Allied Banking Corporation vs Commissioner of Internal Revenue
Taxation – Exception to the Rules of Procedure Regarding Protest and Appeal
In April 2004, the Bureau of Internal Revenue (BIR) issued a preliminary assessment notice (PAN) to Allied Banking Corporation (ABC) demanding payment of P50 million in taxes. ABC then filed a protest in May 2004. In July 2004, the BIR issued a formal assessment notice (FAN). The FAN included a formal demand as well as this phrase:
This is our final decision based on investigation. If you disagree, you may appeal this final decision within thirty (30) days from receipt hereof, otherwise said deficiency tax assessment shall become final, executory and demandable.
ABC then appealed the FAN with the Court of Tax Appeals (CTA). The Commissioner of Internal Revenue (CIR) then filed a motion to dismiss on the ground that ABC did not exhaust all administrative remedies for failing to file a protest against the FAN.
ISSUE: Whether or not the CIR is correct.
HELD: No. It is true that a FAN is not appealable with the CTA. However, this case holds an exception. The wordings of the FAN issued by the CIR made it appear that the FAN is actually the CIR’s final decision. It even advised ABC to file an appeal instead of filing a protest. ABC cannot therefore be faulted for filing an appeal with the CTA instead of filing a protest with the CIR. The CIR as well as his duly authorized representative must indicate clearly and unequivocally to the taxpayer whether an action constitutes a final determination on a disputed assessment. Words must be carefully chosen in order to avoid any confusion that could adversely affect the rights and interest of the taxpayer.
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