FACTS:
Petitioner found respondent United Salvage and Towage (Phils.), Inc. (USTP) liable to pay, among others, deficiency expanded withholding tax (EWT) for taxable year 1994. A mere perusal of the FAN for the deficiency EWT for taxable year 1994 will show that other than a tabulation of the alleged deficiency taxes due, no further detail regarding the assessment was provided by petitioner. Only the resulting interest, surcharge and penalty were anchored with legal basis.
ISSUE(S):
Whether or not the EWT assessments issued against the respondent for taxable year 1994 were valid.
HELD:
NO. The law requires that the legal and factual bases of the assessment be stated in the formal letter of demand and assessment notice. Such cannot be presumed. The alleged “factual bases” in the advice, preliminary letter and “audit working papers” did not suffice. There was no going around the mandate of the law that the legal and factual bases of the assessment be stated in writing in the formal letter of demand accompanying the assessment notice.
