Facts:
Oceanic
Wireless is a corporation with principal office located in Legaspi Village,
Makati. In April 1996, petitioner filed its 1995 Annual Corporate Annual Income
Tax Return. In December 1996, petitioner received a letter from the Revenue
District Officer authorizing Revenue Officers to examine the books of accounts
and other records for the period January to December 1995.
In
1999, petitioner executed a Waiver of Defense of Prescription of the NIRC
within which respondent may assess petitioner for deficiency taxes. A
preliminary report of tax assessment was issued and petitioner was requested to
attend an informal conference to discuss the result of the investigation done
on the books.
Again, petitioner received another
pre-assessment notice this time with Details of Discrepancies. The company was
advised to file a written protest or set up an office conference to discuss the
assessments for deficiency income. Inasmuch as the authority of respondent to
assess was about to prescribe in July 31 1999, demand letters were sent on July
30, 1999.
Petitioner now contends that the
assessment notices for taxable year 1995 are void for having been issued beyond
the 3-yr prescriptive period as provided under the NIRC. Since the tax return
was filed in April 1995, respondent has 3 years to assess the petitioner. But the assessment was done in 1999, hence
the action has already prescribed.
Petitioner also questions the
validity of the waiver on the ground that it failed to state the kind and
amount of tax required under RMO 20-90.
Respondent argues that petitioner
executed a waiver extending the period of the respondent pursuant to the
provisions in the Tax Code.
Issue:
1.
Whether or not the BIR’s right to assess has already
prescribed.
2.
Whether or not the deficiency assessments are
void for failure to state the law and facts to which the assessments are made.
3.
Whether or not petitioner is liable for
deficiency income tax.
Held:
1. No.
BIR’s right has not yet prescribed and the assessment notices are valid. At the
time of the execution of the waiver, there was no preliminary assessment issued
yet against petitioner where the kind and amount of tax could be referred to.
Such details cannot be specified in the waiver since it was still unascertainable
at the time.
Following the rule that the period
of respondent to assess was extended up to July 31, 1999 in view of the
waiver, the deficiency assessments issued against petitioner on July 30, 1999
are within the period allowed by law.
2. No.
The purpose of Section 228 of the
National Internal Revenue Code of 1997in requiring that "(t)he taxpayer be
informed of the law and facts on which assessment is made" is to give the
taxpayer the opportunity to refute the findings of the examiner and
give a more accurate and detailed explanation regarding the proposed
assessment.
In the case, there was substantial
compliance with Sec. 228 of the NIRC because petitioner was able to protest the
assessments intelligently, thereby implying that it had actual knowledge of the
factual and legal bases of the assessments. The fact that petitioner was
furnished the computation and brief explanation of how the assessment for
deficiency quarterly income tax was arrived at, the requirement under Section
228 of the 1997 Tax Code is deemed complied with. And even if
petitioner was not furnished of the detailed computation of the deficiency
quarterly income tax, the same was discussed with petitioner during
the informal conference.
3. Yes.
Petitioner having failed to comply with the requirement of the law in disputing
an assessment, the same became final, executory and demandable. Sec. 228 states that:
x x x If the protest is denied in whole or in part, or is not
acted upon within one hundred eighty (180) daysfrom submission of documents,
the taxpayer adversely affected by the decision or inaction may appeal to
the Court of Tax Appeals within thirty (30) days from receipt of the said
decision, or from the lapse of the one hundred eighty (180)-day
period; otherwise, the decision shall become final, executory and demandable. Undoubtedly,
a taxpayer has sixty (60) days from the filing of the protest to submit
the relevant documents to support its protest, otherwise, the assessment
becomes final. Within one hundred eighty(180) days from the submission of the
relevant documents, the respondent should act on the protest. If the
respondent rendered his decision within the period or failed to act on it, the
remedy of the taxpayer is to file within thirty (30) days from the
receipt of the decision or from the lapse of one hundred eighty(180)
days, an appeal to this court, otherwise, the assessment will become
final, executory and demandable. x x x
In the case, petitioner failed
to submit supporting documents contrary to what was jointly stipulated by the
parties. Hence, the reckoning of the 180-day period would be the day the
protest was filed (August 16, 1999). However, respondent failed to
render his decision within 180 days or until February 12, 2000. The remedy
of petitioner was to file within 30 days there from an appeal with this court
which would be until March 14, 2000. But since the Petition for Review was
filed only on May 12, 2000, the same was definitely filed beyond the date
prescribed by law.
*Case dismissed for being filed out of time.
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