Notwithstanding the purport of Article 119 (1) of the former Income Tax Act, which requires the tax authority to determine the tax base and the amount of tax in writing where a final return on tax base of income tax is filed along with the adjusted account statement prepared by the tax accountant, etc., and the requirements

Article 119(1) of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994) stipulates that where only certain persons liable for tax payment, such as those who trust the amount of income reported or who can be easily calculated, submit a written adjusted statement prepared by a certified tax accountant, etc. along with the adjusted tax base return, the determination of the tax base and the amount of tax shall be made on behalf of the Government by making them prepare and submit an adjusted statement verifying that the entries in the tax base investigation and the income return are correct according to the adjusted statement of tax base and the adjusted statement of income amount, and thus, the tax base and the amount of tax may be determined on behalf of the Government without any reasonable ground such as documentary investigation. However, if it is evident that the adjusted statement was prepared in a false and processed manner without any ground such as documentary evidence or it is evident that the amount of income was omitted from the beginning without including the details of the revised tax base and the amount of tax, the determination of tax may be made on the basis of a written investigation or revised statement of tax base and the amount of tax base.

Article 119 (see current Article 80) of the former Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994), Article 168-2 (see current Article 70 (5) of the Income Tax Act), Article 169 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14467 of Dec. 31, 1994), Article 169 (see current Article 143 (1)), Article 182-2 (see current Article 143 (3)) of the former Income Tax Act

Supreme Court Decision 86Nu348 Decided March 24, 198 (Gong1987, 745) Supreme Court Decision 94Nu11200 Decided December 8, 1995 (Gong1996Sang, 423) Supreme Court Decision 96Nu4701 Decided March 28, 1997 (Gong197Sang, 1277) (Gong198Ha, 2148) Decided July 10, 1998

Plaintiff (Law Firm Ilwon, Attorneys Choi Young-young et al., Counsel for the plaintiff-appellant)

Distribution of Tax Offices (Attorneys Park Young-ro et al., Counsel for the defendant-appellant)

Seoul High Court Decision 97Gu3844 delivered on May 28, 1998

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

We examine the grounds of appeal.

1. Article 119 (1) of the Income Tax Act (amended by Act No. 4803 of Dec. 22, 1994; hereinafter referred to as the "Act") provides that where a business operator who files a return of tax base and tax amount with an adjusted account statement confirmed by a certified tax accountant (including a certified tax accountant registered under Article 6 of the Certified Tax Accountant Act) to be reasonable in the final tax base return falls under the standards prescribed by the Presidential Decree, notwithstanding the provisions of Article 118, the tax base and tax amount of tax shall be determined through written deliberation; and Article 118 (2) provides that where the return or other documents submitted are incomplete or erroneous, the Government may request correction in writing under the conditions as prescribed by the Presidential Decree; paragraph (3) provides that where the business operator fails to submit the corrected documents or the tax base and tax amount can not be determined by written deliberation with the submitted corrected documents, or where other reasons prescribed by the Presidential Decree exist, the provisions of paragraph (1) provide that the business operator may not be determined by the Presidential Decree as the basis and tax amount of tax amount of tax before such written deliberation.

On the other hand, Article 127 of the Act provides that if a business operator who has received a written investigation decision pursuant to Article 119(1) of the Act confirms any omission or error after he/she is unable to determine the tax base and amount of tax pursuant to Articles 117 through 120 of the Act, or finds such omission or error, the Government shall immediately investigate the tax base and amount of tax, and shall correct them, and Article 182-2 of the Enforcement Decree provides that if it is confirmed that he/she falls under any of the following subparagraphs, the business operator who has received a written investigation decision pursuant to Article 119(1) of the Act may correct the tax base and amount of tax pursuant to Article 127 of the Act, and includes cases falling under any subparagraph

2. Where only a person liable to pay income tax, such as a person who can trust the amount of revenue reported under Article 119(1) of the Act or whose total amount of revenue can be easily calculated, and where he/she has filed a final return of tax base with an adjusted statement prepared by a tax accountant, etc. along with the adjusted statement, requiring him/her to determine the tax base and the amount of tax in writing, in trust with the person subject to written investigation and the tax accountant, etc., to act on-site investigation to the Government by preparing and submitting the adjusted statement confirming that the entries in the final return of tax base are correct according to the tax base investigation and the income statement, and thus, in order to enhance the efficiency of tax administration and promote the convenience of the taxpayer, he/she has significance. Thus, where it is evident that the adjusted statement was prepared at all false or processed without any basis, or that the amount of tax was reported, but it is deemed improper to determine the tax base and the amount of tax only by a written investigation, such as where it is objectively evident that the details of the return were reported but not included in the tax base and the amount of tax can be corrected after the written investigation.

Therefore, Article 119(3) of the Act and Article 168-2(3) of the Enforcement Decree of the Act stipulate the reasons why the decision was not made in writing, and Article 182-2(2) of the Enforcement Decree of the Act stipulates the reasons why the decision was made with respect to the person who made a written investigation. However, as seen above, although it is apparent that the adjusted account statement was prepared at all by false and processed without any ground such as documentary evidence, or it is evident that the revenue was not included in the contents of the report at all and was omitted from the beginning, and even if the reported amount was objectively evident that there was an omission or error by the contents of the report itself, it shall be deemed that there is a ground that

3. After duly recognizing the facts in its reasoning based on the evidence of employment, the lower court determined that the Plaintiff included the construction cost of the construction account by attaching the adjusted account statement that the details of the statement are justifiable in making the final tax base return on global income tax in 1993 and 1994, and that the Plaintiff’s excessive appropriation of the construction cost as claimed by the Defendant constitutes “insufficient or error in the documents itself,” insofar as it is not an omission in the revenue itself. In light of the reasoning of the lower judgment and the records of this case, the lower court did not err by misapprehending the legal doctrine without examining the remaining grounds of appeal. In so doing, the lower court did not err by misapprehending the legal principles as to the disposition of this case, without examining the grounds of appeal.

4. Therefore, the appeal is dismissed and all 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 Seo Sung-sung (Presiding Justice)