Examination Income 2014-0020 (No. 12, 2014)

Where expenses for processing for several years have been appropriated and the revenue has been omitted, it shall be subject to an illegal under-reported penalty tax.

The plaintiffs are merely a passive under-reported case without an active purpose of tax avoidance, such as the fact that the plaintiffs included necessary expenses in the account for repair expenses without any disbursement of repair expenses or without any material supporting the spending of the repair expenses for several years, and the fact that the rental income has been continuously omitted.

2014Guhap64391 Disposition of revocation of Disposition of Imposition of Value-Added Tax

HongA et al.1

Sung Dong Tax Office et al. 2

on December 1, 2013, the value-added tax for the first period of 2009 that the head of Sung-dong Tax Office provided to the Plaintiffs.

00 won, value-added tax for the second term of 2009, value-added tax for the first term of 2010, value-added tax for the first term of 2010

00 won, value-added tax for the second period of 2010, value-added tax for the first period of 2011

00 won, value-added tax for the second period of 201, value-added tax for the first period of 2012, value-added tax for the first period of 2012

00 won, value-added tax for the second period of 2012, value-added tax for the first period of 2013, value-added tax for the first period of 2013

The head of Echeon District Tax Office imposed each of 000 won on the Plaintiff Hong-A on December 1, 2013

00 won of global income tax for the year 2008, 000 global income tax for the year 2009, 2010

Reversion 000 global income tax, 000 global income tax for the year 201, 2012

Each disposition of imposition of global income tax of KRW 000, and on December 1, 2013

BB global income tax of 000 won for the year 2008, global income tax of 2009

00 won, global income tax of 000 won for the year 2010, global income tax of 2011

Each imposition disposition of KRW 000 and KRW 000 on global income for the year 2012 shall be revoked.

May 29, 2015

June 19, 2015

1. The plaintiffs' part of the attached amount decreased among the plaintiffs' lawsuits of this case is dismissed. 2. The plaintiffs' remaining claims are dismissed.

3. The costs of lawsuit are assessed against the plaintiffs.

Cheong-gu Office

1. Details of the disposition;

A. On March 19, 2003, the Plaintiffs shared 1/2 shares in each of the OO building located in the OOdong OO-dong OO, Seoul, and provided a leasing service for the above building.

B. The Defendants corrected the omitted portion of the Plaintiffs’ return of value-added tax and global income tax, denied necessary expenses without any objective evidence, and imposed tax as indicated in the original decision on April 24, 2015 (including additional tax; hereinafter “each of the instant dispositions”). The Plaintiffs filed a request for review with the Commissioner of the National Tax Service on February 20, 2014 and February 21, 2014, but was dismissed on May 12, 2014.

[Ground of recognition] Unsatisfy, Gap evidence Nos. 1 to 3 and 6

2. Judgment on the amount reduced by the decision of correction

Since the part of the amount reduced, as stated in the amount that was reduced according to the Defendant’s decision of correction on April 24, 2015, as stated in the separate sheet, does not exist any longer as the disposition of revocation is revoked, the revocation lawsuit on the said part is unlawful as there is no benefit of lawsuit (see, e.g., Supreme Court Decision 2004Du5317, Sept. 28, 2006).

A. Summary of the plaintiff's assertion

For the following reasons, each of the dispositions of this case is unlawful.

① The Plaintiffs spent KRW 000 as repair cost for real estate rental business from 2008 to 2012, and the Defendant did not include it as necessary expenses. The instant disposition denying the entire repair cost without specifying the items of repair cost.

② The Plaintiffs’ family members are merely underreporting the Plaintiffs’ passive tax base in special circumstances where the Plaintiffs’ family members were unable to help them tax treatment due to lack of knowledge about taxation as the principal father or minor, and it is difficult to view that they committed unlawful acts with the purpose of tax avoidance. Therefore, no penalty tax for unlawful underreporting may be imposed.

(3) The Defendant’s inclusion in the tax base of all the amounts exceeding the difference calculated by deducting the amount already reported from the input amount of financial data is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) If indirect facts that can recognize taxation requirements in light of the empirical rule were revealed in the specific litigation process, the pertinent taxation disposition cannot be readily concluded unlawful unless the other party proves that there are special circumstances that the other party would have to exclude such empirical rule (see, e.g., Supreme Court Decision 2006Du6383, Sept. 22, 2006). However, considering that Gap evidence No. 4 and Eul evidence No. 3 obtained the overall purport of the pleadings in addition to the overall purport of the pleadings as stated in the evidence No. 25,485,00 won in 208, 35,150,000 won in 209, 45,100,000 won in 20, 32,600,000 won in 20, 2011, 35,048,000 won in 200, 35,048,000 won in the account, and the facts that the Plaintiffs included the above receipts and receipts account as necessary expenses as necessary expenses.

In addition to these facts, the instant disposition denying the items of repair cost cannot be deemed unlawful on the sole basis of the data submitted by the Plaintiffs, when considering the following circumstances: (a) both of the above receipts are evidentiary documents under the Income Tax Act (each subparagraph of Article 160-2(2) of the Income Tax Act); or (b) do not fall under exceptional cases where the receipt and custody of such evidentiary documents are excluded (Article 208-2(1) of the Enforcement Decree of the Income Tax Act); and (c)

3) In addition to the overall purport of the pleadings, evidence Nos. 6 and A No. 5, the following facts may be acknowledged.

(1) Details, deposits, and monthly rent reported by the Plaintiffs are as follows:

② With the exception of management expenses, etc., the first floor lessee 5 deposited KRW 2,00,00 per month from the first to the first month from 2009 to the second month from 2011, and the second floor lessee deposited KRW 2,320,00 per month from the first to the second month from 2009 to the second month from 2010. In light of the fact that the lessees deposited the same monthly amount into the Plaintiffs’ account, the said amount of deposit is a rent for commercial buildings, and thus, the instant disposition that included the difference between the amount received from the lessee and the amount reported by the Plaintiffs in the tax base cannot be deemed unlawful.

4) As above, the Plaintiffs have made an account of repair cost without any disbursement of repair cost or materials to prove such expenditure for several years and also reported the reduction of the revenues from housing rental. The circumstances cited by the Plaintiffs alone are insufficient to deem that the Plaintiffs are merely a case of omitting a simple report or underreporting a passive return without an active purpose of tax avoidance.

4. Conclusion

Thus, the plaintiff's claim for revocation of the amount reduced in the attached Form among the lawsuit of this case shall be dismissed as it is unlawful, and the remaining claims shall be dismissed as it is so decided as per Disposition.

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