Cedric Lee. INQUIRER FILE PHOTO
The Court of Tax Appeals (CTA) has granted provisional liberty to businessman Cedric Lee and his estranged wife Judy Gutierrez in connection with the P194.47-million tax evasion case filed by the Department of Justice (DOJ) last July.
Lee and Gutierrez paid P20,000 bail for each count of the four counts of tax evasion. Their co-accused John K. Ong posted bail ahead of them.
The tax court set their arraignment for Oct. 14.
Based on the charge sheet filed by the DOJ, Lee’s firm Izumo Contractors under declared its income by 1,602 percent from 2006 to 2009.
“The manifest underdeclaration is more than tenfold…thus, a prima facie case thereby exists against all the respondents,” the DOJ resolution stated.
Lee denied the allegation saying it was the company’s accountant who prepared its Income Tax Return (ITR).
But the DOJ said Lee’s “flimsy” defense “deserves minuscule if not nary a consideration.”
“No amount of delegation to an accountant or bookkeeper would extenuate any responsible officer of a corporation from the commission of any violation arising from such delegated act,” the DOJ said.
“Parenthetically, it is likewise quite ironic for the president of Izumo to merely feign personal knowledge of such important transactions involving the corporation in the guise that he is not an accountant,” the DOJ added.
On the other hand, the DOJ called as “lame” the defense of Gutierrez-Lee and Ong that their titles were “merely for purposes of incorporation of Izumo.”
The DOJ said their defense should best be threshed out in a full-blown trial.
“Their astute denial of any participation or involvement as responsible officers of Izumo, are at best, self-serving statements with no probative value,” the DOJ said.
Investigation against Izumo stemmed from a confidential information received by the BIR against tax evasion committed by Izumo. A letter of authority was issued by the BIR for the examination of its books of accounts and other accounting records.
Izumo declared P5.54 million in its ITR in 2006; P9.14 million in 2007; P21.34 million in 2008 and P40.20 million in 2009. Comparing it from the certifications from their clients, probers discovered that their income in 2006 is P94.33 million; P46.07 million in 2007; P30.83 million in 2008 and P131.49 million in 2009 with a total of P76,218-million.
But replies from clients of Izumo showed that Izumo received a total amount of P302.63 million in income payments.
Under Section 248 of the Tax Code, underdeclaration of taxable income by more than 30 percent is considered substantial and constitutes a prima facie case of fraud tantamount to tax evasion.