Respondent filed before the CTA Division a petition for review of petitioner’s Final Decision on Disputed Assessment (FDDA) showing deficiency VAT for 2007, where there was a finding of underdeclaration of more than 30% of its declared VAT sales. In its 02 April 2014 Decision, the CTA Division ruled that the VAT assessment had prescribed and consequently deemed invalid because petitioner failed to present evidence regarding its allegation of fraud or falsity in the returns.
Whether or not a false return may be presumed.
YES. When there is a showing that a taxpayer has substantially underdeclared its sales, receipts or income, there is a presumption that it has filed a false return. As such, the CIR need not immediately present evidence to support the falsity of the return, unless the presumption has been overcome.