Whether or not there is a case where the evidence is not received in the subject of the imposition of the additional tax on lack of evidence under the former Income Tax Act (negative)

Article 81 (8) of the former Income Tax Act (amended by Act No. 6557 of Dec. 31, 2001) provides that where a person obliged to book-keeping by double-entry receives goods or services from a business entity, including a corporation, in relation to his business, and receives documents other than the evidential documents, tax invoices, credit card sales slip (hereinafter “legal evidential documents”), which fall under any of the subparagraphs of Article 160-2 (2) of the same Act, an amount equivalent to 10/100 of the received amount shall be added to the final tax amount. Thus, the interpretation that the aforementioned provision includes cases where evidence is not received in the “where evidence other than the legal evidential documents,” which is subject to the imposition of additional tax on non-legal evidential documents, includes cases where evidence is not received. It goes beyond the possible scope of interpretation of the language and text, which results in the failure of the law on the taxation requirements by interpretation, and thus, it cannot be allowed against the principle of strict interpretation

Article 81 (8) of the former Income Tax Act (amended by Act No. 6557 of Dec. 31, 2001) (see current Article 81 (4))

Plaintiff (Law Firm Rate, Attorneys So-young et al., Counsel for the plaintiff-appellant)

Sung-dong Tax Office (Law Firm Dongin, Attorneys Kim Jae-in, Counsel for the plaintiff-appellant)

Seoul High Court Decision 2005Nu2188 delivered on September 23, 2005

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

The grounds of appeal are examined.

1. According to Article 81(8) of the former Income Tax Act (amended by Act No. 6557, Dec. 31, 2001; hereinafter the same), where a resident who has income from real estate rental, business income, or forestry income (hereinafter “business operator”) subject to double-entry bookkeeping receives goods or services from a business operator, including a legal entity, in relation to his/her business, and receives documents other than a invoice, tax invoice, and credit card sales slip (hereinafter “legal documentary evidence”) corresponding to one of the subparagraphs of Article 160-2(2) of the former Income Tax Act, the amount equivalent to 10/100 of the received amount shall be added to the final tax amount.

Under the principle of no taxation without law, or the requirements for tax exemption or tax exemption, and the interpretation of tax laws shall be interpreted in accordance with the law, unless there are special circumstances, and it shall not be extensively interpreted or analogically interpreted without reasonable grounds (see Supreme Court Decisions 82Nu142, Jun. 28, 1983; 2003Du7392, May 28, 2004; 2003Du7392, May 28, 2004; hereinafter referred to as "cases where evidence, other than the legal evidence, is not received" as those subject to the imposition of no penalty tax under Article 81 (8) of the former Income Tax Act. It goes beyond the scope of interpretation possible to interpret the text, which goes beyond the scope of interpretation of the law as to the taxation requirements, and thus, it is not permissible to interpret the same purport of the judgment below to the effect that it goes against the principle of strict interpretation by interpreting the law as to the taxation requirements and therefore, it is not justified.

2. The argument in the grounds of appeal that the plaintiff supplied goods and received evidence other than the legal document, and thus, constitutes the subject of the imposition of additional tax on lack of evidence is a new argument that the defendant first raised in the final appeal and cannot be a legitimate ground of appeal against the judgment of the court below (see Supreme Court Decision 2005Du6300, Jan. 26, 2006, etc.). In addition, it is difficult to view that the plaintiff received evidence other than the legal document, and therefore, it is difficult to view this part of

3. Therefore, the appeal is dismissed, and the 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 Kim Hwang-sik (Presiding Justice)