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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 year1995. 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. 2*dditiona++y, petitionerc+aimed that since it #as incorporated on+y on May (0, 1995, there #as no $asis to ass"methat it had a+ready earned income for the tax year 1995. On e$r"ary 1, 2005, respondentiss"ed a #arrant of distraint and-or +e&y a!ainst petitioner,4dra#in! petitioner to fi+e on March1, 2005 a etition for Re&ie# $efore the Co"rt of )ax *ppea+s C)*/ $efore #hich itreiterated its defense of prescription.

In his *ns#er,respondent a++e!ed that theri!ht of the respondent to assess petitioner fordeficiency income tax, *) and oc"mentary 'tamp )ax for the year 1995 has notprescri$ed p"rs"ant to 'ection 222a/ of the 1997 )ax Code. etitioner3s 1995 Income )axRet"rn I)R/ fi+ed on *pri+ 11, 199 #as fa+se and fra"d"+ent for its de+i$erate fai+"re todec+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! $"siness and had sa+es operations for the year 1995 #hich it fai+edto report in its 1995 I)R. ence, for fa!"re to f!e a V#T ret"r$ 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 aee% at a$*t'e t)$ te$ /10 *ear after t)e %coer* of "c) o'o$ or fra"%p"rs"ant to'ection 222a/ of the 1997 )ax Code.

)he IR/ in fact fi+ed on March 10, 2005 a crimina+ comp+aint $efore the epartment of6"stice a!ainst petitioner for &io+ation of the pro&isions of IRC co&erin! the taxa$+e year1995.8 etitioner imp"!ns the manner in #hich the doc"ments in "estion reached the IR,'a$+an, petitioner3s former acco"ntant, ha&in! a++e!ed+y s"$mitted them to the IR #itho"tits petitioner3s/ consent.

etitioner3s Motion for Reconsideration24of the C)* Reso+"tion of 6an"ary 15, 2007 #asdenied,25hence, the present etition for Certiorari2#hich imp"tes !ra&e a$"se of discretionto the C)*

ISSES3

1. Whether or not the mode of acquiring the documents which are the bases ofthe deficiency tax assessments by the BIR without petitioners consent wasillegal.

2. Whether or not petitioners constitutional right to cross examine the witnessagainst them was iolated.

R4ING3

1. etitioner imp"!ns the manner in #hich the doc"ments in "estion reached the IR,'a$+an ha&in! a++e!ed+y s"$mitted them to the IR #itho"t its petitioner3s/ consent.etitioner3s +ac: of consent does not, ho#e&er, imp+y that the IR o$tained themi++e!a++y or that the information recei&ed is fa+se or ma+icio"s. or does the +ac: ofconsent prec+"de the IR from assessin! deficiency taxes on petitioner $ased on thedoc"ments. )he +a# th"s a++o#s the IR access to a++ re+e&ant or materia+ recordsand data in the person of the taxpayer, (2and the IR can accept doc"ments #hichcannot $e admitted in a ;"dicia+ proceedin! #here the R"+es of Co"rt are strict+y

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8/12/2019 34. Fitness by Design vs CIR - CD

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o$ser&ed.(()o re"ire the consent of the taxpayer #o"+d defeat the intent of the +a#to he+p the IR 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 crossexamine the #itness a!ainst him and to ha&e comp"+sory process iss"ed to sec"rethe attendance of #itnesses and the prod"ction of other e&idence in his $eha+f doesnot +ie. C)* Case o. 710 is not a crimina+ prosec"tion, and e&en !rantin! that it isre+ated to I.'. o. 2005%20(, the respondents in the +atter proceedin! are the officersand acco"ntant of petitioner%corporation, not petitioner. rom the comp+aint ands"pportin! affida&its in I.'. o. 2005%20(, 'a$+an does not e&en appear to $e a#itness a!ainst the respondents therein.(4

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