THE Court of Tax Appeals (CTA) ruled against the Bureau of Internal Revenue (BIR) and cancelled the alleged P59.844-million income tax deficiency of RCBC Savings Bank, Inc. (RSB) for the taxable year 2006 due to a void waiver supposedly extending the period to assess the bank.
In a decision penned by Associate Justice Erlinda P. Uy dated Dec. 18, CTA’s Special Second Division ruled that the period to assess tax deficiency of RSB, a subsidiary of Rizal Commercial Banking Corp., has already lapsed.
Despite the issuance of nine waivers agreed upon by the BIR and RSB to extend the period of assessment, the appellate court found that the first waiver issued was already void as it was received by the BIR on April 21, 2010, which was already after the expiration of the three-year assessment period for 2006, which was on April 16, 2010.
“Considering that the First Waiver is void, the eight subsequent waivers are also void because there was no period to extend at the time these were all executed as the period to assess has already expired on April 16, 2010,” the decision read.
“Since the waivers executed by petitioner are void, the deficiency income tax assessment for taxable year 2006 is likewise void for having been issued beyond the three-year prescriptive period mandated by law,” it added.
Section 203 of the National Income Revenue Code (NIRC) states that internal revenue taxes of a taxpayer must be assessed within three years after the last day of filing of income tax returns.
However, Section 222(b) of the NIRC provided that assessment period for the collection of taxes may be extended by both parties through an agreement before the lapse of the prescribed period.
RSB is being assessed for deficiency income tax from disallowed deductions from alleged bad debt write-offs of P87.83-million.
The Final Assessment Notice, on the other hand, was only issued on Jan. 16, 2012 or almost five years since the bank filed its corporate income tax return due to the nine waivers issued for the assessment period extension.
For its part, the BIR said RSB should be barred from assailing the assessment due to the nine waivers executed and the bank has previously filed protests but never raised the issue on the validity of the waivers. It also claimed that the assessment has legal and factual basis.
“Nevertheless, petitioner counters that the First Waiver executed on April 13, 2010 is null and void for being belatedly accepted by respondent on April 21, 2010. As a consequence, the period to assess was not validly extended. We agree with petitioner,” the decision read.
The decision was concurred in by Justices Ramon G. Del Rosario and Cielito N. Mindaro-Grulla. — Vann Marlo M. Villegas

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