Assessment against Pedro Ty Belizar

October 23, 1959 BIR RULING NO. 527-59 The Regional Director B.I.R. Regional District No. 7 Cebu City S i r : This is in connection with the proposed assessment against Mr. Pedro Ty Belizar of Borongan, Samar as deficiency percentage tax and surcharge, documentary stamp tax and compromise. cdtech The Court of Tax Appeals in the case of Felicidad Samson vs. Collector of Internal Revenue, CTA Case No. 232 dated June 30, 1958, stated as follows: ". . . it should be noted that the 'estimate' considered as office policy of the Bureau and on which the assessment in question is entirely based has not been shown by any data, statistics or even simple explanation to be a reasonable, if not a correct, estimate of gross receipts obtained by common carriers. So many vital and relevant questions remain unanswered to enable this Court to determine whether such 'estimate' should apply to petitioner herein. . . ." The proposed assessment is based on a mere estimate the basis of which is vague. No explanation is given as to how the average receipts of P50.00 was arrived at. It also appears from the records of this case that the taxpayer has been keeping books of accounts during the period in question. To justify the proposed assessment which is based on mere estimates it is necessary to prove that the entries in the books of accounts are fraudulent. It is suggested that a survey of the conditions of the trucks and the daily gross receipts of other operators in the same locality for the same period be made in order to have a basis for our assessment. As regards the proposed assessment of the deficiency documentary stamp tax against the abovenamed taxpayer, you are hereby instructed to cause to be ascertained definitely the number of receipts or bills of lading issued during the period and assess the documentary stamp tax due thereon in accordance with section 227 of the Tax Code and section 121 of Regulations 26 of the Department of Finance, the pertinent portion of which is quoted hereunder as follows: "SEC. 121. Basis of the tax and affixtures of stamps . . . . Unless the bill of lading states that the goods are worth P5 or less, it must be held that the tax is due, and internal revenue officers will see to it that the tax is paid in all cases where the bill of lading does not state that the shipment is worth P5 or less. . . ." Very truly yours, MISAEL P. VERA Deputy Commissioner of Internal Revenue