G.R. No. 183408 - COMMISSIONER OF INTERNAL REVENUE, V. LANCASTER PHILIPPINES, INC..D E C I S I O N - Supreme Court E-Library

Ruling

Accordingly, respondent is ORDERED to CANCEL and WITHDRAW the deficiency income tax assessment issued against petitioner under Formal Letter of Demand and Audit Result/Assessment Notice No. LTAID II IT-98-00007 dated October 11, 2002, in the amount of P6,466,065.50 , covering the fiscal year from April 1, 1998 to March 31,1999. [20] The CIR moved [21] but failed to obtain reconsideration of the CTA Division ruling. [22] Aggrieved, the CIR sought recourse [23] from the CTA En Banc to seek a reversal of the decision and the resolution of the CTA Division. However, the CTA En Banc found no reversible error in the CTA Division's ruling, thus, it affirmed the cancellation of the assessment against Lancaster. The dispositive portion of the decision of the CTA En Banc states: WHEREFORE , premises considered, the present Petition for Review is hereby DENIED DUE COURSE , and, accordingly DISMISSED for lack of merit. [24] The CTA En Banc likewise denied [25] the motion for reconsideration from its Decision, Hence, this petition. The CIR assigns the following errors as committed by the CTA En Banc : I. THE COURT OF TAX APPEALS EN BANC ERRED IN HOLDING THAT PETITIONER'S REVENUE OFFICERS EXCEEDED THEIR AUTHORITY TO INVESTIGATE THE PERIOD NOT COVERED BY THEIR LETTER OF AUTHORITY. II. THE COURT OF TAX APPEALS EN BANC ERRED IN ORDERING PETITIONER TO CANCEL AND WITHDRAW THE DEFICIENCY ASSESSMENT ISSUED AGAINST RESPONDENT. [26] THE COURT'S RULING We deny the petition. I. The CTA EN BANC did not err when it ruled that the BIR revenue officers had exceeded their authority. To support its first assignment of error, the CIR argues that the revenue officers did not exceed their authority when, upon examination (of the Lancaster's books of accounts and other accounting records), they verified that Lancaster made purchases for February and March of 1998, which purchases were not declared in the latters fiscal year from 1 April 1997 to 31 March 1998. Additionally, the CIR posits that Lancaster did not raise the issue on the scope of authority of the revenue examiners at any stage of the proceedings before the CTA and, consequently, the CTA had no jurisdiction to rule on said issue. On both counts, the CIR is mistaken. A. The Jurisdiction of the CTA Preliminarily, we shall take up the CTA's jurisdiction to rule on the issue of the scope of authority of the revenue officers to conduct the examination of Lancaster's books of accounts and accounting records. The law vesting unto the CTA its jurisdiction is Section 7 of Republic Act No. 1125 (R.A. No. 1125) , [27] which in part provides: Section 7. Jurisdiction . - The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal, as herein provided: (1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the National Internal Revenue Cod