It is reasonable to see that the money of the borrowed account was actually attributed to the actual representative, and it is not against the speed since the re-audit according to the re-audit decision has been performed.

In light of the circumstances, it is reasonable to view that the Plaintiff constitutes the actual representative of the corporation and the amount of money in the borrowed account was actually attributed to the actual representative, and that the omission using the borrowed account constitutes a case of evading national taxes due to fraud or other unlawful acts, it is reasonable to apply 10 years to the exclusion period.

Article 26-2 of the Framework Act on National Taxes, the exclusion period for the imposition of national taxes, and Article 67 of the Corporate Tax Act

Seoul Administrative Court-2016-Gu Partnership-1875 ( November 11, 2016)

AA

BB Director of the Tax Office

October 28, 2016

November 11, 2016

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of global income tax of KRW 105,396,820 for the Plaintiff on September 15, 2014, KRW 269,683,850 for the year 2005, KRW 342,537,90 for the year 2006, KRW 370,506,940 for the year 2007, KRW 381,572,210 for the year 2008, and KRW 1,492,595,650 for the year 2004 is revoked.

1. Details of the disposition;

A. The CCC Co., Ltd. (hereinafter referred to as "CC") was a corporation established on March 16, 199 for clothing wholesale, retail, and export and import business, and closed its business on December 17, 2013. The business structure is entitled to use the trademark "DDD" for its members and to pay the fees (hereinafter referred to as "Belgium fees") from its members. The company was supplied with clothing produced using the above trademark from its members and supplied them to agents, department stores, etc. with the above clothing and received related sales amount.

B. From June 4, 2013 to August 27, 2013, 2013, the ○○ regional tax office conducted a tax investigation with respect to the CCC, based on which CCC calculated the actual sales revenue of 5,425,806,100 won from its member companies from 2008 to 201, and determined that 4,932,551,000 won, which is the difference between the sales revenue of 493,25,100 won reported by CCC, was omitted in sales. From 2004 to 2009, the 3,528,292,677 won was calculated and then reported by CCC to 320,75,80,80 won and sales revenue of 4,951,737,7737,79,777, and the 2009 EE and F’s account (hereinafter “the instant borrowed account”).

C. Accordingly, on October 1, 2013, the head of the GG Tax Office notified CCC of the rectification and notification of corporate tax and value-added tax, and CCC filed a lawsuit seeking revocation of the disposition imposing corporate tax and value-added tax (Seoul Administrative Court 2014Guhap53148), but was dismissed on March 27, 2015. Although CCC filed an appeal and appeal, it was dismissed on August 26, 2015, the judgment dismissing the appeal was rendered on December 23, 2015 (Seoul High Court 2015Nu4011, 2015Du52333).

Since then, as the CCC did not pay the above taxes, the head of the GGG Tax Office deemed HH to be an oligopolistic shareholder of the CCC, a secondary taxpayer, and determined and notified the value-added tax and corporate tax on part of the delinquent amount on November 29, 2013. Accordingly, HH filed a lawsuit seeking revocation of the disposition imposing value-added tax (Seoul Administrative Court 2014Guhap50293). On August 12, 2016, the court of first instance dismissed the claim for revocation of the disposition imposing value-added tax (Seoul Administrative Court 2014Guhap50293) and dismissed the claim for revocation of the remainder of the tax payment, deeming that HH’s secondary tax liability was extinguished. On the above judgment, HH and the tax authority both appealed appealed appealed and the tax authority, and currently pending in the appellate trial (Seoul High Court 2016Nu62407).

D. Meanwhile, on September 15, 2014, the Defendant notified the Plaintiff of taxation data from the ○○ Regional Tax Office, applied 105,396,820 won for the use of the instant borrowed account, 269,683,850 won for the year 2004, 269,683,850 won for the year 2005, 342,537,900 won for the year 2006, 370,506, 940 won for the year 2007, 381,572,210 won for the year 209, 222,897,930 won for the year 209, 595,650 won for the disposition of this case (hereinafter “instant disposition”).

E. On April 13, 2015, the Plaintiff dissatisfied with the instant disposition, filed an appeal with the Tax Tribunal on April 13, 2015, and the Tax Tribunal decided as follows on December 2, 2015.

