Appellate Court 2015No810 (Law No. 15, 2015)

The amount deposited into the borrowed account shall be the amount omitted from sales, and in the case of taxation by on-site investigation, income shall not be estimated.

If the amount of deposit between the borrowed account and the business account is confirmed, it cannot be deemed that the amount deposited into the borrowed account is a double reported amount, and the corresponding necessary expenses are also imposed by the on-site investigation after clarifying the omitted amount of revenue by the on-site investigation, the income cannot be determined by the estimation investigation.

2015Guhap1132 Revocation of Disposition of Imposing Value-Added Tax

leAA

BB Head of tax office et al.

November 10, 2016

December 8, 2016

1. The plaintiff's claims against the defendants are all dismissed.

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

Cheong-gu Office

The part of the imposition disposition imposing global income tax exceeding KRW 0,00,00,129 (including additional tax; hereinafter the same shall apply) on the Plaintiff on July 1, 2014 exceeding KRW 20,00,000,129, the part of the imposition disposition imposing global income tax exceeding KRW 00,000,656 among the imposition disposition imposing global income tax exceeding KRW 00,000,000,000 among the imposition disposition imposing global income for KRW 10,000,000,69, the part of the imposition disposition imposing global income tax exceeding KRW 00,000,000 among the imposition disposition imposing global income for KRW 1,00,00,000, and KRW 20,000 among the imposition disposition imposing global income tax for KRW 1,00,000, and KRW 20,006,000 for the imposition disposition imposing global income tax for over KRW 20,000,0000 for year.

1. Details of the disposition;

A. From April 1, 2002, the Plaintiff was running a wholesale and retail business for the main purpose of the name of ○○○○○○○○○○○○○○○○ (hereinafter “instant place of business”) from April 1, 2002, and closed down January 16, 2014.

B. As a result of the tax investigation conducted on the Plaintiff from April 6, 2014 to June 15, 2014, Defendant BB head of the tax office: (a) deposited cash sales in the name of △△△△△△△ for its business employees from April 1, 2009 to June 2, 2013; (b) the amount of KRW 0,000,000,000,000 for total income for KRW 20,000 for total income for KRW 10,000 for 20,000 for total income for KRW 20,000 for total income for 20,000 for 20,000 for total income for 20,000,000 for total income for 20,000,000,0000 for global income for 200,000,0000,000 for total income tax for 200.

C. The Plaintiff dissatisfied with each of the instant dispositions and filed an objection on August 11, 2014, but was dismissed on September 25, 2014, and thereafter filed an appeal with the Tax Tribunal on December 26, 2014, but was dismissed.

[Ground of recognition] Facts without dispute, Gap evidence 1 to 4, Eul evidence 1 to 3, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Among the details deposited in the Plaintiff’s business account, approximately KRW 0 billion deposited in the Plaintiff’s name was withdrawn from the instant borrowed account and deposited in the business account. Since the Plaintiff already reported and paid value-added tax on the amount deposited in the business account, it should be excluded from the omitted sales amount, each of the dispositions of this case on different premise is unlawful.

2) Defendant BB director of the tax office corrected and notified the global income tax on the basis of the omitted sales amount, and it is difficult to receive legal evidence from customers in light of the practice of the main product industry, and from the Plaintiff’s standpoint, evidence of actual expenses corresponding to the omitted sales amount is difficult, and the false bookkeeping rate of the instant business establishment (the omitted return rate) is 23.3%. Therefore, the amount of income should be calculated based on the expense rate in consideration of the average income rate of the same business sector. Therefore, the disposition imposing global income tax in this case is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

(1) The details of the report on value-added tax at the workplace of this case are as follows:

② The Plaintiff opened on May 26, 2009 the instant borrowed account and received cash sales from customers in the said borrowed account. The details confirmed to have omitted sales reports among them are as follows (hereinafter “the instant table”). Accordingly, the amount reported by the Plaintiff as pure cash sales during the second taxable period from the first to the second taxable period from 2009 to the second taxable period from 2013 was KRW 00,000,000, but the amount deposited in cash during the instant borrowed account was KRW 0,000,000 (cost of supply) and thus, the amount omitted in cash sales during the said taxable period was KRW 0,00,000,000 (amount converted to the supply value - KRW 0,000,000,000 - KRW 0,000,000).

③ On May 12, 2014, the Plaintiff: (a) was unable to separately collect value-added tax 10% or less from a customer; and (b) was starting from May 2, 2009 to use the name account of this case as operating funds, following the determination that it is reasonable to collect value-added tax from a customer; (c) was using the name account of this case from May 13, 2009. If a relative or spouse or employee account is used, it would be better to use the name account of an employee; (d) deposit in the business account is almost every customer. In addition to the amount of tax invoice delivery, the cash sales was reported in cash sales in consideration of the rate of value-added tax, etc.; (d) the Plaintiff stated that there is no way to explain that the Plaintiff would be able to file a return on purchase other than the amount of tax invoice payment; and (e) the Plaintiff’s return on the total amount of cash sales of the Plaintiff’s personal account of this case from 00 to 200,000,00.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 3 through 6 (including separate number for each paper), the purport of the whole pleadings

D. Determination

1) The assertion about omission in sales

In a lawsuit seeking revocation of tax imposition disposition, the tax authority bears the burden of proving the fact that the taxpayer's account of the financial institution constitutes sales or revenue, and the taxpayer bears the burden of proving the fact that the amount was omitted from the return.

