Whether or not the estimated investigation and decision in case where income which forms the tax base of documentary evidence can be calculated is legitimate.

Even if a taxpayer fails to keep a day-book under Article 184 of the Income Tax Act, if it is possible to calculate the income which serves as the tax base on other evidential documents, the tax base and tax amount shall be determined on-site investigation and shall not be determined by the method of estimated investigation.

Articles 114, 117, 118, 119, 120, 184 of the Income Tax Act, Article 159 of the Enforcement Decree of the same Act

Supreme Court Decision 78Nu277 Decided September 26, 1978

[Judgment of the court below]

Head of Mapo Tax Office

Seoul High Court Decision 79Gu485 delivered on February 12, 1980

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. According to Articles 114, 117, and 119 of the Income Tax Act and Article 159 of the Enforcement Decree of the same Act, the Government shall, in principle, determine the tax base and tax amount on real estate income by filing a final tax base return, but even if there is no return, with respect to a resident who keeps a prescribed account book, when calculating the amount of income based on such account book and documentary evidence, the Government shall determine the tax base and tax amount by such account book when it can calculate the amount of income based on such account book and documentary evidence. It is clear that such provisions clearly stipulate that the tax base and tax amount shall be determined by the standard rate for income by type of business only if the resident cannot make a field investigation or written determination due to apparent objective reasons as prescribed by the Presidential Decree, and Article 169 of the Enforcement Decree of the same Act provides that the tax base and tax amount shall be determined by the estimation rate by type of business, and Article 169 of the same Decree provides that the entry shall be clearly false in light of the quantity of raw materials used, quantity of raw materials, product, product size, market price, etc.

2. As to this case, the plaintiff's real estate income is the plaintiff's income acquired by leasing the plaintiff's ( Address omitted) title and apapap 1 house to another person in Jung-gu Seoul Special Metropolitan City, the plaintiff's real estate income, and it is confirmed by the court below that the plaintiff did not keep the records of this income while the plaintiff has a duty to keep the records prescribed in Article 184 of the Act on this income.

However, according to the records, as seen above, this case can be calculated based on the contents of Gap evidence No. 4-1, 2, and 3 (the lease contract and the monthly lease contract) and the defendant's final return amount and the plaintiff's final return amount based on these evidentiary documents are almost equal to 4,356,00 won for the former, 4,348,683 won for the latter (see Gap evidence No. 5 and Eul evidence No. 3). Thus, even if the plaintiff did not keep a book on a prescribed day, the tax base and tax amount can be calculated based on other evidentiary documents. Thus, it is reasonable to deem that the tax base and tax amount can be actually investigated (see Supreme Court Decision 78Nu277 delivered on September 26, 197).

Nevertheless, the decision of the court below that the defendant's additional disposition on the basis of the decision by the estimation investigation was lawful only in the fact that there was no keeping of a prescribed book after receiving the corresponding tax amount by the plaintiff's final return of tax base. Thus, the decision of the court below is erroneous in the misapprehension of legal principles as to the decision of estimation investigation. Therefore, the decision of the court below is without merit.

Therefore, it is so decided as per Disposition by the assent of all participating judges.

Justices Park So-young (Presiding Justice)