The disposition of this case shall re-inform the actual person to whom the amount omitted in sales by CCC using the borrowed name account in the name of EE and FF, and accordingly correct the tax base and tax amount according to the results, and dismiss the remainder of the appeal.

F. Since then, the Defendant conducted a reinvestigation from December 18, 2015 to February 26, 2016 in accordance with the re-audit decision of the Tax Tribunal (hereinafter “instant re-audit decision”), and concluded that the instant disposition was legitimate, and the Plaintiff filed a lawsuit seeking cancellation of the instant disposition on February 26, 2016.

[Ground of recognition] Unsatisfy, Gap evidence 1, 2, Eul evidence 1

(9) The purport of the whole pleading

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Notwithstanding the decision of the Tax Tribunal on the re-examination, the Defendant’s act of maintaining the instant disposition as it is and notifying the conclusion of the reexamination is unlawful.

2) The Plaintiff is not only the representative of the CCC, but also cannot be deemed to have reverted to the Plaintiff the money of the instant borrowed name account.

3) The omission in cash sales by the CCC constitutes a mere omission, even if the omission in cash sales by the CCC constitutes fraud or other wrongful acts, the imposition of national tax for five years shall apply since the Plaintiff did not have committed any act of evading global income tax, and thus, the imposition of global income tax for the year 2004 through 2008 is illegal after the lapse of five years from the exclusion period of imposition.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) The Plaintiff established and operated the CCC on March 16, 1999. At the time, the Plaintiff’s amount of national taxes in arrears exceeded approximately KRW 270 million.

2) On November 17, 200, the Plaintiff and HH, married on November 9, 200, assumed office as the representative director of CCC. Around that time, the shareholder of CCC acquired 25% (2,500 shares) of the outstanding shares of CCC. At that time, CCC, other than HH, had been affiliated with CCC, third, the Plaintiff’s father-and-child, JJ, the Plaintiff’s Southern, and the Plaintiff’s father-child, and all shares owned 25% of the shares. After all, the Plaintiff and HH were notarized on December 7, 2005 (hereinafter “instant implementation letter”).

H H H H:

1) ○○○○-si ○○○-dong 000-0 ○○○○-dong 000-0 acquired 1/2 of 1/2 of the building under one’s own name and one another. It is recognized that the Plaintiff, the wife, acquired one’s right, but was registered under one’s name, and actually acquired 1/2 of the Plaintiff and 1/2 of its own investment;

2) It is recognized that a building on five parcels, including 000-00, 000 ○○, Seoul, ○○-gu, 2002, registered under one’s name, was registered under one’s own name by the Plaintiff by selling and selling the answer in the name of Dong ○○-dong, the Plaintiff’s birth, and paying the purchase price in full;

3) Around the end of 2000, the representative position of CCC established and operated by the Plaintiff is recognized as the fact that the principal was delegated the representative position without purchasing shares or making investments.

HH’s friendships of the Company or Real Estate in relation to Section 1(a), (2), and (3) above, on any other grounds, shall immediately return to the Plaintiff, the actual holder of the right, without civil or criminal objection, all the title and rights, as the actual holder of the right, if any, to the extent that they would impair the honor of the Company or Real Estate in relation to the Company or Real Estate in question.

3) CCC issued 100,000 new shares by offering new shares with KRW 500,000 capital increase, and around 2006, HH issued 120,000 new shares by offering new shares with KRW 600,000 capital increase. HH acquired all the above new shares and owned KRW 22,50,000 shares by acquiring them.

4) Once HH was appointed as the representative director of CCC, he/she was in office at the OO’s office and signed on the work log, and was managed and used with cash payment for the newly established agency deposit, member company rent and management expenses, labeling sales amount, and sales proceeds of CCC products. The Plaintiff finally approved the new agency’s initial specifications, agency management expenses, approval letter for carrying forward products, details of approval for carrying forward product, details of the settlement of membership fees, written approval for Belgium withdrawal, written approval for the withdrawal of Belgium, written approval for the withdrawal of Belgium, written notification for the collection of stored money following the termination of the contract of member companies, and details of imposition of working cans.

