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Aznar vs. CTA - Case Digest

The administrator of the estate of the deceased Matias Aznar petitioned to nullify the CTA decision ordering payment of deficiency income tax for 1946-1951. The CIR investigated Aznar's tax returns and found substantial underdeclaration of income and increases in net worth not reported. The CIR assessed additional tax in 1952. The petitioner argued the 5-year period to assess had lapsed, but the CTA and Supreme Court found Aznar filed false returns with intent to evade tax, making the 10-year period under Section 332 applicable. The Supreme Court affirmed the CTA decision, concluding the 10-year period had not expired when the assessment was made due to Aznar's false tax returns.

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1K views

Aznar vs. CTA - Case Digest

The administrator of the estate of the deceased Matias Aznar petitioned to nullify the CTA decision ordering payment of deficiency income tax for 1946-1951. The CIR investigated Aznar's tax returns and found substantial underdeclaration of income and increases in net worth not reported. The CIR assessed additional tax in 1952. The petitioner argued the 5-year period to assess had lapsed, but the CTA and Supreme Court found Aznar filed false returns with intent to evade tax, making the 10-year period under Section 332 applicable. The Supreme Court affirmed the CTA decision, concluding the 10-year period had not expired when the assessment was made due to Aznar's false tax returns.

Uploaded by

Karen Mae Servan
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© © All Rights Reserved
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JOSE B.

AZNAR, in his capacity as Administrator Petitioner contended that the five year period from
of the Estate of the deceased, Matias H. the filing of returns wherein which the BIR can
Aznar, petitioner, make an assessment for the years 1946, 1947, and
vs. 1948 had already prescribed at the time the
COURT OF TAX APPEALS and COLLECTOR OF assessment was made on November 28, 1952.
INTERNAL REVENUE, respondents.
Respondent firmly believed that the prescription
G.R. No. L-20569 August 23, 1974 period of 10 years is applicable in this case
pursuant to Sec. 332 of the NIRC.

Petitioner argues that said provision does not


Facts:
apply because the taxpayer did not file false and
Petitioner Jose B. Aznar, the administrator of the fraudulent returns with intent to evade tax.
estate of the deceased Matias H. Aznar seeks for
Issue:
the review and nullification of the Decision of the
CTA ordering him to pay the sum of P227,691.77  WON the late Matias Aznar filed false or
representing the deficiency IT for the years 1946- fraudulent return with intent to evade tax
1951. or failed to file a return that would justify
application of extraordinary prescription.
Late Matias H. Aznar who died on May 18, 1958,
during his lifetime filed his ITRs on cash and
disbursement basis. The CIR doubted the veracity Ruling:
of the reported income of Matias as a wealthy
The petition is without merit.
man. An investigation by the Commissioner of
Internal Revenue (CIR) ascertained the assets and The CTA concluded that the very substantial
liabilities of the taxpayer and it was discovered under declarations of income for six consecutive
that from 1946 to 1951, his net worth had increased years eloquently demonstrate the falsity or
every year, which increases in net worth was very fraudulence of the income tax returns with an
much more than the income reported during said intent to evade the payment of tax.
years. The findings clearly indicated that the
The ordinary period of prescription of 5 years
taxpayer did not declare correctly the income
within which to assess tax liabilities under Sec.
reported in his income tax returns for the aforesaid
331 of the NIRC should be applicable to normal
years.
circumstances, but whenever the government is
Based on the findings, the Commisioner through a placed at a disadvantage so as to prevent its lawful
letter dated November 28, 1952, notified Matias of agents from proper assessment of tax liabilities
the assessed tax delinquency amounting to due to false returns, fraudulent return intended to
P723,032.66. On reinvestigation requested, the evade payment of tax, or failure to file returns, the
amount was reduced to P381,096.07. In period of ten years from the time of the discovery
determining the unreported income, the of the falsity, fraud or omission even seems to be
respondent Commissioner of Internal Revenue inadequate.
resorted to the networth method.
There being undoubtedly false tax returns in this
CIR placed the properties of Matias H. Aznar case, the Court affirmed the conclusion of the
under distraint and levy to secure payment of the respondent Court of Tax Appeals that Sec. 332 (a)
deficiency income tax in question. Upon review, of the NIRC should apply and that the period of
the Supreme Court set aside the C.T.A. resolution ten years within which to assess petitioner's tax
and required the petitioner to deposit with the liability had not expired at the time said
Court of Tax Appeals the amount demanded by assessment was made.
the Commissioner of Internal Revenue for the
years 1949 to 1951 only.

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