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BIR loses appeal tax evasion case vs Pichay: P58.5M hike in net worth not proof of unreported income – CTA

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The Court of Tax Appeals has ruled against the appeal P19 million tax evasion suit filed by the Bureau of Internal Revenue against Surigao del Sur Rep. Prospero “Butch” Pichay.

In a 14-pager order penned by Associate Justice Esperanza Fabon-Victorino, the CTA affirmed its May and Augist 2018 resolutions denying BIR’s claim that Pichay, then chair of the Local Water Utilities Authority,cheated the government in his income tax declaration for 2009.

The BIR accused Pichay of not paying P18,667,975.34 for tax year 2009. This was based on the “net worth method” wherein the BIR cited the unexplained P58,496,797.94 increase in his net assets from 2008 to 2009 based on his statement of assets, liabilities and net worth (SALN).

The BIR said such spike in wealth could not be justified by Pichay’s annual income of P584,911.64 as LWUA chair.

The CTA, however, stressed that assessments must be based on actual facts and not on mere assumptions or presumptions.

“Petitioner merely assumed that income was paid to respondent which resulted in a significant increase in his assets. However, presumptions cannot by all measures or standards approximate direct evidence. Obviously, petitioner failed to consider that this is a criminal case, in which proof beyond reasonable doubt is required to sustain the indictment,” the CTA said.

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