Aznar vs. Court of Tax Appeals GR No. 20569, 23 August 19 !

"a#ts$ Petitioner, as administrator of the estate of the deceased, Matias H. Aznar, seeks a review and nullification of the decision of the Court of Tax Appeals orderin the petitioner to pa! the overnment the sum of P""#,$%&.## representin deficienc! income taxes for the !ears &%'$ to &%(&. An investi ation )! the Commissioner of *nternal +evenue ,C*+- ascertained the assets and lia)ilities of the taxpa!er and it was discovered that from &%'$ to &%(&, his net worth had increased ever! !ear, which increases in net worth was ver! much more than the income reported durin said !ears. The findin s clearl! indicated that the taxpa!er did not declare correctl! the income reported in his income tax returns for the aforesaid !ears. Petitioner avers that accordin to the .*+C, the ri ht of the C*+ to assess deficienc! income taxes of the late Aznar for the !ears &%'$, &%'#, and &%'/ had alread! prescri)ed at the time the assessment was made on .ovem)er "/, &%("0 there )ein a five !ear limitation upon assessment and collection from the filin of the returns. Meanwhile, respondents )elieve that the prescription period in the case at )ar that is applica)le is under 1ec. 22" of the .*+C which provides that3 4,a- *n the case of a false or fraudulent return with intent to evade tax or of a failure to file a return, the tax ma! )e assessed, or a proceedin in court for the collection of such tax ma! )e )e un without assessment, at an! time within ten !ears after the discover! of the falsit!, fraud or omission4. Petitioner ar ues said provision does not appl! )ecause the taxpa!er did not file false and fraudulent returns with intent to evade tax.

%ssue$ 5hether or not the deceased Aznar filed false or fraudulent income tax returns and su)se6uentl!, whether the action has not prescri)ed. &el'$ The petition is without merit.

The respondent CTA concluded that the very "substantial under declarations of income for six consecutive years eloquently demonstrate the falsity or fraudulence of the income tax returns with an intent to evade the payment of tax." The ordinary period of prescription of 5 years within which to assess tax liabilities under Sec. 33 of the !"#C should be applicable to normal circumstances$ but whenever the %overnment is placed at a disadvanta%e so as to prevent its lawful a%ents from proper assessment of tax liabilities due to false returns$ fraudulent return intended to evade payment of tax$ or failure to file returns$ the period of ten years from the time of the discovery of the falsity$ fraud or omission even seems to be inadequate. There bein% undoubtedly false tax returns in this case$ &e affirm the conclusion of the respondent Court of Tax Appeals that Sec. 33' (a) of the !"#C should apply and that the period of ten years within which to assess petitioner*s tax liability had not expired at the time said assessment was made