In the event that a tax assessment is made on the omitted income by the on-site investigation decision, the burden of proof on the fact that the cost corresponding to the omitted income was also omitted in filing a return (=taxpayer), and whether it can be determined by the method of an on-site investigation even in cases where the amount

When a tax assessment is made on the omitted income by the on-site investigation decision, unless there is any evidence that there is a separate expense corresponding to the omitted income, the total amount of the income shall be added to the income amount, and the cost corresponding to the omitted income is also returned or omitted, a taxpayer who seeks a separate deduction shall assert it, and if it is possible to determine the amount of income by the method of the on-site investigation, it shall not

Articles 9(3) and 32(3) of the Corporate Tax Act; Articles 12(2) and 93(1)1 of the Enforcement Decree of the Corporate Tax Act; Article 26 of the Administrative Litigation Act (Liability for Proof)

Supreme Court Decision 88Nu1179 decided Jul. 11, 1989 (Gong1989, 1257) 90Nu42 decided Dec. 11, 1990 (Gong1991, 507) 91Nu4935 decided Nov. 22, 1991 (Gong192, 343)

Gu Roo Military Corporation

Head of Guro Tax Office

Seoul High Court Decision 89Gu8967 delivered on November 16, 1990

The case shall be reversed and remanded to the Seoul High Court.

As to the Grounds of Appeal

According to the reasoning of the judgment, the court below determined that the defendant's disposition, which adds the total amount of expenses reported by the plaintiff to the tax base by deducting double books of the plaintiff corporation as a result of the tax investigation and adding them to the tax base. However, according to the statement of expenses other than the above amount of income, the total amount of expenses for each business year is more than the reported amount of income and the plaintiff reported less than the actual amount of expenses in underreporting the amount of income, was unlawful, while the defendant's disposition which adds the total amount of expenses not appropriated in the expenses as a result of deducting only the expenses reported by the plaintiff, which added the total amount of the omitted income not appropriated as a result of the tax base to the tax base amount cannot be calculated by the on-site investigation because there is no evidentiary document necessary for calculating the amount of income, and thus, it cannot be calculated by the estimation under the proviso of Article 32 (

However, in a case where a tax assessment is made with respect to omitted income, unless there is any evidence to support that there was a separate expense corresponding to the omitted income, the total amount of the revenue should be added to the income amount, and the rate corresponding to the omitted income was also declared and omitted, a taxpayer who seeks a separate deduction must assert and prove that there was a separate expense, and when the income amount can be determined by the method of the on-site investigation, it cannot be determined by the method of the additional investigation (see, e.g., Supreme Court Decision 85Nu1004, Oct. 13, 1987; 90Nu42, Dec. 11, 1990).

Although the court below acknowledged the fact that the actual cost stated in the plaintiff's double account book is more than the cost reported by the plaintiff, on the one hand, the court below judged that the cost cannot be calculated by the actual investigation, and on the other hand, there is no documentary evidence necessary for calculating the amount of income, or there is insufficient reason for estimation. Therefore, it cannot be said that the original judgment erred by misapprehending the legal principles on inclusion in deductible expenses and estimated taxation under the Corporate Tax Act, and it is reasonable to discuss that it affected the part against the defendant among the original judgment, even if there is no documentary evidence of expenditure corresponding to the omitted income.

Therefore, the part against the defendant in the original judgment shall be reversed, and the case shall be remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices.

Justices Yoon Young-young (Presiding Justice)