COMMISSIONER OF INTERNAL REVENUE, vs. COURT OF APPEALS, CITYTRUST BANKING CORPORATION and COURT OF TAX APPEALS.
- G.R. Number: G.R. No. 106611
- Promulgated: 1994-07-21
- Ponente: Regalado, J.
Doctrine
To avoid multiplicity of suits and unnecessary expense, issues on a taxpayer's refund claim and the Government's deficiency assessment should, when appropriate, be resolved jointly in a single proceeding.
A taxpayer's claim for refund may be barred by prescription and thus properly denied if the claim pertains to a prescribed taxable year (here, 1983).
The trial court should receive all relevant evidence and determine the correct tax liability as part of a comprehensive adjudication that binds both taxpayer and the Government.
Facts
CTA Case No. 4099 ordered CIR to grant Citytrust a refund of P13,314,506.14 for overpaid income taxes for 1984–1985, but denied the refundable amount claimed for 1983 on the ground of prescription.
The Court of Appeals affirmed the tax court judgment in CA-G.R. SP No. 26839, which Citytrust/CIR thereafter elevated to the Supreme Court by petition for review.
On 24 June 1991 CIR filed a manifestation and motion in the tax court praying suspension of proceedings because BIR's Tax Credit/Refund Division was processing Citytrust’s claim and awaited confirmation receipts.
The Supreme Court set aside the Court of Appeals judgment and remanded the case to the Court of Tax Appeals for further proceedings, including reception of evidence and appropriate disposition consistent with the Court's adjudgment.
Issues
Whether petitioner Citytrust is entitled to a refund of the amount claimed in its 1983 income tax return.
Whether the deficiency tax assessment against Citytrust should be resolved jointly with its claim for tax refund in a single proceeding.
Whether the Court of Appeals' judgment should be set aside and the case remanded to the Court of Tax Appeals for further proceedings.
Ruling
Citytrust is entitled to a refund only for overpaid income taxes for 1984 and 1985; the refundable amount shown in its 1983 return is denied on the ground of prescription.
The Court held that the deficiency tax assessment should be resolved together with the refund claim to determine in a single proceeding the true amount of tax due or refundable.
The judgment of the Court of Appeals in CA-G.R. SP No. 26839 is SET ASIDE and the case is REMANDED to the Court of Tax Appeals for reception of evidence and appropriate disposition not inconsistent with the Supreme Court's adjudgment.
Keywords
G.R. No. 106611, refund, overpaid income taxes, prescription, CTA Case No. 4099, CA-G.R. SP No. 26839, petition for review on certiorari, Bureau of Internal Revenue (BIR), income tax overpayments, prescriptive period, Sections 292 and 295 National Internal Revenue Code of 1977, suspension of proceedings, jurisdiction, audit, tax credit, deficiency assessment, presumption of regularity, motion for reconsideration, outstanding unpaid deficiency income taxes, Demand/Assessment Notice No. FAS-1-84-003291-003296