Facts:
Alberto Benipayo is the owner of the Lucena Theater in Lucena, Quezon. In 1953, the internal revenue agent investigated Benipayo’s tax liability for the period of August 1952 to September 1953. The examiner recommended a deficiency tax assessment in the sum of P11,193.45 inclusive of 25% surcharge plus a suggested compromise penalty of P900.00 based on the conclusion that Benipayo sold 2 tax-free 20c ticletsfraudulently in order to avoid payment of amusement tax prescribed by Section 260 of the Tax Code (based on a reverse ratio of adult to children; 3:1 in 1949 to 1951, and 1:3 for period in question; and average attendance for the past years). Benipayo protested, claiming that the findings of the examiners are mere presumptions and conclusions, devoid of findings of fact of alleged fraudulent practices by him.
Issue:
Whether there is evidence in the record to show Benipayo committed the alleged act to cheat or defraud the Government
Ruling:
No. An assessment fixes and determines the tax liability of a taxpayer. In order to stand the test of judicial scrutiny, the assessment must be based on actual facts. The presumption of correctness of assessment, being a mere presumption, cannot be made to rest on another presumption, no matter how reasonable or logical such may be; i.e. that the circumstances in 1952 and 1953 are presumed to be the same as those existing in 1949 to 1951, and July 1955. There are no substantial facts to support the assessment in question. Neither was there any proof of the fraud allegedly committed. Fraud is a serious charge, and to be sustained, it must also be supported by clear and convincing proof.
Alberto Benipayo is the owner of the Lucena Theater in Lucena, Quezon. In 1953, the internal revenue agent investigated Benipayo’s tax liability for the period of August 1952 to September 1953. The examiner recommended a deficiency tax assessment in the sum of P11,193.45 inclusive of 25% surcharge plus a suggested compromise penalty of P900.00 based on the conclusion that Benipayo sold 2 tax-free 20c ticletsfraudulently in order to avoid payment of amusement tax prescribed by Section 260 of the Tax Code (based on a reverse ratio of adult to children; 3:1 in 1949 to 1951, and 1:3 for period in question; and average attendance for the past years). Benipayo protested, claiming that the findings of the examiners are mere presumptions and conclusions, devoid of findings of fact of alleged fraudulent practices by him.
Issue:
Whether there is evidence in the record to show Benipayo committed the alleged act to cheat or defraud the Government
Ruling:
No. An assessment fixes and determines the tax liability of a taxpayer. In order to stand the test of judicial scrutiny, the assessment must be based on actual facts. The presumption of correctness of assessment, being a mere presumption, cannot be made to rest on another presumption, no matter how reasonable or logical such may be; i.e. that the circumstances in 1952 and 1953 are presumed to be the same as those existing in 1949 to 1951, and July 1955. There are no substantial facts to support the assessment in question. Neither was there any proof of the fraud allegedly committed. Fraud is a serious charge, and to be sustained, it must also be supported by clear and convincing proof.
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