The Court of Tax Appeals (CTA) has dismissed a tax evasion case filed against two Manila business executives who allegedly refusal to settle income tax debts amounting to more than P184 million over a decade ago.

Cleared of the criminal charges were Arturo Zapata and Jacob Valeriano, Jr. president and treasurer, respectively, of Cross Country Oil and Petroleum, of Binondo, Manila.

CTA's Third Division said the prosecutors of the Bureau of Internal Revenue (BIR) failed to establish beyond reasonable doubt that the accused willfully or deliberately neglected to pay the tax incurred in 2009.

In a 43-page decision, the court stressed that tax evasion connotes willful attempt not to pay the tax, a condition prescribed in the Tax Code.

The court also noted that the final assessment notice (FAN) and the final decision on disputed assessment (FDDA) sent to the taxpayers did not mention the exact amount of the tax liabilities, but only computations that could still be adjusted.

It said the BIR cannot proceed with tax collection without first establishing the exact amount owed by the taxpayers.

The court also agreed with the respondents' stand that they did not receive the FAN and FDDA sent through the postal system.

Associate Justice Erlinda Uy stated that the tax law requires a taxpayer to receive his or her assessment notice so that he or she may answer and present evidence.