Whether the representative's bonus disposal is legitimate because it is deemed that an omission in inventory has been omitted in sales.

If it is not proven that there was no omission in sales in order to avoid the liability for omission in sales in stock, the representative's bonus disposal shall be legitimate.

Article 66 of the Corporate Tax Act: Decision and Correction

Article 21 of the Value-Added Tax Act

[Seoul High Court Decision 2007Nu11018 ( October 30, 2007)]

1. The defendant's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant shall revoke the disposition of imposition of KRW 20,616,026 out of the global income tax of KRW 100,345,797 for the plaintiff on June 7, 2005.

The reasoning of this court's ruling is that "in this case without any proof" in the first place of the judgment of the court of first instance shall be "in this case without any proof (at least 1 and 2 of the evidence A)," and "in this case where no proof is presented or proved" in the last place of the 10th part of the judgment of the court of first instance (at least 1 and 2 of the evidence A) shall be "in this case where no assertion or proof is presented or proved (at least 8-1 and 2 of the evidence A)", it shall be the same as the entry of the judgment of the court of first instance. Thus, it shall be cited in accordance with Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

Therefore, the judgment of the first instance court as to this conclusion is legitimate, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.

[Seoul Administrative Court 2006Guhap39161, October 10, 2007]

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the litigation costs.

Cheong-gu Office

The Defendant’s disposition of imposition of KRW 20,616,026 out of the global income tax of KRW 100,345,797 for the year 2000 against the Plaintiff on 06.07 is revoked.

1. Circumstances of dispositions;

The following facts are not disputed between the parties, or can be acknowledged in full view of the whole purport of arguments in the statements in Gap evidence 1, Gap evidence 3-1, 2, Eul evidence 7-1 through 5, Eul evidence 1-7, Eul evidence 1-2, Eul evidence 6, Eul evidence 7-1 through 3, Eul evidence 8, 9, Eul evidence 10-1 through 4, and Eul evidence 10-1 through 4:

A. On October 29, 199, ○○○○○○ Company (hereinafter referred to as “non-party company”) was established with the location of ○○○○○○○○○○○○ Building 203, the main office of ○○○○○○○○○ Building for the purpose of wholesale and retailing steel products, and the Plaintiff was registered as the representative director on the corporate register of the non-party company from the date of incorporation to the present time.

B. The non-party company submitted a purchase tax invoice of KRW 71,825,00 (the first taxable period), supply price of KRW 53,188,00 (the second taxable period) received from the ○○○○○○○○ in filing a return of the value of value 1,200 (the first taxable period), and received the input tax deduction of KRW 53,18,00 (the second taxable period). In addition, when filing a return of corporate tax attributed to the business year 200, the value of supply on the invoice was included in deductible expenses.

C. On November 4, 2003, the head of the ○○ Tax Office notified the non-party company from the head of the ○○ Tax Office of the fact that the non-party company received the account statement, etc. of this case from ○○○○, a so-called “data world” without a real transaction, and conducted a tax investigation of value-added tax on the non-party company’s business for the 2000 year from May 14, 2004 to 28 of the same month.

D. As a result of the investigation of value-added tax on the non-party company, it was confirmed that the non-party company purchased steel products from the non-party company ○○○○ and received the invoice of this case. However, it was confirmed that the non-party company's value of steel products purchased from the non-party company ○○○ on September 4, 200, which was recorded as inventory in the book as inventory goods (hereinafter "the inventory of this case") did not remain in the actual inventory. Accordingly, the head of ○○ Tax Office omitted the sales revenue of 26,704,00 won calculated by applying the total profit ratio of sales of the non-party wholesale business in 200 to the inventory of this case (hereinafter "amount omitted in the sales of this case") from the non-party company's return of value-added tax in 200 business year, the non-party company corrected the value-added tax, corporate tax, etc. for the non-party company's business year 200 and notified the non-party company as bonus for the plaintiff company's income disposition.

