THE Court of Tax Appeals (CTA) denied for lack of merit the motion for reconsideration of the Bureau of Internal Revenue (BIR) over the cancellation of the alleged tax deficiency of Central Luzon Drug Corp. amounting to P1.15 billion.
In a five page-resolution on March 6, the CTA special third division reiterated that it is necessary to issue a Letter of Authority (LOA) for a designated revenue officer to assess a taxpayer for its alleged deficiency.
The appellate court said that the authority RO (Revenue Officer) Josa C. Gomez was issued only through a Memorandum of Assignment (MoA).
“The record is bereft of any showing that a valid LOA was issued by respondent or the concerned Revenue Regional Director in favor of RO Gomez for the latter to continue the examination of petitioner’s books of account or accounting records for potential tax liabilities for the relevant period,” the CTA ruled.
“Being a product of an unauthorized tax audit/examination, the subject assessment predicated upon the findings of RO Gomez should be deemed a complete nullity and without any legal consequence, thereby warranting its cancellation and withdrawal,” it added.
According to the Tax Code, a valid LOA issued by the BIR Commissioner or Regional Revenue Director is necessary for an RO to “legally conduct a verification/audit of a taxpayer for potential deficiency taxes.”
The CTA in November last year canceled the tax assessment of Central Luzon Drug Corp. for 2009 for being assessed by an unauthorized officer.
In the motion for reconsideration, the BIR said its right to due process was violated when the CTA ruled on whether the revenue officer was authorized to conduct examination of the corporation’s tax liabilities.
It also argued that the deficiency tax assessment of the company should be upheld because Revenue Memorandum Order Nos. 8-2006 and 62-2010 allow heads of investigation office to issue a MoA in cases of reassignment or resignation of previously assigned officers in the LOA.
The court said the revised rules of the CTA allow it “to resolve not only the issues brought forth by the parties, but also those related or interwoven with the issues raised by the parties and even those are necessary to pass upon in order to achieve an orderly disposition of the case before it.”
The decision was written by Associate Justice Esperanza R. Fabon-Victorino and concurred in by Associate Justice Ma. Belen M. Ringpis-Liban. — Vann Marlo M. Villegas
