Requirements and Grounds for Estimated Taxation

The estimated tax under the Income Tax Act is exceptionally acknowledged in cases where there are no books or documentary evidence of a taxpayer, which serves as the basis for the determination of income amount or tax base, or where it is impossible to use them as the basis for the determination of income amount or tax base because the contents are incomplete or false, so even if there are documents presented by a taxpayer which are insufficient or are suspected to be false, the tax authority may determine the tax base and tax amount by the means of estimated tax investigation only when it is found that the contents of all documentary evidence are clearly false as a result of the on-site investigation, and the method and contents of the estimation should also be determined by reasonable and reasonable grounds so as to reflect the income amount or actual income amount near the truth.

Article 120 (1) of the Income Tax Act, Article 169 of the Enforcement Decree of the Income Tax Act

Supreme Court Decision 86Nu516 Decided December 9, 1986, 85Nu978 Decided February 24, 1987, 85Nu859 Decided March 10, 1987, 86Nu721 Decided March 10, 1987

Plaintiff

The Director of Gangnam District Office

Seoul High Court Decision 85Gu1234 delivered on December 8, 1986

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal by the defendant litigant are examined.

1. Estimated taxation under the Income Tax Act is exceptionally granted in cases where there are no books or documentary evidence of a taxpayer, which serves as the basis for the determination of income amount or tax base, or where it is impossible to use them as the basis for the determination of income amount or tax base because the details are incomplete or false. Thus, the tax authority may determine the tax base or tax base by the method of estimated investigation only when the taxpayer pointed out the illegality of all documents presented by him or new materials and it is found that the contents of all documentary evidence are clearly false as a result of an on-site investigation. Furthermore, the method and contents of the estimation should also reflect the revenue amount or income amount adjacent to the truth in the calculation. Thus, the above legal principle does not apply to cases where the entrepreneur fails to make a preliminary or final return under the Value-Added Tax Act within 25 days after the date of the preliminary return or taxable period under Article 114 of the Income Tax Act or where the Value-Added Tax Exemption Business Operator concurrently runs a business subject to the imposition of value-added tax, thereby making a decision on the amount of income amount of his business exempted from value-added tax under Article 15858.7.85.8.

2. Therefore, the court below, based on this purport, did not record all the receipts and disbursements of goods to be entered and kept as simplified account books under Article 184 (4) of the Income Tax Act, which are operated by the plaintiff in Mapo-gu, Seoul. However, by installing and using a cash register, it issued receipts by the cash register at each time of sale, and the Plaintiff prepared a sales ledger based on the above settlement table, and filed a final return of global income tax for the year 1983 by calculating each item of the sales tax imposed and the tax-exempt amount based on the above settlement table. Since the defendant did not keep the records of receipts and disbursements of the goods or the current sales situation of the goods purchased during the month and the end of the month, it is hard to find that the plaintiff did not have any errors in the misapprehension of legal principles as to the determination of global income tax-exempt or the tax-exempt amount based on the calculation of the total amount of the tax-exempt amount of the goods so that it can not be found that the plaintiff's new tax-exempt amount of the tax-exempt amount cannot be found to be based on the ground that it is difficult.

3. Therefore, the appeal shall be dismissed, and all costs of appeal shall be assessed against the losing party. It is so decided as per Disposition by the assent of all participating judges.

Justices Park Jong-dong (Presiding Justice)