THE Court of Tax Appeals (CTA) has affirmed its ruling that canceled Titanium Corp.’s tax liabilities worth P9.22 million inclusive of interests for the taxable year 2011.
In a 26-page decision dated Feb. 13 and made public on Feb. 16, the CTA full court agreed with its third division that said the commissioner of internal revenue (CIR) did not afford the firm due process when it did not address its arguments in the final assessment notice.
“A party’s fundamental right to due process includes the right to be informed of the various issues involved in a proceeding and the reasons for the decision rendered by the quasi-judicial agency,” Associate Justice Lanee S. Cui-David said in the ruling.
The tax court said Titanium was left unaware of how its arguments disputing the tax assessment were considered.
In a 2020 resolution, the CTA Third Division voided the tax assessment representing the firm’s alleged deficiency income tax, value-added tax, extended withholding tax, withholding tax on compensation, and documentary stamp tax for 2011.
Citing Supreme Court jurisprudence, the tax court said the final decision on the disputed assessment must be canceled since revenue officers were not authorized through a new letter of authority to recommend the issuance of the decision.
The CIR argued that it duly notified the firm of the factual and legal basis of its issuance of the subject tax assessment. The official said the firm was able to file its protest but did not present any relevant documents to support its defenses against the deficiency tax findings.
The CTA disagreed, saying the final assessment only reiterated the same findings it said in its preliminary notice, without explaining why it rejected the firm’s arguments.
“It is true that the Commissioner is not obliged to accept the taxpayer’s explanations; however, when he or she rejects these explanations, he or she must give some reason for doing so,” the tax tribunal said.
“He or she must give the particular facts upon which his or her conclusions are based, and those facts must appear in the record.” — John Victor D. Ordoñez