E. On June 7, 2005, based on the Plaintiff’s initial amount of earned income of KRW 127,198,600,000, the Defendant issued a decision of correction to add the Plaintiff’s global income tax of KRW 100,345,790 (the tax amount of KRW 20,616,026, which is the tax amount for the omitted sales of the instant tax amount) for the year 200, based on the Plaintiff’s initial amount of earned income of KRW 13,20,00,000, and the total amount of the instant revenue omitted from sales. The Defendant notified the Plaintiff of the decision.

F. After that, the Plaintiff filed an appeal with the National Tax Tribunal on February 27, 2006 on the instant disposition among the global income tax, but on July 31, 2006, the National Tax Tribunal rendered a decision to dismiss the Plaintiff’s appeal on the ground that the Plaintiff did not submit any data proving that the Plaintiff was not omitted in sales, by explaining the details of sales of steel products purchased by the Non-Party Company from ○○○○○, and by explaining the sales of steel products, the Plaintiff confirmed the omission in sales through taxation data submitted by the Non-Party Company.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) After securing the sales office first, the tax agent of the non-party company prepared and submitted taxation data stating that the inventory of this case remains at his own discretion against the plaintiff's intent, even though it could not be structural inventory due to the non-party company's business method of purchasing and selling steel products, after securing the sales office, and then, as the result of the investigation conducted by the public official belonging to the ○○ Tax Office, it was found that the defendant did not have the inventory at the time of the investigation conducted by the public official belonging to the ○○ Tax Office, and thus, the disposition of this case was taken by deeming it as omitting sales of the inventory of this case. The disposition of this case was unlawful due to the non-party company's erroneous report by the tax agent

(2) In a case where the non-party company failed to explain the sales details of part of the steel products purchased from the non-party company ○○○○○○, the head of the ○○ Tax Office’s order to prepare and submit a written confirmation (referring to the taxation data of this case) that the non-party company’s agent remains in the stock of this case even though it is required to conduct an on-site investigation, and the non-party company’s agent should immediately prepare and submit a written confirmation (referring to the taxation data of this case) to the non-party company that did not keep a inventory

(b) Related statutes;

○ Decision and Correction of Article 66 of the Corporate Tax Act

(2) Where a domestic corporation makes a report under Article 60 falls under any of the following subparagraphs, the superintendent of the district tax office having jurisdiction over the place of tax payment or the Commissioner of the competent Regional Tax Office shall correct the tax base and

1. Where there are errors or omissions in the contents of the report;

○ Disposition of Income, Article 67 of the Corporate Tax Act

In filing a report on the corporate tax base on the income for each business year under the provisions of Article 60 or in determining or revising the corporate tax base under the provisions of Article 66 or 69, the amount included in the calculation of earnings shall be disposed of as bonus, dividend, other outflow from the company, internal reserve, etc. according to the person to whom it reverts

Article 106 of the Enforcement Decree of the Corporate Tax Act

(1) The amount included in the calculation of earnings under the provisions of Article 67 of the Act shall be disposed of under the provisions of the following subparagraphs. The same shall apply to nonprofit domestic corporations and nonprofit

1. Where the amount included in the calculation of earnings has clearly leaked out of the company, the dividends, bonuses from the disposition of profits, other income, and other outflow from the company under each of the following items according to the person to whom they accrue: Provided, That where the accrual is unclear, it shall be deemed as accrual to the representative (where the total number of stocks held by an officer who is not a minority shareholder under the provisions of Article 87 (2) and persons with a special relationship under the provisions of paragraph (4) of the same Article is 30% or more of the total number of stocks issued or total investment amount of the relevant corporation and the officer actually controls the operation of the corporation, he shall be deemed the representative, and where a corporation which has been exempted from withholding under the provisions of Article 46 (12) of the Restriction of Special Taxation Act reports that there is a separate representative among the officers who are stockholders, etc., the reported person shall be the representative, and where there

Article 20 of the Income Tax Act

Article 20 (Earned Income)

(1) Employment income shall be the following incomes generated in the current year:

1.A

(c) Amount treated as bonus under the Corporate Tax Act; and

○ The date of payment of dividends, contributions, and other income by the disposal of income under Article 192 of the Enforcement Decree of the Income Tax Act

