[1] In a case where the legality of the disposition of corporate tax on income for a business year is disputed, the existence of taxable income and the burden of proving that the income was reverted to the pertinent business year (=the taxation authority)

[2] In a case where it is difficult to determine whether a taxpayer's income subject to taxation belongs to a certain business year as a result of hiding such income, whether the business year to which income belongs may vary according to the business year that the tax authority investigated and verified regardless of the time of determining the income subject to taxation (negative)

[1] Since the tax authority bears the burden of proving the legality of a taxation disposition, the tax authority must prove the existence of taxable income and the fact that the income was attributed to the pertinent business year in a case where the legality of a taxation disposition on income for a business year is disputed.

[2] In a case where it is difficult for a taxpayer to determine whether the taxable income belongs to a certain business year as a result of hiding the taxable income, the tax authority shall regard the taxable income as reverted to the business year in which the taxable income was investigated and verified. However, regardless of the time when the taxable income is determined, the tax authority’s business year of accrual of the income shall not vary according to the business year in which the taxable

[1] Articles 9(1) and (2), and 17(1) of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998); Article 26 of the Administrative Litigation Act / [2] Articles 9(1) and (2), and 17(1) of the former Corporate Tax Act (amended by Act No. 5581 of Dec. 28, 1998)

[1] Supreme Court Decision 98Du7350 decided Dec. 24, 1999 (Gong2000Sang, 326)

Western Transport Transport Co., Ltd. (Attorney Lee Jae-soo, Counsel for the plaintiff-appellant)

Head of Tax Office

Daejeon High Court Decision 96Gu875 delivered on December 5, 1997

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

We examine the grounds of appeal.

According to the reasoning of the judgment below, the court below acknowledged the following facts: (a) since 377,893,346 won of the Plaintiff, a corporation operating a bus transportation business in agricultural and fishing villages established around 1981, which was established in December 31, 1981, was carried over each year since the 377,893,346 won was appropriated as provisional income, and the 502,778,479 won was counted as provisional income on the current balance sheet as of December 31, 1993; and (b) the Defendant conducted a written investigation of the corporate tax base on the income in 1993 as of the Plaintiff's 193 business year after the 1993 business year, the above provisional income was included in the gross income, and the burden of proving the legality of the taxation disposition on income in a certain business year is not sufficient to establish the facts that the tax authority violated the rules of evidence or evidence as to the 193 business year.

The issue is that if it is difficult for a taxpayer to determine whether the taxable income belongs to a certain business year as a result of hiding the income subject to taxation, the tax authority should regard the taxable income as belonging to the business year in which the taxable income was investigated and verified. However, regardless of the time of determining the taxable income, the tax authority cannot change the business year in which the income was attributed to the business year in which the tax authority investigated and verified regardless of the time of determining

Therefore, the appeal is dismissed and all 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 Yoon Jae-sik (Presiding Justice)