5) On July 9, 2013, HH and the Plaintiff jointly participated in the management of the company, and on June 4, 2013, on the basis of the National Tax Service’s tax investigation date, HH and the Plaintiff considered all the amount of taxes and fines imposed on individuals or companies as one-half of each of them is liable for the amount of additional charges related thereto. However, on the condition that all the rights related to the company, such as the company’s bonds and debts, are transferred and taken over collectively to the Plaintiff who is a joint equity right holder, HH and the Plaintiff agree to bear part of the amount of additional charges and bear a significant portion of the Plaintiff’s liability (hereinafter referred to as the “agreement”). As to the burden of additional charges, the agreement was made between the Plaintiff’s total burden of KRW 3 billion, KRW 5 billion, KRW 4 billion, KRW 1.2 billion, KRW 1.3 billion, KRW 6 billion, KRW 1.3 billion, KRW 7 billion, KRW 2 billion, and KRW 1.3 billion.

6) On July 17, 2013, the Plaintiff filed an application for divorce and division of property with HH on the grounds of filing a divorce and division of property (Seoul Family Court 2013p. 1357), and on September 13, 2013, “HH and the Plaintiff bear the amount of additional tax as stated in the letter of performance of the instant agreement, and HH bears the duties of director and representative director of the CCC, resigning all rights related to CCC, and not exercising those rights. HHCC shares are transferred to the Plaintiff, and the Plaintiff comprehensively acquires all rights related thereto, including all rights of CCC and shares, etc. (hereinafter “instant protocol of mediation”).

7) On June 28, 2014, the FF, working as the head of the CCC’s operating headquarters, stated at an investigative agency as follows:

On February 2, 2008, the plaintiff made a direct passbook to the author and made it possible for him to create a passbook. So, I made a separate account at the time of whether the branch is a withdrawal from the National Bank in the right side of the company, and memory of the head of the management planning office, the head of the passbook, and the password in the name of the company, the head of the management planning office, or the plaintiff.

When the ○○○ is the head of the business team or the head of the business headquarters, all business reports were made to the Plaintiff, and the Plaintiff issued instructions to the Plaintiff, such as gold relationship, return relationship, and settlement of agency difficulties.

8) On July 20, 2010, the Plaintiff established CCCA and serves as the representative director. The business type of CCC and CCCAP are the same as the wholesale and retail business with DDR trademarks.

【Reasons for Recognition】 Each entry in the Evidence Nos. 2 through 4, 6 through 11, and the purport of the whole pleadings

D. Determination

1) Determination on the first argument

Article 80 of the former Framework Act on National Taxes (amended by Act No. 911, Jan. 1, 2010; hereinafter the same) provides only the binding force of the Tax Tribunal on the rejection, dismissal, and decision of reexamination, and does not have any provision on the decision of reexamination. In addition, the decision of reexamination constitutes a modified decision in which the agency has expressed its intent to take part of the decision of the request for a trial, etc. regarding the matters pointed out in the relevant decision by re-inspection. Therefore, the decision of reexamination takes effect as a decision of the request for a trial, etc. by supplementing the contents thereof by the subsequent disposition of the agency (Supreme Court en banc Decision 2007Du12514, Jun. 25, 2010). Ultimately, the agency has a legal obligation to conduct re-audit on the matters pointed out in the decision of reexamination, and it cannot be deemed that it does not violate the original purport of the re-audit decision even after the initial re-audit or even if it maintains a new disposition or does not violate its binding force.

In light of such legal principles, it cannot be readily concluded that the initial disposition of this case has been maintained through the reexamination of this case, which is duly conducted by the Defendant (the investigation of whether the amount of withdrawal of the instant borrowed account belongs to the Plaintiff, the continuous business of the CCC, and the fact-finding through the statement of related parties). Furthermore, according to the evidence Nos. 1 and 14, the Tax Tribunal did not accept the Plaintiff’s assertion, but the actual owner of the omitted sales by using the instant borrowed account is probable, but it can be sufficiently proved. Thus, it cannot be deemed that the Defendant’s notice of the completion of reexamination of this case does not conflict with or conflict with the purport of the re-audit decision of this case.

2) Determination on the second argument

In full view of the following circumstances revealed in light of the above facts of recognition, it is reasonable to view that the Plaintiff constitutes the actual representative of the CCC and that the amount of money for the instant borrowed name account was reverted to the Plaintiff, the actual representative.

① HH acquired 25% of the total outstanding shares of CCC after marriage with the Plaintiff, and held 96.74% of the total outstanding shares via capital increase in 2003 and 2006. However, it appears that the Plaintiff could not own the name of CCC as a large delinquent taxpayer at the time of establishment of CCC.

