[1] The requirements for taxation by estimation in a case where evidentiary documents submitted by a taxpayer are deemed insufficient or false

[2] The method of imposing estimated tax by the method of partner's right

[1] Even in a case where a taxpayer of value-added tax is deemed to have failed to submit documentary evidence submitted to the tax authority upon filing a return of his tax base and amount of tax and where it appears that there are circumstances that could easily recognize the relevant income by way of confirming the purchaser of the content of the real estate sales contract submitted by the taxpayer on a relatively simple basis, the tax base and amount of tax cannot be determined immediately on the grounds of insufficient documentary evidence, etc., without going through such procedures, only if the actual amount is not revealed after this year.

[2] It is intended to examine and determine the tax base close to actual amount on the basis of the revenue amount calculated according to the balance with other enterprisers of the same business type, as well as the estimation by the method of partner authority under Article 69 (1) of the Enforcement Decree of the Value-Added Tax Act. Thus, it is probable that the revenue of the same kind of business, which is used as the comparison standard, is reasonable and determined by the account books, as well as the amount determined by the account books. Even if the same type of business is the same type of business, it is likely that the specific business situation is identical to the

[1] Article 21(2) of the Value-Added Tax Act; Article 69(1) of the Enforcement Decree of the Value-Added Tax Act; Article 120(1) of the former Income Tax Act (amended by Act No. 4803, Dec. 22, 1994; see current Article 80(3)); Articles 169 and 169-2 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 1467, Dec. 31, 1994; / [2] Article 21(2) of the Value-Added Tax Act; Article 69(1) of the Enforcement Decree of the Value-Added Tax

Plaintiff (Attorney Yang Dong-soo, Counsel for the plaintiff-appellant)

Head of Western Tax Office

Seoul High Court Decision 95Gu5686 delivered on January 24, 1996

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

We examine the grounds of appeal.

1. On the first ground for appeal

Even in cases where a taxpayer of value-added tax is deemed to have failed to report his tax base and amount of tax and where it is deemed that the relevant income could be easily confirmed by the method of confirming a purchaser of the real estate sales contract submitted by the taxpayer relatively simple in the case, it is reasonable to first deem that the relevant income may be estimated only in cases where the actual amount is not revealed after this year as a result of an investigation conducted in such a way as well as where the actual amount is not revealed after this year, and that the tax base and amount of tax cannot be determined immediately on the ground of insufficient evidential documents, etc. without going through such a procedure (see Supreme Court Decision 89Nu2844 delivered on January 23, 190).

In this case where the sale price of three percent of the building newly built and sold by the Plaintiff is at issue, only on the ground that the reported amount under the approval seal contract submitted by the Plaintiff is an unreasonably low amount, the Defendant’s investigation of the actual sale price by confirming the contents of the sale contract to the purchaser, etc., and the instant tax disposition by estimation was just and there is no error of law in matters of law by misapprehending the legal principles.

2. On the second ground for appeal

Article 69 (1) of the Enforcement Decree of the Value-Added Tax Act provides that the entry is justified as one of the method of estimated correction under subparagraph 1, and the method of calculating by way of authorization with other partners of the same business without correction under the provisions of Article 21 (1) of the Value-Added Tax Act due to good faith in the report. Thus, it is intended to examine and determine the tax base close to the actual amount on the basis of the amount of income calculated according to a balance with other enterprisers of the same business type. Thus, it is highly probable that the entry of revenues, etc. of the same kind of business which is considered as the comparative standard is reasonable, and even if the same type of business is the same, such revenues are similar to the actual amount of income of the relevant businessman because the specific business situation is identical or at least similar to the business situation of the relevant businessman (see Supreme Court Decision 92Nu1506 delivered on September 14, 1992).

The court below determined that the method of estimation cannot be deemed lawful on the ground that it is difficult to view that it is highly probable that the sale price of the above two houses is similar to that of internal facilities and users, which are important elements of the decision on sale in lots, in light of the following: (a) the sales price of the above houses is merely the price examined by the Defendant’s employees using the method of questioning the sales office of the above lending; and (b) there is no evidence to acknowledge that the pertinent house is the amount determined by the captain’s entry as reasonable; (c) although the instant house is located in the slope and the retaining wall is installed on the back of the house; and (d) there is no evidence to find that there is no significant difference in the sales performance; and (e) there is the same internal facilities and users, which are the important elements of the decision on sale in lots.

The above determination by the court below is just as it is based on the opinion of the party members as seen earlier, and there is no error of law by misunderstanding the legal principles as alleged in the grounds of appeal. We do not err.

3. 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 Jeong Jong-ho (Presiding Justice)