[1] In a case where a corporation did not enter sales in a book or calculated the cost of processing, whether the corporation’s profit equivalent to the omitted sales amount or the cost of processing should be deemed to have been leaked out of the company (affirmative in principle) and the burden of proving that the total amount omitted sales was not leaked out of the company (=the person who asserts this)

[2] The case affirming the judgment below holding that in case where Gap corporation's sales revenue for several years was included in the debt account other than the sales account, and the head of the competent tax office regarded it as an outflow from the company, and disposes of it as bonus for the representative director Eul, and Eul additionally reported and paid the tax amount of global income tax, and five years have passed since the exclusion period of imposition of global income tax was expired since some of them was reported and paid, the above tax return and payment was made at the expiration of the exclusion period of imposition of global income tax on the income for which the exclusion period of imposition expires, and the total income tax was paid after the exclusion period of imposition expired

[1] Where a corporation fails to record its sales in the account book despite a fact of sales or appropriates the cost of processing in the account book, barring special circumstances, the corporation's profits equivalent to the omitted sales or the cost of processing shall be deemed to have been leaked out of the company. In this case, the special circumstance that the total amount omitted sales is not leaked out of the company shall be proved by the claimant.

[2] The case affirming the judgment below holding that, in case where Gap corporation's sales revenue for several years was included in the debt account other than the sales account, and the head of the competent tax office regarded it as an outflow from the company, and disposes of it as a bonus for the representative director Eul and additionally reported and paid the amount of global income tax on Eul, and five years have passed since the exclusion period of imposition of global income tax on some of them was expired before the date of the return and payment, the above tax return and payment was made on the global income tax on the income for which the exclusion period of imposition expires, and the total income tax was paid after the exclusion period of imposition expired as the tax return and payment

[1] Article 67 of the Corporate Tax Act, Article 288 of the Civil Procedure Act / [2] Article 67 of the Corporate Tax Act, Articles 20 and 70 (1) of the Income Tax Act, Article 26-2 (1) of the Framework Act on National Taxes, Article 741 of the Civil Act

[1] Supreme Court Decision 93Nu630 Decided May 14, 1993 (Gong1993Ha, 1750) Supreme Court Decision 201Du4053 Decided November 29, 2012

Plaintiff (Law Firm Changcheon et al., Counsel for the plaintiff-appellant)

Korea

Seoul High Court Decision 2019Na200112 decided November 21, 2019

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

The grounds of appeal are examined.

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

A. Where a corporation fails to record its sales in the account book despite a fact of sales or appropriates the cost of processing in the account book, barring any special circumstance, the corporation’s profits equivalent to the omitted sales or the amount of processing costs shall be deemed to have been leaked out, barring special circumstances. In such cases, the special circumstance that the total amount omitted sales, etc. is not leaked out, shall be verified by the claimant (see, e.g., Supreme Court Decisions 93Nu630, May 14, 1993; 201Du4053, Nov. 29, 2012).

B. Review of the reasoning of the lower judgment and the record reveals the following facts.

1) While engaging in an agency business for clothing purchase, a stock company (hereinafter “BE purchase”) included 7,184,765,400 won in total, not in the sales account, but in the foreign currency commodity deposit account, the debt account, 2005 sales amounting to 5,281,19,49,491 won, 261,967,776 won in 2005 sales amounting to 261,967,766 won in 2006, 137,068,235 won in 207, 94,684,213 won in sales amounting to 59,845,685 won in 208.

2) The head of Seocho District Tax Office under the Defendant’s jurisdiction corrected corporate tax for the business year of 2008 of forest purchase. From April 2008 to June of the same year, the sum of KRW 7,184,765,400 was deposited out from the account in the name of the Nonparty, a manager of forest purchase, from April 2008 to the account in the name of the Nonparty, a manager of forest purchase. The said amount was leaked to the company at the time of withdrawal and its attribution is unclear. As such, on May 13, 2013, the said amount was disposed of as a bonus to the Plaintiff, the representative director of forest purchase, and on July 9, 2013, the Plaintiff was notified of the change in the amount of income.

3) Upon receipt of the notice of the change in the above amount of income, the Plaintiff returned the total income tax for 2008 years following the change in the amount of income to the head of Seocho District Tax Office on September 30, 2013, and paid the additional tax amount of KRW 2,390,684,490 (hereinafter “instant return and payment”). From 2004 to 2,207,576,184, the return and payment of additional global income tax on the income for the period from 2004 to 2007, which the Plaintiff asserted that the exclusion period of imposition has expired (hereinafter “instant return and payment”).

C. Under such premise, the lower court determined that the exclusion period of imposition of global income tax already imposed on June 1, 2012, 2012, prior to the filing date and payment date of the instant report and payment date, on the grounds that, barring any special circumstances, the amount of omission in sales arising from appropriating it in the account of deposits for foreign currency goods, which was not the sales account, in the sales amount from 2004 to 2007, was discharged from the forest purchase at the time of omission of sales, and that the amount of omission in sales has expired at the time of lapse of five years from June 1, 2004 to 207 following the year in which the pertinent income was reverted to the Plaintiff as a result of the disposition of income disposition.

D. Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine, the lower court’s determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine regarding the timing of outflow from the company, or by exceeding the bounds of the principle

2. Regarding ground of appeal No. 1

For the reasons indicated in its holding, the lower court determined that the return and payment in this case should be deemed null and void as in the case where the global income tax on the income for which the exclusion period expires after the exclusion period expires.

In light of the relevant legal principles and records, the above determination by the court below is just, and contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles on the invalidation of the global income tax return

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Sang-ok (Presiding Justice)