② The instant performance report prepared by the Plaintiff and HH on December 7, 2005 includes the content that the Plaintiff recognizes as the actual right holder of CCC.

③ Although HH had been engaged in some business as a representative director on the registration of CCC, the Plaintiff handled all of the practical business related to money and finally approved.

④ In the letter of the implementation of the instant agreement, the Plaintiff decided to impose more burden on CCC’s delinquent tax amount than HH. In the instant protocol, HH resigned from office directors and representative directors of CCC, and does not waive and exercise all rights related to CCC, and the Plaintiff decided to acquire all rights related thereto, including all of the powers of CCC stocks and CCC owned by HH and all other rights related thereto. In addition, the above fact proves that the Plaintiff was the actual operator of CCC.

⑤ The Plaintiff established the CCCA and worked as a representative director, and succeeded to the CCC’s business as it is.

6. The FF, the head of the CCC headquarters, stated that it opened an account according to the direction of the Plaintiff, and that the Plaintiff managed the account. There is no special circumstance to deem the above statement false.

3) Judgment on the third argument

Article 26-2(1)1 of the former Framework Act on National Taxes provides that the exclusion period of the right to impose national taxes shall be ten years from the date on which the national tax can be imposed if the national tax is evaded by fraud or other unlawful means. The term “Fraud or other unlawful means” refers to an act which is deemed to be unfair by social norms, i.e., an act which makes it impossible or considerably difficult to impose and collect taxes, i.e., a deceptive scheme which makes it impossible or considerably difficult to do so. It does not constitute mere failure to file a tax return or making a false tax return without accompanying any other act. However, it does not constitute the failure to file a tax return or making a false tax return under the tax law or making a false tax return. However, in addition to circumstances where the intention of active concealment, such as a false entry in books, check, etc., repeated use of multiple borrowed accounts, the determination of whether a tax return or a false tax return was made can be made based on the following circumstances: (see, e.g., Supreme Court Decision 2010Do13345, supra.).

On the other hand, in filing a return of CCC’s corporate tax and value-added tax, the fact that the Plaintiff, the actual representative of CCC, uses the bank account in the name of the Plaintiff as a borrowed account, omitted the agency’s sales deposited into the above borrowed account and reported only the agency sales and cash sales deposited into the CCC’s bank account. The above act is deemed to be a false entry in order to pretend that the Plaintiff is liable to pay taxes less than taxes on the actual sales that the Plaintiff is liable to pay. As such, the act constitutes a case where the Plaintiff evades national tax by fraud or other unlawful act (it is not bound by the administrative trial, even if the Plaintiff received a disposition of non-prosecution regarding the omission of agency sales using the borrowed account in the criminal case at which the tax evasion was at issue, but it can be acknowledged that the Plaintiff opposed the fact that the agent sales and cash sales were opposed with the evidence).

In addition, Article 26-2(1)1 of the Framework Act on National Taxes (amended by Act No. 11124, Dec. 31, 2011) provides that "where a taxpayer evades national taxes or obtains a refund or deduction by fraudulent or other unlawful means, the exclusion period of the right to impose national taxes shall be ten years from the date on which the national taxes can be imposed, and in this case, where a national tax evaded or refunded or deducted by unlawful means is a corporate tax, the exclusion period of the right to impose national taxes shall be ten years from the date on which the income tax may be imposed on the amount disposed of pursuant to Article 67 (Disposition of Income) of the Corporate Tax Act." Article 2(1)1 of the Addenda of the same Act (amended by Act No. 11124, Dec. 31, 2011) provides that "Article 26-2(1) of the amended Act shall apply from the first amount to be disposed of pursuant to Article 67 of the Corporate Tax Act after January 1, 2012."

As above, the exclusion period for imposition of income tax imposed by the disposal of income under Article 67 of the Corporate Tax Act after the latter part of Article 26-2 (1) 1 of the Framework Act on National Taxes was amended on December 31, 201, became ten years, and the exclusion period for imposition of income tax has also 10 years, so long as the Plaintiff deemed the Plaintiff as the actual representative of the CCC and deemed that the amount of the instant borrowed name account was reverted to the Plaintiff, the exclusion period for imposition of income tax shall also be ten years, and

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.