The Court of Tax Appeals (CTA) has ordered the Zambales Electric Cooperative-1, Inc. (ZAMECO-1) to pay the Bureau of Internal Revenue (BIR) more than P8.5 million as deficiency tax for taxable year 2016. The amount may balloon to about P17 million since the CTA ordered ZAMECO-1 to pay surcharge and deficiency interest under Sections 248(A) and 249(B) of the National Internal Revenue Code of 1997, as amended.  The surcharge and deficiency interest were computed at P2,826.27 per day from Feb. 16, 2019 until fully paid. At the same time, the CTA – in line with its expanded jurisdiction under Republic Act No. 9282, authorized the BIR “to seize and distraint any goods, chattels, or effects, and the personal property, including stocks and other securities, debts, credits, bank accounts, and interests in and rights to personal property, and/ or to levy the real property, of petitioner (ZAMECO-1), in sufficient quantity to satisfy the taxes herein ordered to be paid, and the increments thereto incident to delinquency.” On Nov. 8, 2018, the BIR issued a Preliminary Assessment Notice (PAN) assessed ZAMECO-1's total deficiency income tax of P8,504,125.56 for taxable year 2016. After exhausting remedies, the cooperate filed a petition for review before the CTA.  The petition was raffled to the court’s first division. In its petition, ZAMECO-1 said it is not liable for deficiency income tax because it is exempted under Section 39 of Presidential Decree No. 269, law that creaed the National Electrification Administration (NEAP.  It said PD 269 states that "a cooperative shall be permanently exempt from paying income taxes." But the CTA disagreed.  It said that electric cooperatives registered with NEA are subject to income tax, insofar as those incomes derived from electric service operations and other sources such as interest income from bank deposits and yield or any other monetary benefit from bank deposits. "Petitoner, being an electric cooperative registered with the NEA, cannot claim exemption from taxation on its income from electric service operations and other sources," the CTA said. "To be sure, without any clear and convincing showing that respondent's (BIR) determination of the amount of taxable income to which income tax was imposed was erroneous, the subject income tax assessment must perforce be sustained," it added. The CTA also said: “… it must be emphasized that all presumptions are in favor of the correctness of tax assessments. The good faith of tax assessors and the validity of their actions are presumed. “And as a logical outgrowth of the presumption in favor of the validity of assessments, when such assessments are assailed, the burden of proof is upon the complaining party. “Petitioner (ZAMECO-1), however, failed to discharge the said burden, even when respondent did not cross examine petitioner's witness. In sum, the subject deficiency Income tax assessment stands. “Wherefore, in light of the foregoing considerations, the present Petition for Review is denied for lack of merit.” The 20-page decision was written by Associate Justice Catherine T. Manahan with the concurrence of Presiding Justice Roman G. Del Rosario.