The legitimacy of the assertion that the disguised purchase amount equivalent to the processed purchase amount should be recognized as a necessary route

With respect to the fact that the expenses have been actually paid, there is a need to prove the fact that it is easy for the taxpayer to present all the materials, such as the account books and evidence, etc., but it is difficult to recognize it as evidence submitted by the taxpayer, and the estimation cannot be made only because the income rate is high.

Article 80 (Determination and Correction)

Article 142 of the Enforcement Decree of the Income Tax Act: Determination and correction of tax bases and taxes

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s disposition of imposition of KRW 121,436,460 of global income tax for the year 2001 against the Plaintiff on August 1, 2006 and KRW 32,502,290 of global income tax for the year 2002 shall be revoked.

1. Details of taxation; and

The following facts are not disputed between the parties, or may be acknowledged by considering the whole purport of the pleadings in each entry in Gap evidence 1-1 through 5, Gap evidence 7, 9, Gap evidence 10, and Gap evidence 11-1 and 2:

A. The Plaintiff, who was engaged in the business of gambling in the name of △△△△ △△ △△△△ 133, “○○○○○○”, was included in the necessary expenses in filing a tax return on the purchase tax invoice amounting to KRW 206,704,536 from the stock company (hereinafter “the purchase tax invoice amounting to KRW 206,70,536” in the taxable period of the value-added tax for 2 years 2001, on the ground that the purchase tax invoice amounting to KRW 38,536 in the purchase tax invoice amounting to KRW 140,338,426 in the taxable period of the value-added tax for 202 and KRW 29, in filing a tax return on the purchase tax invoice amounting to KRW 140,38,

B. The Defendant notified the head of △△ (hereinafter referred to as the “instant tax invoice”) of the taxation data that the purchase tax invoice (hereinafter referred to as the “instant tax invoice”) equivalent to KRW 237,199,00,00 received at the end of 201 from the Plaintiff of the said purchase tax invoice, which was received at the end of 2001, and the total of KRW 71,340,000, which was received at the end of 1,202 from the Plaintiff from the head of △△△ (hereinafter referred to as “the instant tax invoice”). The Defendant corrected the amount of the instant tax by adding the amount equivalent to the instant tax to necessary expenses, thereby deducting the amount of the said tax, and then deducted the amount of the said tax. On August 7, 2006, the Defendant additionally notified the Plaintiff of the global income tax amount of KRW 121,436,460 and the global income tax amount of KRW 32,502,290 for the year 2002 (hereinafter referred to as the instant taxation”).

C. On December 4, 2006, the Plaintiff filed a request for a trial with the National Tax Tribunal on December 4, 2006, but was dismissed on December 15, 2006.

2. Whether the instant taxation disposition is legitimate

A. The plaintiff's assertion

1) Although the tax invoice of this case was prepared and delivered from dumnasium without any transaction between sumnasium and sumnasium, the plaintiff actually purchased sumnasium equivalent to the amount of this case from the sumnasium, the amount of this case should be included in the necessary expenses.

2) If the amount equivalent to the supply value under the tax invoice of this case is not calculated as necessary expenses, the Plaintiff’s input ratio of raw materials is much less than 60-70%, which is the input ratio of raw materials in the same industry, as 44.4% in 201 and 52.0% in 202, and the Plaintiff’s income ratio also reaches an unreasonable conclusion that the Plaintiff’s income ratio is much higher than 8.5% in the same industry as 22.0% in 201 and 13.4% in 2002, which is 8.5% in the standard income ratio in the same industry, and it is difficult to recognize the fact of purchase by documentary evidence submitted by the Plaintiff, this constitutes a case where the important part of the books is incomplete or false, and thus, the Plaintiff’s business income for 2001, the business income for 202 itself must be determined by the estimation investigation method in accordance with Article 80(3) proviso of the Income Tax Act and Article 143(1)

B. Relevant statutes

(Income Tax Act)

Article 80 (Settlement and Correction)

(2) If a person who has made a final return on tax base pursuant to Articles 70 through 72 or 74, falls under any of the following subparagraphs, the head of a regional tax office having jurisdiction over the place of tax payment or the head of a regional

1. Where an omission or error exists in the contents of return;

(3) Where the head of a regional tax office or the head of a regional tax office having jurisdiction over the place of tax payment determines or revises the tax base and amount of tax for the concerned year under paragraphs (1) and (2), he shall make it based on the books and other documentary evidence: Provided, That where it is impossible to calculate the amount of income by books or other documentary evidence for

(Enforcement Decree of the Income Tax Act)

Article 142 (Determination and Revision of Assessment Standard and Tax Amount)

(1) The determination or correction of tax base and amount of tax under Article 80 of the Act shall be based on the final return on tax base and the attached documents or on-site investigations.

