By Vann Marlo M. Villegas
Reporter
THE Court of Tax Appeals (CTA) affirmed the cancellation of the P1.73 billion alleged tax deficiencies of real estate firm Fort 1 Global City Center, Inc.
In a six-page resolution on Jan. 23, the court’s second division denied for lack of merit the motion for reconsideration of the Bureau of Internal Revenue (BIR).
The court reiterated that the bureau did not comply with Section 3.1.4 of Revenue Regulation No. 12-99 on the personal service of assessment notices for 2009 and 2012.
“While it is true that some of the BIR notices appear to have been received by the people named therein, however, no statement regarding their designation and authority to act for and in behalf of petitioner were mentioned by respondent,” the court said.
It noted that “substantial irregularities” in the alleged personal service of the notices show its failure to comply with laws and regulations and also denies the taxpayer’s due process.
“Accordingly, this Court correctly held that no valid assessment was issued by respondent as petitioner did not receive the same. And since an invalid assessment bears no valid fruit, the assessments and the FDDA [final decision on disputed assessment] issued against petitioner for taxable years 2009 and 2012 should, therefore, be cancelled for not properly observing petitioner’s right to due process of law,” it said.
The court in September last year granted the petition of Fort 1, canceling the BIR’s tax assessments against it worth P134.1 million and P1.6 billion for 2012 and 2009, respectively, as the bureau delivered the notices to different address and was received by individuals.
However, the BIR failed to present evidence that the recipient of the notices were Fort 1’s authorized representatives.
In the motion for reconsideration, the BIR said the petitioner is barred from questioning the authority of those who received the assessments as the issue was never raised in the administrative level and it allowed the taxpayer to substantiate its contentions before the case was brought to the court.
The court, on the other hand, said the Revised Rules of CTA provided the court “may not limit itself to the issues stipulated by the parties but may also rule upon related issues necessary to achieve an orderly disposition of the case.”
It also cited a previous ruling of the Supreme Court that the appellate court may take into consideration issues the parties did not raise or was ignored by the lower court.
The resolution was penned by Associate Justice Cielito N. Mindaro-Grulla and concurred in by Associate Justices Juanito C. Castañeda, Jr. and Jean Marie A. Baacorro-Villena.
