In Santos v. People of the Philippines and BIR, the Court of Tax Appeals (CTA) acquitted Santos from the criminal case of tax evasion and ruled that…

The question

In Santos v. People of the Philippines and BIR, the Court of Tax Appeals (CTA) acquitted Santos from the criminal case of tax evasion and ruled that failure to supply correct and accurate information must be fully established as a positive act or state of mind; it cannot be presumed nor attributed to mere inadvertent or negligent acts. Moreover, the CTA reiterated the doctrine in Yulivo Sons hardware v. Court of Tax Appeals (G.R. No. L- 13203), January 28, 1961, 1 SCRA 169) that mere understatement of a tax is not itself proof of fraud for the purpose of tax evasion. In the present case, Mr. A relied in good faith on the expertise of his lawyer in not declaring his income for that year. Therefore, he is not guilty of fraud. A corporation may change its taxable year to calendar or fiscal year in filing its annual income tax return, provided: (2011 Bar Question)

1. A.it seeks prior BIR approval of its proposed change in accounting period.
2. B.it simultaneously seeks BIR approval of its new accounting period.
3. C.it should change its accounting period two years prior to changing its taxable year.
4. D.its constitution and by-laws authorizes the change.

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