CIR vs Asalus

Facts:

-CIR sent a notice of informal conference to asalus

-Assessed with VAT deficiency –PAN –beyond 3 years prescriptive period, included allegation of false
return

-sent FAN and Final decision on disputed assessment – all protest denied

-Asalus filed an action before the CTA division – it alleged that FAN and FDDA did not include
allegation of false return and CIR was not able to present a clear and convincing evidence in support
of the allegation of false return or intent to defraud the BIR in its tax returns

-CTA division and en banc rendered a decision in favor of Aslus

Ruling of the supreme court:

-The supreme court finds the petition meritorious

-The contention of Asalus that the CIR’s right to assess has already prescribed can not be
appreciated.

-The supreme court in explaining the difference between a false, fraudulent and omission of returns
made reference to the case of Aznar vs CTA.

-It explained that there is a false return should there be at least 30% of undeclaration.

-The fact that there exist at least a 30% deficiency serves a prima facie evidence that there was
indeed a false return and such prima facie evidence stands until controverted by Asalus – in which
they failed to disprove.

-Furtheremore, the defense of asalus that the FAN and the FDDA did not contain any allegation of
false return or fraud could not be appreciated since both the FAN made reference to the PAN and
the FDDA made reference to the FAN. The court held that there was susbstantial compliance in
informing asalus about the existence or allegation of false return.