However, it may be proven that the amount deposited in the account of a taxpayer’s financial institution constitutes sales or revenues by revealing facts or indirect facts that can be inferred in light of the empirical rule in the course of a specific lawsuit. In such a case, whether such presumption can be based on whether the account of the financial institution was used as a principal account or management account for sales or revenues subject to taxation, and whether it has a appearance of sales or revenues in light of the deposit date, the other party, and the amount, etc., in the account transaction, the proportion of sales or revenues in the account transaction, and the possibility and degree of mixing of funds for other purposes than sales or revenues, etc. In addition, even if the account of a taxpayer’s financial institution as a principal account or management account for sales or revenues can be presumed to constitute sales or revenues, it should be determined by comprehensively taking account of various circumstances such as the proportion of sales or revenues in the account transaction, and if there is no special circumstance to prove that such deposit or deposit constitutes sales or revenues, it should be readily concluded that the account constitutes 701 or 2700% of the above sales or revenues.

In light of the above facts and the overall purport of each of the above facts, i.e., the following circumstances acknowledged by the tax authorities to be integrated into the above facts, i., ① if the confirmation document was prepared from the person liable for tax payment in the course of tax investigation, it is difficult for the Plaintiff to readily deny the value of the confirmation document, unless there are special circumstances, such as the fact that it is difficult for the Plaintiff to use it as supporting material for specific facts due to the lack of the content of the certificate, etc. (see, e.g., Supreme Court Decision 2006Du8068, Sept. 25, 2008). The Plaintiff’s statement that the amount of the above 20th bank account would be identical to the above 3rd bank account to the 0th bank account, and that it is difficult for the Plaintiff to claim that the amount of the above 3rd bank account would not be included in the 0th bank account, and that the amount of the 2nd bank account would not be included in the 0th bank account. However, the Plaintiff’s statement that the above amount of the 3rd account would be excluded.

Therefore, each of the dispositions of this case based on the premise that there was an omission of the Plaintiff’s revenue return, is legitimate, and the Plaintiff’s assertion on this part is not accepted.

2) Claim for estimated taxation

Article 80 (3) of the former Income Tax Act (amended by Act No. 11611, Jan. 1, 2013) provides that "where the head of a regional tax office or the head of a regional tax office having jurisdiction over the place of tax payment determines or revises the tax base and amount of tax in the relevant taxable period pursuant to paragraphs (1) and (2), he/she shall do so on the basis of books or other evidentiary documents: Provided, That where it is impossible to calculate the amount of income on the basis of books or other evidentiary documents for reasons prescribed by Presidential Decree,

On the other hand, in principle, the tax base and tax amount of global income tax shall be determined by the actual amount revealed by the method of a field investigation, and it shall be exceptionally permissible only when there is no taxpayer’s account books or documentary evidence in order to determine it by the method of a field investigation, or when there is no other method that the tax authorities can disclose the actual amount of income without the credibility of the important portion being recorded in incomplete or false. Thus, even if some of the account books or documentary evidence kept and kept by the taxpayer or documentary evidence is included therein, if the tax base can be calculated on the basis of this, it is clearly that the remaining portion of the account books or documentary evidence prepared and kept by the taxpayer is consistent with the facts

In addition, the reason that the tax disposition by the on-site investigation is more unfavorable than the imposition by the estimation, or that the taxpayer wants to investigate and determine by the estimation method, cannot be deemed as satisfying the requirements for the estimation taxation (referring to the Supreme Court Decision 96Nu8192 delivered on September 26, 1997).

In addition, when a tax assessment is conducted based on the on-site investigation decision as to the omission of income amount, the taxpayer should assert and prove the necessary expenses corresponding to the omission amount, and when the amount of income can be determined by the on-site investigation method, it cannot be determined by the method of the on-site investigation. If the tax authority found necessary expenses corresponding to the omission of income during the taxable period by the on-site investigation and imposes global income tax by recognizing the necessary expenses corresponding thereto by the on-site investigation, it cannot be deemed impossible to make a decision on the on-site investigation. If necessary expenses not recognized by the tax authority exist, it shall be asserted and proved by the taxpayer, and the income cannot be determined by the method of the on-site investigation to deduct the necessary expenses (see Supreme Court Decision 2001Du4399, Mar. 11, 2003).

On the other hand, the following circumstances, which are acknowledged by comprehensively taking account of the evidence and the overall purport of the arguments as seen earlier, i.e., ① the Plaintiff’s failure to report the amount equivalent to the amount the Plaintiff acknowledged in the course of the tax investigation; ② the Plaintiff is obligated to keep evidential documents so that transactions can be objectively grasped as the amount of income. As such, the Plaintiff is obliged to keep the account books so that transactions can be objectively grasped, as the Plaintiff is obligated to keep the amount of income by double-entry bookkeeping under the Income Tax Act. ③ The Defendant did not specifically assert and prove it in the process of the tax investigation or the litigation as to the existence of necessary expenses corresponding to the omitted amount. ④ Even if the Defendant’s income ratio adjusted by the Defendant exceeds the income ratio of the same kind of business, or the ratio of omission in the return for the corrected amount to the corrected amount of income exceeds 20%, the Plaintiff is not obliged to obtain necessary expenses for the global income tax investigation by presenting the initial amount of the global income tax amount to the amount of income reported by the Defendant, and thus, cannot be considered as necessary expenses for the investigation or omission.

Therefore, the disposition of global income tax in this case is lawful, and the plaintiff's assertion on this part is not accepted.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.