[1] In the case of a tax item imposed on capital gains generated in the year to which the taxable period belongs, whether there is a ground to demand the entry of the actual basis, route, circumstance, etc. of calculating the tax amount (negative)

[2] Where it is evident that a taxpayer has not been hindered in determining whether he/she is dissatisfied with the disposition or filing an objection by a notice of prior notice of taxation, etc., whether the defect in the tax payment notice is corrected or the defect is cured (affirmative), and the requirements of a document to supplement the defect in the tax payment notice in advance

[1] Article 114 (6) of the former Income Tax Act (Amended by Act No. 8144, Dec. 30, 2006); Article 177 (1) of the former Enforcement Decree of the Income Tax Act (Amended by Presidential Decree No. 20618, Feb. 22, 2008); Article 9 (1) of the former National Tax Collection Act (Amended by Act No. 10527, Apr. 4, 201) / [2] Article 114 (6) of the former Income Tax Act (Amended by Act No. 8144, Dec. 30, 2006); Article 177 (1) of the former Enforcement Decree of the Income Tax Act (Amended by Presidential Decree No. 20618, Feb. 22, 2008); Article 177 (1) of the former National Tax Collection Act (Amended by Act No. 10527, Apr. 4, 2011)

[1] Supreme Court Decision 2009Du22850 Decided September 29, 201 (Gong2011Ha, 2258) / [2] Supreme Court Decision 2005Du5505 Decided October 13, 2005

Plaintiff (Attorney Woo-hwan et al., Counsel for the plaintiff-appellant)

Head of the District Tax Office

Gwangju High Court ( Jeonju) Decision 2014Nu477 decided October 6, 2014

The part of the judgment of the court below concerning the imposition of additional tax on negligent tax returns and additional tax on negligent payment shall be reversed, and that part of the case shall be remanded to the Gwangju High Court.

The grounds of appeal are examined.

1. As to the third ground for appeal

For the reasons indicated in its holding, the lower court recognized that the Plaintiff’s act of making and submitting a false double sales contract stating the amount of transfer while underreporting the transfer value of the instant real estate constitutes a “Fraud or other unlawful act” as stipulated in Article 26-2(1)1 of the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010), and determined that the exclusion period of imposition of transfer income tax of the instant case was ten years.

Examining the reasoning of the lower judgment in light of the relevant legal provisions and legal principles as well as the evidence duly admitted, the lower court did not err by misapprehending the legal doctrine on the exclusion period of imposition, contrary to what is alleged in the grounds of appeal.

2. As to the fourth ground for appeal

The lower court rejected the Plaintiff’s assertion that the instant disposition imposing the transfer income tax of this case was unlawful after the lapse of five years, which is the period of extinctive prescription of the right to collect the transfer income tax of this case, on the grounds as indicated in its reasoning that the extinctive prescription is calculated from

Examining the reasoning of the lower judgment in light of the relevant statutes and legal principles as well as the evidence duly admitted, the lower court did not err by misapprehending the legal doctrine on the extinctive prescription of the collection right, contrary to what is alleged in the grounds of appeal.

3. Regarding ground of appeal No. 2

On the grounds indicated in its reasoning, the lower court determined that it is difficult to view that the Plaintiff’s failure to report and pay the principal tax of the capital gains tax of this case constitutes a case where there is a justifiable reason not to mislead the Plaintiff.

Examining the reasoning of the lower judgment in light of the legal doctrine as well as the evidence duly admitted, the lower court did not err in its judgment by misapprehending the legal doctrine on “justifiable cause” which may exempt the imposition of penalty tax, contrary to what is alleged in the grounds of appeal.

4. Regarding ground of appeal No. 1

A. Article 114(6) of the former Income Tax Act (amended by Act No. 8144, Dec. 30, 2006) provides that “When the head of a district tax office having jurisdiction over the place of tax payment or the head of a regional tax office determines or revises the tax base of a resident’s transfer income and the amount of tax, he/she shall notify the resident in writing as prescribed by Presidential Decree.” Article 177(1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 20618, Feb. 22, 2008) delegated by him/her provides that “The notice under Article 114(6) of the Income Tax Act shall be given after entering the tax base, tax rate, tax amount, and other necessary matters in writing.” Meanwhile, Article 9(1) of the former National Tax Collection Act (amended by Act No. 10527, Apr. 4, 201) provides that “When the head of a district tax office or the head of a Si/Gun intends to collect a national tax, he/Gun must issue and notify the place of payment.”

