Mabel Elevator Co. v. Commissioner

2 B.T.A. 517, 1925 BTA LEXIS 2371

• Court: United States Board of Tax Appeals
• Decided: September 8, 1925
• Docket: Docket No. 1110.
• Status: Published

Opinion

OPINION.

Phillips:

On October 29, 1918, taxpayer filed a return of its income for the period from August 1, 1917, to July 31, 1918. Thereafter the Eevenue Act of 1918 was passed, affecting a part of the year for which such return had been filed and subsequently on April 21, 1919, taxpayer filed a second return for this same period, apparently for the purpose of complying with the provisions of that Act. Such second return was required by the 1918 Act if taxpayer was correct in filing its return on the basis of a fiscal year ending July 31,1918.

Section 277(a) (2) of the Kevenue Act of 1924 provides that the amount of income or profits taxes imposed by “ the Revenue Act of 1917, the Revenue Act of 1918, and by any such Act as amended, shall be assessed within five years after the return was filed.” The deficiency letter from which this appeal was taken was mailed to the taxpayer more than five years after the return was filed on April 21, 1919, and the limitation of time within which taxes must be assessed had expired.

The Commissioner urges two contentions upon which he relies to avoid this limitation:

(1) It appears that on August 12, 1921, taxpayer filed what purported to be an amended return for the period from August 1, 1917, to July 31, 1918. It has already been held by this Board that the filing of an amended return does not toll the period of limitations set out in section 277 (a) (2) of the Revenue Act of 1924. Appeal of National Refining Co. of Ohio, 1 B. T. A. 236.

(2) It is urged that since the return filed by the taxpayer was made upon a fiscal year basis, while the law required a return upon a calendar year basis, the return filed was not the return required by the law and could not operate to start running the statutory' period of limitations. With this we can not agree. The return filed purported to be made in accordance with the law; it purported to and did include the income of the taxpayer for the period in question. In the absence of any evidence or claim that such return was false or fraudulent with intent to evade tax, it became the duty of the Commissioner to determine, within the time provided by law, whether or not such return was erroneous in any respect.

There can be no doubt that such limitations are placed on assessments for the purpose of assuring the taxpayer, who has made an honest return, that after such period his tax liability will not .be reopened; otherwise the business of the country would always have before it the threat of additional taxes against the income of years long past whenever a new theory for interpreting the tax law or for the application of accounting principles occurred to the taxing authorities. If the limitation can be avoided on the plea that the return filed was not such a return as is required by law, although filed in good faith, there is no such assurance for the taxpayer and the limitation becomes of doubtful value at least. If the statute requires any interpretation great weight must be given to the purpose which it was obviously intended to accomplish.

Reaching 'the conclusion that we do, it is not necessary to consider whether 'taxpayer was entitled to make and file its return for the period in question on the basis of a fiscal year ending July 31.

AeuNdell not participating.