GOMEZ

CASE NO. 591-A

Issuance of Formal Assessment Notice (FAN) and Letter of Demand
PNZ Marketing v. CIR
CTA Case No. 5726, December 14, 2001

FACTS: BIR sent PNZ Marketing (Petitioner) assessment notice for

alleged income tax deficiency for the year 1994, based on adjustments of
Petitioner’s income; in the said notice, only a breakdown of the alleged
adjustment of income was shown by the BIR and no basis as to law and
pertinent regulations. Petitioner then filed a protest but went
unheeded. Thus, this present petition.

ISSUE: Whether or not the assessment made by the BIR is void for
having no legal or regulatory basis to support it.

RULING: Yes but this was CURED. The assessment notice, while
vague at first glance is subsequently cured by the demand letter
which shows the legal and factual basis relied upon by the BIR in
issuing the assessment. The demand letter, as thus worded contains
the reasons why a deficiency income tax assessment was issued against
the Petitioner.

If the assessment notice is deemed insufficient insofar as compliance

with Section 228 (protesting of assessment) of the Tax Code is concerned,
such insufficiency can be cured, if the demand letter can show the legal
and factual bases relied upon in the issuance of the assessment which
the assessment notice failed to detail.

The rule requiring the BIR to inform the taxpayer in writing of the laws
and the facts on which the assessment is made runs parallel to the due
process clause for it is believed that it is only through a detailed
appraisal of its basis that the taxpayer may be able to dispute the
imposition or agree with it.