[1] In a case where a tax office conducted a tax disposition by re-auditing the investigation data of criminal cases accused against the actual manager, seizure books, etc. after taking the original disposition into account the details of omission of sales, the grounds for calculation of omission tax amount, and copies of the book of omission of sales attached to the notification of taxation data notified by the investigation agency, whether the taxation disposition violates the principle of ground taxation (negative)

[2] In a case where a tax assessment is made on the omitted income by the on-site investigation decision, the burden of proving the omission of a return on the expenses incurred in relation to the omitted income (=taxpayer), and whether only the deductible expenses corresponding to the omitted income can be calculated and deducted by the method of estimated

[1] Only a notice of taxation data sent by an investigation agency to a tax office is a judgment document of the investigation agency and it cannot be a document supporting the legality of taxation. However, when the investigation agency notifies the tax office of the taxation data, the tax office attached a detailed statement of omission in sales, the basis for calculation of omission in sales, and a copy of the omitted sales, respectively. The tax office originally made a disposition using each document as the data of the field investigation. After that, if the tax office conducts a tax disposition through a correction of increase, reduction, and correction of the investigation data of criminal cases against the actual manager and the seized books, the tax office merely conducted a tax disposition without any on-site investigation of other evidentiary documents by the notice of taxation data, but it cannot be deemed a violation of the principle of basis taxation.

[2] If a person liable for tax payment finds any revenue omitted in filing a return on the tax base of corporate tax, etc., the competent tax office may include the omitted revenue in gross income. If the taxpayer has omitted the return on the revenue to be included in gross income in filing a return on the tax base, etc., but there is a fact that the taxpayer has omitted the return on the expenses to be included in gross income, the existence and the amount of such expenses shall be determined by the verification of the claimant to include the expenses in deductible expenses, and if there is no such proof, it shall be deemed that there is no additional expense. In this case, unlike the method of determining the total deductible expenses, only the deductible expenses corresponding to the omission portion shall not be calculated and deducted by the method of additional investigation, not by the on-site investigation.

[1] Article 16 of the Framework Act on National Taxes, Article 27 of the Administrative Litigation Act / [2] Article 26 of the Administrative Litigation Act, Article 9 of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998), Article 32 (3) of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998), Article 12 (2) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 1998), Article 93 (1) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 15970 of Dec. 31, 199)

[1] Supreme Court Decision 85Nu881 delivered on December 9, 1986 (Gong1987, 161), Supreme Court Decision 86Nu357 delivered on May 26, 1987 (Gong1987, 1083) / [2] Supreme Court Decision 86Nu217 delivered on November 25, 1986 (Gong1987, 114), Supreme Court Decision 90Nu10179 delivered on July 12, 1991 (Gong193, 1479), Supreme Court Decision 91Nu10695 delivered on July 28, 1992 (Gong192, 2594) (Gong198Du38968 delivered on April 10, 198)

Korean Newspapers Sales Co., Ltd. (Attorney Lee Il-woo et al., Counsel for the defendant-appellant)

The director of the tax office.

Seoul High Court Decision 98Nu6007 delivered on February 24, 1999

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

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

As to the principle of applicable taxation:

The notification of taxation data sent by the investigative agency to the tax office can not be the basis for supporting the legality of taxation (see, e.g., Supreme Court Decisions 85Nu881, Dec. 9, 1986; 86Nu357, May 26, 1987). In this case, according to the record, the chief prosecutor of the Seoul District Public Prosecutor's Office notified the defendant of the taxation data of this case, attached one detailed statement of omission in sales and one copy of the calculation basis of omission in sales, and one copy of the omission in sales (No. 1), respectively. The defendant made the initial disposition based on each of the documents in the field investigation. After that, the defendant issued the investigation data and seized books (No. 5-3 through 40 of the evidence No. 5) of the criminal case against the non-party 1 who actually manages the plaintiff company, and thus, it cannot be seen that the defendant did not go against the principle of taxation on the spot investigation and did not notify other taxation data of this case.

The recognition and judgment of the court below to the same purport is just, and there is no violation of the principle of taxation based on the grounds as alleged in the grounds of appeal or any misconception of facts against the rules of evidence

The ground of appeal on this issue is rejected.

As to a claim for sales revenue

The lower court determined that the Defendant’s sales of the Plaintiff’s company’s 194 business year and 1995 business year were insufficient to recognize that the Plaintiff’s 210,466,285 won was the sales of the Plaintiff’s ○○○○○○○○○○ store, and there is no other evidence to acknowledge it. Rather, in light of the following: (a) the Plaintiff’s representative director Nonparty 3 and Nonparty 4’s investigation agency, who is an employee of the Plaintiff company, the details of each statement, the receipts and sales proceeds, personnel management, the details of the Plaintiff’s books prepared by the Plaintiff company, and the relationship between Nonparty 1, Nonparty 2, and Nonparty 5, both of the sales of the sales of the Plaintiff company’s ○○○○○○○○ store and Nonparty 5, the sales of the sales of the Plaintiff company’s 4 business year and the sales of the Plaintiff company, and (b) the sales of the Plaintiff company’s ○○○○ store and paid the Plaintiff’s 2 in the name of Nonparty 2.

In light of the records, the fact-finding and decision of the court below is just, and there is no error of law by mistake of facts against the rules of evidence as alleged in the grounds of appeal.

We cannot accept the allegation in the grounds of appeal.

Concerning the omission of sale

If a person liable for tax payment finds any revenue, such as omitted sales, in filing a return on the tax base of corporate tax, etc., the competent tax office may include the omitted revenue in the gross income. If a person liable for tax payment has omitted the return on the revenue to be included in the gross income, not only the omission of the return on the revenue to be included in the gross income in filing a return on the tax base, etc., but also the expenses to be included in the deductible expenses, the existence and amount of such expenses shall be determined by the verification of the person who asserts the inclusion in the deductible expenses. Unless there is such proof, such separate expenses shall be deemed as nonexistent (see, e.g., Supreme Court Decisions 91Nu10695, Jul. 28, 1992; 98Du328, Apr. 10, 1998). In such cases, unlike the method of determining the total deductible expenses, only the deductible expenses corresponding to the omission portion cannot be calculated and deducted by the method of additional investigation, not by the on-site investigation (see, e.g., Supreme Court Decision 286Nu 197Du38, Nov. 198, 198.

In light of the records and the legal principles as seen earlier, the Plaintiff company is also the Plaintiff company that there is no account book related to sales and purchase, such as purchase account statement and payment statement of purchase price, and the materials submitted by the Plaintiff company are insufficient to recognize that sales cost was omitted. Unless there is no evidence to acknowledge otherwise, the lower court did not err by misapprehending the legal principles on mistake of facts or inclusion in deductible expenses due to violation of the rules of evidence or by misapprehending the corporate

The argument in the grounds of appeal as to this cannot be accepted.

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

Justices Lee Yong-woo (Presiding Justice)