FACTS:
Asian Transmission Corporation (ATC) is a manufacturing corporation that was subjected to an investigation by the Commissioner of Internal Revenue (CIR) for the taxable year 2002. The CIR issued a Preliminary Assessment Notice (PAN) to ATC.
ATC responded by executing "Waivers of the Defense of Prescription Under the Statute of Limitations of the National Internal Revenue Code" (Waivers), extending the three-year period for assessing deficiency taxes. These waivers were executed on various dates from September 8, 2004, to May 30, 2008.
Subsequently, ATC availed of the Tax Amnesty Program under Republic Act No. 9480. However, ATC received a Formal Letter of Demand from the CIR for deficiency withholding tax. ATC filed a Protest Letter but eventually received a Final Decision on Disputed Assessment, holding them liable to pay a deficiency tax for the taxable year 2002. In response, ATC filed an appeal letter/request for reconsideration with the CIR, which was denied.
ATC then brought the case to the Court of Tax Appeals (CTA) in Division. The CTA in Division ruled that the waivers executed by ATC were invalid due to defects caused by the Bureau of Internal Revenue (BIR), and thus did not extend the prescriptive period for assessing deficiency taxes.
The CIR filed a motion for reconsideration, which was denied by the CTA in Division. Subsequently, the CIR filed a petition for review with the CTA En Banc. The CTA En Banc reversed the decision of the CTA in Division, considering the waivers to be valid. The case was then remanded to the CTA in Division for further proceedings to determine the merits of ATC's petition seeking the cancellation of the deficiency tax assessments for the taxable year 2002.
ATC filed a motion for reconsideration and a supplemental motion for reconsideration before the CTA En Banc, but both were denied for lack of merit.
ISSUES:
- Whether the waivers executed by petitioner Asian Transmission Corporation (ATC) were invalid and did not operate to extend the three-year period of prescription to assess deficiency taxes for the calendar year 2002.
RULING:
- The Court of Tax Appeals En Banc (CTA En Banc) held that the waivers were valid and operated to toll or extend the three-year period of prescription to assess deficiency taxes for the calendar year 2002. The case was remanded to the CTA in Division for further proceedings to determine and rule on the merits of respondent's petition seeking the cancellation of the deficiency tax assessments.