BIR Ruling

April 5, 1973 Miss Filomena Malubay Mati Copra Mati, Davao Oriental M a d a m : This refers to your telegram to the Honorable, the Secretary of Finance requesting information whether the Revenue District Officer thereat is authorized to order the verification of inventories annually submitted by a businessman. In reply, I have the honor to inform you that inventories filed by taxpayers with the Bureau of Internal Revenue in pursuance of Section 13 of Revenue Regulations No. V-1, otherwise known as the Bookkeeping Regulations, form part of the accounting records of the taxpayers. Thus, considering that under Section 337 of the Tax Code, all books of accounts, including subsidiary books, and other accounting records, of corporations, partnerships or persons shall be subject to examination and inspection only once in a taxable year during the five-year period within which they are to be preserved, except in cases of fraud, irregularity or mistake as determined by the Commissioner of Internal Revenue or unless the taxpayer requests otherwise, the verification of inventories cannot be separately and independently conducted by internal revenue officers without violating the provisions of Section 337 of the Tax Code. (BIR Ruling No. 72-005, dated March 7, 1972). In view thereof, we have on even date instructed the Revenue District Officer thereat to refrain from conducting separate verification of inventories submitted by taxpayers. acd Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue