No invalidation shall be allowed even if the plaintiff did not participate in the preparation of a false contract.

The unlawful means include not only the unlawful means done by the taxpayer himself/herself but also the unlawful means done by the taxpayer's agent or performance assistant, etc. to gain the benefit of expanding the scope of the act by entrusting the taxpayer with the management of related affairs.

Article 100 of the Income Tax Act

2013Gudan23679 Revocation of Disposition of Imposing capital gains tax

AA

BB Director of the Tax Office

August 22, 2014

September 26, 2014

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

On July 1, 2013, the Defendant confirmed that the imposition of capital gains tax of KRW 000,000 (including additional tax) for the Plaintiff in 2004 is null and void.

1. Details of the disposition;

A. On December 15, 2004 and February 23, 2005, the Plaintiff: (a) transferred 00,000m2 (hereinafter “instant land”) of the Fran-do CCD Do, F, F, by dividing it into E and four other parties; and (b) paid KRW 00,000,000 (on January 5, 2005 and March 8, 2005, the transfer value of KRW 00,000 (on March 8, 2005) as transfer value of KRW 00,000,000 (on-site transaction value); and (c) paid KRW 00,00,000,000 (on-site conversion value) of transfer income tax.

B. The Defendant issued an on-site investigation with respect to the Plaintiff, and subsequently corrected the Plaintiff’s transfer income tax amount of KRW 00,000,000 (including penalty tax of KRW 00,100,000 and penalty tax of KRW 000,000,000,00 for failure to report, and penalty tax of KRW 00,00,00 for failure to report), if the Plaintiff had prepared a false contract with the falsity and under-reported transfer income tax on July 1, 2013, although the transfer value of the instant land was KRW 0 billion.

The instant disposition was taken.

Facts without any dispute, entry in the evidence Nos. 2-1, 2-2, and 5, and the purport of the whole pleadings.

2. Summary of the plaintiff's assertion

At the time of the transfer of the instant land, the Plaintiff delegated the return of capital gains tax to EE, and believed that EE was legally reported, and paid capital gains tax as reported by it. As such, the Plaintiff did not evade national taxes due to fraud or other unlawful acts, since the Plaintiff did not participate in the preparation of a false contract on the instant land, it cannot be deemed that the exclusion period for imposition of capital gains tax has been extended. Accordingly, the instant disposition is null and void after the exclusion period for imposition of capital gains tax has expired.

Even if it is not so, the Plaintiff prepared a written contract to transfer the original land amounting to KRW 0 billion, but the Plaintiff, after receiving the intermediate payment, agreed to such reduction and received only KRW 00 billion by allowing EE to cancel the contract unless the purchase price is reduced to KRW 00 billion. Thus, the instant disposition based on the premise that the transfer price of the instant land is KRW 0 billion is illegal, even though the transfer price of the instant land is KRW 0 billion.

3. Judgment on the Defendant’s main defense

After the Plaintiff received the instant disposition on July 8, 2013, the Defendant asserted that the instant lawsuit is unlawful, since it failed to satisfy the requirements for the administrative appeal pre-determination, without filing an objection, a request for adjudication, or a request for examination within the period for filing a petition for appeal under the Framework Act on National Taxes. However, the instant lawsuit is seeking confirmation of the invalidity of the disposition, and the instant lawsuit does not apply the principle of administrative appeal pre-determination. Therefore, the Defendant

4. Whether the disposition is lawful.

(a) Facts of recognition;

1) Around May 21, 2004, the Plaintiff drafted a sales contract (Evidence A3) with respect to the instant land between EE and one other (i.e., payment of KRW 0 billion when a contract is concluded, an intermediate payment of KRW 0 billion is paid on June 25, 2004, and an remainder of KRW 00 billion is paid on August 5, 2004).

2) Thereafter, on December 16, 2004, in the instant land, the F-1, C-1, P-2, P-3, and P-4 were divided, respectively, and the instant land remaining after division into the same day was made to Nonparty GG, P-1, P-72-1, P-2, P-3, P-3, P-2, P-3, P-4, and P-2, separately from P-3, was written to JJ, and the transfer income tax was reported on the basis of each sales contract (3-1 or 5) as follows.

Facts without any dispute, Gap 3 evidence, Eul 1 and 3 respectively, and the purport of the whole pleadings.

B. Determination

1) According to Article 26-2(1)1 of the Framework Act on National Taxes, in a case where a taxpayer evades a national tax, or receives a refund or deduction by fraudulent or other unlawful means, the exclusion period of imposition of national tax is ten years from the date on which the pertinent national tax can be imposed. Unlike the actual sales contract (Evidence A3) where the Plaintiff falsely reported the transfer value by means of unlawful preparation and submission of a false double contract (No. 3-5) and contrary to the actual sales contract (Evidence A3-5), thereby evading the transfer income tax on the instant land transfer. Therefore, the exclusion period of imposition of the transfer income tax on the instant land is ten years from June 1, 2005, which is the following day after the filing deadline. Accordingly, the disposition of this case is lawful by the period on July 1, 2013, which is the date on which the said period is filed.

The Plaintiff did not know the fact that he did not participate in the preparation of a false contract, but delegated the return of capital gains tax to EE, and the Plaintiff made a false report. As such, the Plaintiff asserted to the effect that he did not evade capital gains tax by unlawful act. However, even if the evidence submitted by the Plaintiff was integrated, it is insufficient to acknowledge such fact, and there is no other evidence to acknowledge it. In addition, the "illegal method" under Article 26-2 (1) 1 of the Framework Act on National Taxes includes not only the unlawful method done by the taxpayer himself but also the unlawful method done by the taxpayer's agent or performance assistant, etc. who is benefiting from the expansion of the area of the act by entrusting the management of the relevant business by himself (see Supreme Court Decision 2009Du15104, Sept. 29, 201). Thus, the Plaintiff's above assertion is without merit.

2) In addition, the Plaintiff asserts that the transfer value of the instant land was reduced to KRW 100 million, but this does not constitute grounds for invalidation of the disposition, and even if the evidence submitted by the Plaintiff was integrated, it is insufficient to acknowledge such fact, and there is no other evidence to acknowledge it. Therefore, the Plaintiff’s assertion based on this premise

5. Conclusion

Therefore, the plaintiff's claim is dismissed for lack of reason.