The Court of Tax Appeals (CTA) has nullified the almost P4-million deficiency tax assessment of the Bureau of Internal Revenue (BIR) against a supplier of industrial equipment after the agency failed to follow the correct audit procedure.
The court’s third division stated that the letter of authority (LA) to investigate Reirckermann Philippines, Inc, of Pasig City was not changed when the case was transferred to another set of revenue officers as required under Revenue Memorandum Order 43-90, which implemented Section 13 of the Tax Code.
It said the law requires the issuance of a new LA whenever a case is reassigned to another set of the examiners.
The decision also noted that the reassignment order to examine the books of accounts of Reirckermann was issued by a revenue district officer who had no authority to sign the document.
The 19-page resolution penned by Associate Justice Maria Rowena Modesto-San Pedro pointed out that LAs shall be signed by the designated representatives of the BIR commissioner including regional directors and deputy commissioners.
The assessed tax liabilities covered income, value-added and expanded withholding taxes for 2006.