G.R. No. 177982 October 17, 2008
CARPIO MORALES, J.
Lessons Applicable: BIR power to gather information without consent
Laws Applicable:
FACTS:
- March 17, 2004: CIR assessed Fitness by Design Inc. for deficiency Income Taxes for the year of 1995 for P 10,647, 529.69
- February 1, 2005: CIR issued a warrant of distraint and levy against petitioner which prompted petitioner to file a Petition for Review before the CTA where he alleged his defense of prescription based on Sec. 203 of the Tax Code.
- CIR answer: Tax return was false and fraudulent for deliberately failing to declare its true sales of P 7,156,336.08 and failure to file a VAT return for it. Since petitioner failed to file a protest, it is subject to either distraint or levy. Moreover, it cited Sec. 222 (a) of 1997 Tax Code where false and fraudulent return with intent to evade tax or failure to file a return prescribe 10 years after the discovery of the falsity, fraud or omission.
- March 10, 2005: BIR filed a criminal complaint before the DOJ against the officers and accountant of petitioner for violation against the 1977 NIRC.
- During the preliminary hearing on the issue of prescription, petitioner's former bookkeeper attested that his former colleague, CPA Sablan, illegally took custody of accounting records and turned them over to the BIR.
- Petitioner then requested a subpoena ad testificandum for Sablan who failed to appear.
- CTA: Denied the motion for issuance of subpoena and disallowed the submission of written interrogatories to Sablan who is NOT a party to the case nor was his testimony relevant. It also violates Section 2 of Republic Act No. 2338, as implemented by Section 12 of Finance Department Order No. 46-66, proscribing the revelation of identities of informers of violations of internal revenue laws, except when the information is proven to be malicious or false. Moreover, the subpoena is NOT needed to obtain affidavit of the informer.
HELD: YES.
- Sec. 5 of the tax code provides that the BIR is authorized to obtain from any person other than the person whose internal revenue tax liability is subject to audit or investigation and can even summon any person having possession, custody or care of the books of accountants and other accounting records containing entries relating to the business of the person liable for tax. This includes even those which cannot be admitted in a judicial proceeding where the Rules of Court are strictly observed. CTA case is not a criminal prosecution where he can cross examine the witness against him. CTA can enforce its order by citing them for indirect contempt.