Article 143 (Determination and Revision through Estimation)

(1) "Grounds prescribed by Presidential Decree" in the proviso to Article 80 (3) of the Act means cases falling under any of the following subparagraphs:

1. Where necessary account books and documentary evidence are missing or important parts are incomplete or false in the calculation of the tax base;

C. Determination

1) Determination on the first argument

A) In the administrative litigation seeking the revocation of taxation on the ground of the illegality of taxation, in principle, the tax authority bears the burden of proving the legality of taxation and the existence of the taxation requirement. Therefore, in principle, the tax authority bears the burden of proving necessary expenses which are the basis of the determination of taxable income. However, since necessary expenses are only favorable to the taxpayer, and the facts constituting the basis of necessary expenses are most within the control area of the taxpayer, and it is difficult for the tax authority to prove it. Thus, if it is reasonable to prove the taxpayer by taking into account the difficulty of proof or equity between the parties, it should be returned to the taxpayer. Therefore, if it is proved that the tax invoice on some of the expenses reported by the taxpayer was falsely prepared without real transactions by the defendant who is the tax authority, and it is proved that the taxpayer's party to the payment was false, it is necessary to prove that the taxpayer's presentation of all the data such as account books and documentary evidence, etc. should be made easily (see Supreme Court Decision 200Nu416497, Oct. 28, 1994).

B) In the instant case, the Plaintiff purchased the tax invoice of this case from the actual transaction, but it is difficult to believe that the Plaintiff actually purchased the tax invoice of this case at the time equivalent to the value of the supply from the place of the landing. However, as the Plaintiff alleged above, it is difficult to believe that the Plaintiff purchased the tax invoice of this case at the time equivalent to the amount of the instant case from the place of the landing at the time of the landing at the place of the landing at the place of the landing at the place of the landing at the place of the landing at the place of the landing at the place of the landing at the place of the landing at the place of the landing at the place of the landing at the time. The Plaintiff’s assertion of this part is insufficient to accept the tax invoice of this case on the sole basis of the written evidence as

2) Judgment on the second argument

A) In principle, the tax base and tax amount of global income tax shall be determined by the actual amount revealed by the method of a field investigation. In order to determine it by the method of a field investigation, it shall be exceptionally permitted only when there is no taxpayer’s account book or documentary evidence, or the important part is insufficient or false and the tax authorities do not have any other way to disclose the actual amount of income. Thus, even if the account books or documentary evidence kept and kept by the taxpayer contains some false parts, if the tax base can be calculated based on the clear fact that the remaining parts are consistent with all facts, the tax base and tax amount shall not be determined by the method of a field investigation, and the reason that the taxpayer wants to investigate and determine it by the method of a field investigation cannot be deemed as satisfying the requirements for estimated taxation (see, e.g., Supreme Court Decision 96Nu8192, Sept. 26, 1997).

B) In the case of this case, among necessary expenses on the account books kept by the Plaintiff, the amount equivalent to the transaction portion of the tax invoice of this case (the amount in this case) was falsely appropriated. Thus, the tax base and tax amount can be calculated by the method of on-site investigation by non-inclusion of necessary expenses, and it cannot be said impossible to do so. If the transaction amount in the tax invoice of this case is not included in necessary expenses, the transaction amount in the tax invoice of this case is considerably short of the input ratio of raw materials in the same industry, and the Plaintiff's income rate and the standard income rate of the same industry are set at the same industry, even if there is no necessary account books and documentary evidence in calculating the tax base under Article 143 (1) 1 of the Enforcement Decree of the Income Tax Act

Therefore, the plaintiff's assertion on this part is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.