(1) In determining or correcting the corporate income amount under the Corporate Tax Act, the dividend, bonus and other incomes disposed of shall be notified to the corporation concerned by the notice of change in the income amount as prescribed by the Ordinance of the Ministry of Finance and Economy within 15 days from the date of the determination or correction by the head of the tax office or the director of the regional tax office who makes the determination or correction of the corporate income amount: Provided, That where the location of the corporation concerned is not clear or it is impossible to serve the notice, or where the corporation concerned falls under the provisions of Article 86 (1) 1, 2 and 4 of the National Tax Collection

○ Decision and rectification Article 21 of the Value-Added Tax Act

(1) The head of a district tax office having jurisdiction over the place of business, the Commissioner of the competent Regional Tax Office or the Commissioner of the National Tax Service shall determine or correct the tax base of value-added tax or tax amount

2. Where there are any mistakes or omissions in details of the final tax return;

(2) Where the tax base and amount of tax payable or refundable amount are determined or corrected for each taxable period pursuant to paragraph (1), the head of the competent district tax office having jurisdiction over the place of business, the Commissioner of the competent Regional Tax Office or the Commissioner of the National Tax Service shall determine or correct them on the basis of tax invoices, account books and other

1. Where tax invoices, books, and other evidence necessary for calculating the tax base do not exist or important parts are incomplete;

Article 69 of the Enforcement Decree of the Value-Added Tax Act

(1) Estimated amounts under the proviso of Article 21 (2) of the Act shall be as follows:

4. Calculation method by any of the following criteria determined by the Commissioner of the National Tax Service for each type of business and each region:

(d) A sales profit rate which determines the ratio of the sales to the gross sales profit during a fixed period;

(c) Fact of recognition;

The following facts may be acknowledged in light of the above evidence evidence Nos. 2, 5-1, 2, and 6-1, 5-2, and the purport of the whole pleadings:

(1) On March 10, 2004, the head of the ○○ Tax Office notified the non-party company and the non-party company that the non-party company was suspected of engaging in the processing transaction, and first sent to the non-party company an explanation explaining that the purchase tax invoice of KRW 36,793,000 of the supply price received from the non-party company in the year 200 was due to the actual transaction, and then conducted an investigation of value-added tax on the non-party company for the business year 200 from May 14, 2004 to the 28th of the same month.

(2) In the course of the tax investigation, the non-party company actively explained that the instant invoice, etc. received by the non-party company from the non-party company from the ○○○○○ through the real transaction rather than the processing transaction, and during that process, the non-party company submitted a list of taxation data (Evidence 7-1), which is the data on the details of sales of the steel products purchased from the non-party company from the non-party company ○○○○○○, a credit purchase invoice (Evidence 7-2), a credit sales invoice (Evidence 7-3), a cash sales invoice (Evidence 7-4), a cash receipt receipt book (Evidence 7-5), a copy of passbook (Evidence 7-5), and a commodity receipt receipt book (Evidence 10-1 through 4).

(3) However, according to the taxation data of this case submitted by the non-party company, the non-party company purchased steel products amounting to 137,515,085 won in total from ○○○○○ in the business year 2000 over 13 times, and among them, the value of steel products purchased on September 4, 200 to 24,228,985 won remains in stock and remains in stock, and is entered in the account book, such as the receipt and payment of goods (in particular, it is stated that the inventory of this case remains in stock as of December 31, 200 in the receipt and payment of goods prepared by the non-party company employees, but it is stated that the inventory of this case remains in stock as of December 31, 200.)

(4) The non-party company, whose main business is the wholesale and retail business of steel products, is operating the business of purchasing and selling steel products in the form of purchasing and selling steel products by securing the sales source of the steel products first. The non-party company purchased steel products of 137,515,085 won from ○○○○○ in the business year of 2000 and sold them to other companies within 2,30 days from the date of purchasing the products of 114,000,000 won among them, or within 13 days from the date of purchasing the products of 137,515,085 won. The non-party company sold only the steel products of 23,000,000 won to other companies after the lapse of 10 days from the date of purchase.

(5) Meanwhile, the non-party company’s balance sheet of the year 2000, which was submitted by the Plaintiff during the instant lawsuit, stated that there was no commodity inventory at the time of December 31, 2000, and the Plaintiff did not submit explanatory materials as to the absence of omission of sales in the instant inventory until the closing date of the argument.