In light of the language, purport, etc. of the aforementioned relevant statutes, in cases of a tax item imposed on capital gains generated in the year to which the transfer income tax belongs, such as transfer income tax, the tax base of the year to which the tax payment notice belongs, and the grounds for calculation of the tax amount should be specified and notified. There is no ground to require the tax payment notice to describe the substantial grounds, route, circumstances, etc. of calculating the tax amount, such as taxable objects, etc. (see, e.g., Supreme Court Decision 2009Du22

However, when both a principal tax and a penalty tax are to be imposed based on a single tax payment notice, the relevant tax amount and the basis for calculation of the principal tax shall be stated in the tax payment notice separately; and where multiple types of penalty taxes are to be imposed, the relevant taxpayer shall be able to have the details of each tax assessment by themselves known by classifying the tax amount and the basis for calculation, etc. Even between the relevant penalty taxes by type. Therefore, if a tax payment notice includes only the total sum of penalty taxes without disclosing the type thereof and the basis for calculation of the penalty tax (see Supreme Court en banc Decision 2010Du12347, October 18, 2012)

On the other hand, if it is evident that a taxpayer was not affected by the determination of whether he/she is dissatisfied with the disposition or by the notice of tax notice sent by the tax authority prior to the taxation disposition, it can be deemed that the defect of the tax notice is corrected or completely corrected. However, the document that can supplement the defect of the tax notice is required to be delivered to the taxpayer prior to the delivery of the tax notice in accordance with the statutes, etc., and it is necessary to properly state the necessary matters to be stated in the tax notice (see Supreme Court Decision 2005Du5505, Oct. 13, 2005, etc.).

B. (1) On April 17, 2012, the lower court determined that (i) the Defendant rendered a notice of taxation along with the details of calculation of the tax base and amount of tax, and the procedure for the notice of tax investigation result, on the ground that “the transfer value of the instant real estate was confirmed to be KRW 850,000,000, not to be KRW 737,000,000, which was reported by the Plaintiff; (ii) on May 15, 2012, the Plaintiff filed a claim with the Defendant for the review of the legality before imposing the tax, stating that “the transfer value is almost nonexistent; and (iii) the Defendant did not receive any correction from the Plaintiff on the grounds that the transfer value of the instant real estate was not verified to be KRW 850,00,000,000,000, which was the Plaintiff’s return; and (iii) the Defendant did not receive any correction from the Plaintiff’s tax base or the assessment basis on the instant tax amount; and (iii) did not received any correction from the Plaintiff.

C. (1) Examining the reasoning of the lower judgment in light of the aforementioned statutes and legal principles, the instant tax notice does not contain a substantive basis and route for calculating the amount of capital gains tax, as the tax base and calculation basis of the amount of the principal tax are specified in the instant tax notice, and thus, cannot be deemed unlawful. Therefore, although the lower court’s reasoning was somewhat inappropriate, its conclusion is justifiable. In so doing, contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on the principal

(2) However, the instant tax notice imposing the Defendant on the Plaintiff the additional tax on negligent tax returns and the additional tax on negligent tax payment is merely written in KRW 73,790,939, which is the sum of each of the above additional tax without being divided by type. Thus, according to the aforementioned legal principles, the instant tax notice on negligent tax returns and the additional tax on negligent tax payment are defective in omitting the matters required by the relevant statutes. Furthermore, even if the Defendant’s notice of prior notice of tax payment sent to the Plaintiff, the instant additional tax on negligent tax returns and the additional tax on negligent tax payment are not written separately by type

Nevertheless, solely on the foregoing grounds, the lower court determined that the imposition of the additional tax on negligent tax returns and the additional tax on negligent payment was lawful. In so determining, the lower court erred by misapprehending the legal doctrine on the notice of the additional tax payment, thereby adversely affecting the conclusion of the judgment. The allegation contained

5. Conclusion

Therefore, the part of the judgment of the court below concerning the imposition of additional tax on negligent return and additional tax on negligent return is reversed, and that part of the case is remanded to the court below for a new trial and determination, and the remaining appeal is dismissed. It is so decided as per Disposition by the assent of all participating

Justices Kim So-young (Presiding Justice)