FITNESS BY DESIGN VS CIR

G.R. No. 177982 October 17, 2008

On March 17, 2004, CIR assessed petitioner for deficiency income taxes for the tax year
1995. etitioner protested the assessment on the !ro"nd that it #as iss"ed $eyond the
three%year prescripti&e period "nder 'ection 20( of the )ax Code.
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*dditiona++y, petitioner
c+aimed that since it #as incorporated on+y on May (0, 1995, there #as no $asis to ass"me
that it had a+ready earned income for the tax year 1995. On ,e$r"ary 1, 2005, respondent
iss"ed a #arrant of distraint and-or +e&y a!ainst petitioner,
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dra#in! petitioner to fi+e on March
1, 2005 a etition for Re&ie# $efore the Co"rt of )ax *ppea+s .C)*/ $efore #hich it
reiterated its defense of prescription.
In his *ns#er,
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respondent a++e!ed that the ri!ht of the respondent to assess petitioner for
deficiency income tax, 1*) and 2oc"mentary 'tamp )ax for the year 1995 has not
prescri$ed p"rs"ant to 'ection 222.a/ of the 1997 )ax Code. etitioner3s 1995 Income )ax
Ret"rn .I)R/ fi+ed on *pri+ 11, 1990 #as fa+se and fra"d"+ent for its de+i$erate fai+"re to
dec+are its tr"e sa+es. In&esti!ation $y the re&en"e officers of the respondent disc+osed that it
has $een operatin!-doin! $"siness and had sa+es operations for the year 1995 #hich it fai+ed
to report in its 1995 I)R. 4ence, for fa!"re to f!e a V#T ret"r$ a$% for f!$& a fra"%"!e$t
$co'e ta( ret"r$ for t)e *ear 199+, t)e corre,-o$%$& ta(e, 'a* be a,,e,,e% at a$*
t'e .t)$ te$ /100 *ear, after t)e %,co1er* of ,"c) o',,o$ or fra"%p"rs"ant to
'ection 222.a/ of the 1997 )ax Code.
)he .5IR/ in fact fi+ed on March 10, 2005 a crimina+ comp+aint $efore the 2epartment of
6"stice a!ainst petitioner for &io+ation of the pro&isions of 7IRC co&erin! the taxa$+e year
1995.8 etitioner imp"!ns the manner in #hich the doc"ments in 9"estion reached the 5IR,
'a$+an, petitioner3s former acco"ntant, ha&in! a++e!ed+y s"$mitted them to the 5IR #itho"t
its .petitioner3s/ consent.
etitioner3s Motion for Reconsideration
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of the C)* Reso+"tion of 6an"ary 15, 2007 #as
denied,
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hence, the present etition for Certiorari
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#hich imp"tes !ra&e a$"se of discretion
to the C)*
ISS2ES3
1. Whether or not the mode of acquiring the documents which are the bases of
the deficiency tax assessments by the BIR without petitioners consent was
illegal.
2. Whether or not petitioners constitutional right to cross examine the witness
against them was iolated.
R24ING3
1. etitioner imp"!ns the manner in #hich the doc"ments in 9"estion reached the 5IR,
'a$+an ha&in! a++e!ed+y s"$mitted them to the 5IR #itho"t its .petitioner3s/ consent.
etitioner3s +ac: of consent does not, ho#e&er, imp+y that the 5IR o$tained them
i++e!a++y or that the information recei&ed is fa+se or ma+icio"s. 7or does the +ac: of
consent prec+"de the 5IR from assessin! deficiency taxes on petitioner $ased on the
doc"ments. )he +a# th"s a++o#s the 5IR access to a++ re+e&ant or materia+ records
and data in the person of the taxpayer,
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and the 5IR can accept doc"ments #hich
cannot $e admitted in a ;"dicia+ proceedin! #here the R"+es of Co"rt are strict+y
o$ser&ed.
((
)o re9"ire the consent of the taxpayer #o"+d defeat the intent of the +a#
to he+p the 5IR assess and co++ect the correct amo"nt of taxes. rec+"de
2. etitioner3s in&ocation of the ri!hts of an acc"sed in a crimina+ prosec"tion to cross
examine the #itness a!ainst him and to ha&e comp"+sory process iss"ed to sec"re
the attendance of #itnesses and the prod"ction of other e&idence in his $eha+f does
not +ie. C)* Case 7o. 7100 is not a crimina+ prosec"tion, and e&en !rantin! that it is
re+ated to I.'. 7o. 2005%20(, the respondents in the +atter proceedin! are the officers
and acco"ntant of petitioner%corporation, not petitioner. ,rom the comp+aint and
s"pportin! affida&its in I.'. 7o. 2005%20(, 'a$+an does not e&en appear to $e a
#itness a!ainst the respondents therein.
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