The Court of Tax Appeals (CTA) has granted the petition of a Quiapo, Manila businessman not to pay the Bureau of Internal Revenue (BIR) more than P40-million deficiency taxes due to improper sending of a tax collection notice.

The court’s Third Division stated that Johnny King Jr. was not given the opportunity to answer and protest the Preliminary Assessment Notice (PAN), before receiving the Final Assessment Notice (FAN), or the demand to pay the debts.

The BIR insisted that the taxpayer received the PAN on Dec. 20, 2012.

The court, however, did not give credence to the BIR witnesses as they failed to present during the trial  the registry receipt issued by the Bureau of Post, or the registry return card signed by the taxpayer, or his duly authorized representative.

Associate Justice Belen Ringpis-Liban who wrote the decision said the sending of the collection letter to the taxpayer violated his constitutional right to due process pursuant to Section 228 of the Tax Code.

Quoting a Supreme Court resolution on similar case, Liban said “the sending of the PAN is but part of the due process requirement in the issuance of the deficiency tax assessment, and the absence of which renders nugatory any assessment made by the taxing authorities.”

The deficiency assessment issued to King covered income, Value-Added, and expanded withholding taxes for 2009. 

Source: Manila Bulletin (