CTA nullifies R2.9-B tax assessment vs Erap

The full Court of Tax Appeals (CTA) has sustained the decision of one of its divisions nullifying the R2.9-billion deficiency income tax assessment for 1999 against former President and now Manila Mayor Joseph Ejercito Estrada.

The CTA said the collection case sought by the Bureau of Internal Revenue (BIR) was void because it did not give Estrada the opportunity to answer the alleged tax liabilities.

“Between the power of the state to tax and an individual's right to due process, the scale favors the right of taxpayer to due process,” the 21-page resolution read.

The BIR based its assessment on the decision of the Sandiganbayan finding the former president guilty of plunder as the real owner of the multi-million peso deposits at the erstwhile Equitable-PCI Bank under the name Jose Velarde.

Citing Section 228 of the Tax Code, the CTA stated “the taxpayers shall be informed in writing of the law and facts on which the assessment is made, otherwise, the assessment shall be void.”

It said to immediately proceed with tax collection without initially substantiating a valid assessment contravenes the principle in the administrative investigation “that taxpayers shall be able to present their case and adduce supporting evidence.”

It said the BIR cannot justify its assessment on the decision of the anti-graft court, adding that as a general rule the tax court cannot base its decision on contents of the records of other cases.

It also cited the decision of the Supreme Court that the CTA is not bound to take judicial notice of proceedings pending before another court.