D. Determination

(1) As to the assertion that there was no omission in sales of the instant inventory

(A) Generally, the burden of proof of the facts requiring taxation is against the tax authority, but if it is proved that the facts alleged in light of the empirical rule in the course of a specific lawsuit are proved, the taxation disposition cannot be deemed unlawful unless the other party proves the circumstances not subject to the empirical rule (see Supreme Court Decision 92Nu6761, Jul. 10, 1992).

(B) The Plaintiff asserts that the inventory of this case, which is one of its own entries in the account book, does not remain in the actual inventory, and that the account book and the inventory of this case are not in accord with the actual inventory. As of the end of the last taxable year, it is reasonable to deem that there was an omission in sales in the report of the current year, such as value-added tax, if the account book and the actual inventory are inconsistent with each other, it is reasonable to deem that there was an omission in sales in the report of the current year. Therefore, in order to exempt the Plaintiff

Therefore, in this case where there is no proof as to this point until the closing of argument in this case, there is no illegality in the disposition of this case that the plaintiff reported the part concerning the inventory of this case to be omitted sales (the purport of the plaintiff's assertion is to remain as a stock product among the steel products that the non-party company purchased from ○○○○○○ on December 31, 200, and there is no inventory product. However, even though the non-party company's agent did not have a document wrong and reported that the inventory remains, but it was the disposition of this case where the non-party company's agent reported that the inventory remains without inventory, the plaintiff did not prove that the inventory of this case was sold through normal trade and it was already included in the gross income of the non-party company and completed the non-party company's report of value-added tax, etc., as seen above, unless the plaintiff proves that the part concerning the inventory of this case was omitted sales, this part of the plaintiff's assertion in this part

(2) On the assertion that there is a defect in the estimated taxation requirement

(A) If the tax office finds that the tax invoice, account book, and other evidence submitted by the taxpayer upon filing a tax base and tax amount to be unfaithful, the tax office shall point out the illegality and make a field investigation by receiving new data, and even if based on such data, the tax office shall make a decision by estimation only when it is impossible to determine the tax base and tax amount, and the taxation by the estimation investigation decision without taking such procedures is unlawful as it goes against the requirements for estimation taxation. However, in light of the fact that the reasons for taking such procedures are exceptionally permitted when the estimation investigation decision cannot be made on the basis of the principle of taxation based on the basis of the principle of taxation based on the basis, the tax office shall point out the illegality of the tax invoice, account book, and other evidence submitted by the taxpayer, and even if it is evident that the tax office cannot determine the tax base and tax amount even if the on-site investigation is conducted by submitting new data, it shall not be deemed unlawful (see, e.g., Supreme Court Decision 2004Du8293, Jul. 8

(B) As seen earlier, it is clear that the inventory of this case, which is entered as inventory in the account book in the process of the tax investigation with respect to the non-party company, remains in the inventory as a result of the on-site investigation, and the defendant et al. found the amount converted by applying the gross profit ratio to the stock of this case as sales omission, and the disposition of this case was taken on-site investigation such as ordering the plaintiff et al. to submit new data, even if the defendant et al. on-site investigation on the inventory of this case, it is obvious that the market price cannot be confirmed. Thus, since the defendant's calculation of the estimated income amount by applying the gross profit ratio to the stock of this case cannot be seen as any defect in the market

If the stock of this case remains at the time of December 31, 200, the stock of this case could have been carried over and sold after 200. Thus, the disposition of this case is unlawful on the premise that the defendant, without any grounds, sold the stock of this case on or before December 31, 200. Thus, as seen above, the non-party company takes the form of business to purchase and sell the steel products by printing the purchase price after securing the ordinary sales price first, and the non-party company takes the form of business to purchase and sell the steel products in 13 times from 00 business year, and the non-party company purchased the steel products of 137,515,085 won from 13 times from 00,000 won from 23,00,000 won from the date of purchase, or within 200,000 won from the date of purchase, and it is not reasonable to view that the plaintiff's stock of this case was not carried over to other non-party company after 200 days from the date of purchase.

3.In conclusion

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