SVI INFORMATION SERVICES CORPORATION vs. COMMISSIONER OF INTERNAL REVENUE
CTA Case No. 8496
FACTS:
Petitioner received Letter of Authority (LOA) No. 000087833 dated September 11, 2008 from the BIR, authorizing the examination of petitioner's books of accounts and other financial records for all internal revenue taxes for taxable year 2007. On October 20, 2009, petitioner received a Post Reporting Notice from BIR Revenue District Office (ROO) No. 43A. Said notice, pursuant to the LOA, informed petitioner of the tentative findings for deficiency income tax, VAT, EWT, and withholding tax on compensation liabilities for taxable year 2007 and directed petitioner to attend an informal conference or to submit documentary evidence to refute said findings.
On October 28, 2009, petitioner replied to the Post Reporting Notice through a letter dated October 26, 2009 addressed to Mr. Wilfreda M. Pantino, the Revenue Officer of BIR ROO No. 43A. Thereafter, on November 11, 2010, petitioner received from respondent Assessment Notices (FAN) and a Formal Letter of Demand with attached Details of Discrepancies dated October 18, 2010.
Petitioner protested the FAN through a letter dated December 10, 2010, addressed to Ms. Lorna Tobias, Chief of the Assessment Division of BIR RDO No. 43A. Subsequently, petitioner received a Preliminary Collection Letter8 on April 26, 2012, finding petitioner liable for deficiency taxes in the total amount of P14,513,761.44, inclusive of interest. On May 24, 2012, petitioner received a Final Notice Before Seizure (Final Notice) dated May 10, 2012 from BIR RDO No. 43A, reiterating the demand for payment of the alleged deficiency income tax, VAT and EWT for taxable year 2007. Hence, petitioner filed the instant Petition for Review on May 25, 2012.
On October 28, 2009, petitioner replied to the Post Reporting Notice through a letter dated October 26, 2009 addressed to Mr. Wilfreda M. Pantino, the Revenue Officer of BIR ROO No. 43A. Thereafter, on November 11, 2010, petitioner received from respondent Assessment Notices (FAN) and a Formal Letter of Demand with attached Details of Discrepancies dated October 18, 2010.
Petitioner protested the FAN through a letter dated December 10, 2010, addressed to Ms. Lorna Tobias, Chief of the Assessment Division of BIR RDO No. 43A. Subsequently, petitioner received a Preliminary Collection Letter8 on April 26, 2012, finding petitioner liable for deficiency taxes in the total amount of P14,513,761.44, inclusive of interest. On May 24, 2012, petitioner received a Final Notice Before Seizure (Final Notice) dated May 10, 2012 from BIR RDO No. 43A, reiterating the demand for payment of the alleged deficiency income tax, VAT and EWT for taxable year 2007. Hence, petitioner filed the instant Petition for Review on May 25, 2012.
ISSUE:
Whether or not the FAN and the PCL are null and void since petitioner never received a Preliminary Assessment Notice from respondent.
RULING:
Yes, the law and the regulations are clear on the requirements for procedural due process on the issuance of assessment for deficiency taxes. Full and complete compliance with these requirements is mandatory to ensure the validity of the assessment. Consequently, a void assessment bears no valid fruit. The issuance of PAN is an integral part of procedural due process. The PAN lays down the factual and legal basis for the assessment. We reiterate the Assailed Decision's discussion on the indispensable nature of the PAN in the issuance of assessments and give emphasis to the fact that the 1997 NIRC provided that the issuance of PAN in assessments is mandatory in tax assessments except in a few instances, specifically enumerated by law, where it is not required.
Yes, the law and the regulations are clear on the requirements for procedural due process on the issuance of assessment for deficiency taxes. Full and complete compliance with these requirements is mandatory to ensure the validity of the assessment. Consequently, a void assessment bears no valid fruit. The issuance of PAN is an integral part of procedural due process. The PAN lays down the factual and legal basis for the assessment. We reiterate the Assailed Decision's discussion on the indispensable nature of the PAN in the issuance of assessments and give emphasis to the fact that the 1997 NIRC provided that the issuance of PAN in assessments is mandatory in tax assessments except in a few instances, specifically enumerated by law, where it is not required.
In the instant case, respondent failed to prove that the PAN was delivered to petitioner. Records show that respondent did not formally offer as her evidence any document, such as a copy of a registry return receipt in case of service through registered mail or the alleged request for certification addressed to the Pasig City Post Office, which will prove that petitioner did in fact receive the disputed PAN. Respondent also failed to convince this Court that the PAN was personally received by petitioner.
Accordingly, in the absence of proof of actual receipt by petitioner of a PAN in violation of Section 228 of the NIRC of 1997 and RR No. 12-99, as amended by RR No. 18-2013, this Court finds that petitioner was not accorded procedural due process in the issuance of the assessment.
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