Barcelon, Roxas Securities Inc. v CIR; G.R. No. 157064; 07 Aug 2006

in Legal Chyme by

After an audit investigation conducted by the BIR, respondent Commissioner issued an assessment for deficiency income tax arising from the disallowance of the item on salaries, bonuses and allowances as part of the deductible business expense since petitioner failed to subject the same to withholding taxes. This assessment was covered by a Formal Assessment Notice dated 01 February 1991 which, respondent alleges, was sent to petitioner through registered mail on 06 February 1991.

Whether or not respondent’s right to assess and collect petitioner’s alleged deficiency income tax is barred by prescription.

YES. An assessment is made within the prescriptive period if notice to this effect is released, mailed or sent by the CIR to the taxpayer within said period. Receipt thereof by the taxpayer within the prescriptive period is not necessary. The rule, however, does not dispense with the requirement that the taxpayer should actually receive, even beyond the prescriptive period, the assessment notice which was timely released, mailed and sent.

If the taxpayer denies having received an assessment from the BIR, it is incumbent upon the latter to prove by competent evidence that such notice was indeed received by the addressee. The onus probandi was shifted to respondent to prove by contrary evidence that the petitioner received the assessment in the due course of mail.

In the instant case, respondent utterly failed to discharge this duty. No substantial evidence was ever presented to prove that the assessment notice or other supposed notices subsequent thereto were in fact issued or sent to the taxpayer.

Consequently, the right of the government to assess and collect the alleged deficiency tax is barred by prescription.

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