principles and relevant statutes and records, the above recognition and judgment of the court below is just, and there is no error of law by misunderstanding legal principles as to the actual reversion of income.

3. Therefore, the plaintiff's appeal is dismissed and the costs of appeal are assessed against the plaintiff. It is so decided as per Disposition by the assent of all participating Justices who reviewed the appeal.

Justices Shin Shin-chul (Presiding Justice)