The Court of Tax Appeals (CTA) has declared that the power of the commissioner of the Bureau of Internal Revenue (BIR) to enter into a compromise agreement with taxpayers for the settlement of the latter’s deficiency taxes is not absolute.
According to CTA, this discretionary power granted to the revenue chief under Section 204 of the Tax Code “cannot be superior over the judicial review of the court’s.”
“It is subject to the determination by the courts whether it is within the parameter set by law,” it added.
The court’s Third Division issued the ruling after the office of the commissioner disapproved the compromise settlement entered by the New Farmer’s Plaza (NFP) of Araneta Center, Cubao, Quezon City with the Quezon City revenue region.
Court records showed NFP had already made partial payment to settle the deficiency income and value assessments incurred in 2006.
The BIR argued that the CTA has no jurisdiction over the case as the taxpayer had already paid a portion of the P111-million deficiency assessment.
The resolution penned by Associate Justice Maria Belen Ringpis-Liban stated that “no such unlimited power may be validly granted to any officer of the government except perhaps in cases of national emergency.”
The decision also noted that the whole deficiency assessment was invalid as it violated the rights of the NFP to due process by sending the final letter demand (FLD) to settle the tax liabilities without giving it the opportunity to answer first the preliminary assessment notice.