GR 33870; (February, 1932) (Digest)
G.R. No. L-33870; February 23, 1932
In re Estate of the deceased Diego de la Viña. THE COLLECTOR OF INTERNAL REVENUE, petitioner-appellant, vs. ESPIRIDION VILLEGAS, administrator-appellee.
FACTS
The administrator of the estate of Diego de la Viña filed an income tax return for the year 1925. In 1929, auditors from the Bureau of Internal Revenue discovered that the return was erroneous and false because it failed to report the sale of real property and the resulting profit of P234,340. The Collector of Internal Revenue assessed a deficiency income tax of P18,420.93 against the estate and filed a motion in the testamentary proceedings to compel payment. The Court of First Instance denied the motion, ruling that the right to collect the tax had prescribed under Section 9(a) of Act No. 2833 , which the court interpreted as requiring assessment and collection within three years from the date the return was due or filed.
ISSUE
Whether the right of the Collector of Internal Revenue to collect the assessed income tax had prescribed.
RULING
No. The Supreme Court reversed the order of the lower court. The three-year period prescribed in Section 9(a) of Act No. 2833 refers to the time within which the Collector must discover erroneous, false, or fraudulent returns and make a summary assessment. It is not a limitation on the government’s right to collect the tax by judicial action. The provision is similar to the United States Revenue Act of 1916, and federal court interpretations hold that such a limitation applies only to summary administrative proceedings, not to plenary suits for collection. Therefore, the government’s right to collect the tax through court action had not prescribed. The estate administrator was ordered to pay the tax with interest.
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