Mutual Lumber Co. v. Commissioner

16 T.C. 370

• Court: United States Tax Court
• Decided: February 19, 1951
• Docket: 6128
• Status: Published

Opinions

OPINION.

Mukdock, Judge:

The Commissioner notified the petitioner that he had disallowed its application for relief under section 722 for 1941 in the amount of $69,675.35. The only error assigned in the petition is the disallowance of the petitioner’s claim for refund of $69,675.35 of excess profits taxes for 1941. That “claim” was an application for relief under section 722. It is recognized by the parties that the Court has jurisdiction to consider the question of whether the Commissioner erred in rejecting the application for relief under section 722 and to decide whether or not the petitioner is entitled to any relief under that section.

The parties filed a stipulation at the hearing which contained L.e following paragraph:

The petitioner is not entitled to any relief under any of the provisions of section 722, I. R. C., and the assignment of error contained in paragraph 4 (a) of the petition in this proceeding is hereby waived by petitioner.

That portion of the stipulation removed from this case the only issue properly before the Court, and it, in such a situation, has but the duty to enter a decision holding that the petitioner is not entitled to any relief under section 722. Such an order will be entered and it will close the case.

Yet the petitioner, by a motion filed at the hearing, asks the Court to enter quite a different decision to the effect that there is an overpayment of excess profits taxes for 1941 in the amount of $858.76 and the refund thereof is not barred by the statute of limitations. The Commissioner first argued that a refund is barred by the statute of limitations but later that this Court has no jurisdiction as to the over-assessment. No issue involving any statute of limitations is raised in the petition. The only error relating to excess profits tax alleged in the petition is that based upon the application for relief under section 722 and that one has been waived. Thus, there is no assignment of error to support the decision which the petitioner seeks. Issues are raised by pleadings, not by motions, and the Court has nothing before it for decision such as the motion suggests. Rule 7, Rules of Practice before the Tax Court of the United States; Dixie Manufacturing Co., 1 B. T. A. 641; Producers Oil Corporation, 43 B. T. A. 9; Louis Wellhouse, Jr., 3 T. C. 363; M. C. Parrish & Co., 3 T. C. 119, affirmed on other grounds, 147 Fed. (2d) 284.

Furthermore, there is a more fundamental reason why the Court can not enter the proposed decision. It lacks the jurisdiction. The Commissioner, in the same notice in which he rejected the application for relief under section 722, notified the petitioner that he had. determined overassessments for 1941 as follows:

Income tax_$312.86

Declared value excess-profits tax_ 132. 00

Excess profits tax_ 858.76

Certain determinations of the Commissioner give this Court jurisdiction under section 272 (a) (1) to decide whether or not that particular determination was correct and, if incorrect, to “redetermine” a correct amount of deficiency or overpayment in that particular tax. Sections 272 (e) and 322 (d). The Commissioner frequently makes one notice suffice in advising taxpayers of several different and separate determinations. He did that in the notice sent to the petitioner. But we have held, and the law is now well established, that our jurisdiction is not enlarged by that method of notification. Hobbs Western Co., 43 B. T. A. 5; Citizens Mutual Investment Association, 46 B. T. A. 48; Superheater Co. v. Commissioner, 125 Fed. (2d) 514. If the notice upon which a petition is based shows that a deficiency has been determined in income tax and an overassessment has been determined in excess profits tax, our jurisdiction is limited .to the income tax liability, since the determination of an overassessment does not give the Tax Court jurisdiction as to excess profits tax liability. The jurisdiction as to the two kinds of tax is separate and each depends upon a determination of a deficiency in that particular kind of tax. Will County Title Co., 38 B. T. A. 1396; Hobbs Western Co., supra; Difco Laboratories, Inc., 10 T. C. 660; The Emeloid Co., 14 T. C. 1295.

The jurisdiction of this Court to consider and decide cases involving the alleged application of section 722 is given in section 732, not in section 272 (a) (1). It is just as separate from that given to decide a case involving the tax imposed under the general excess profits tax provisions of the Code as it is from that given to decide one involving income tax. Ideal Packing Co., 9 T. C. 346. This Court has no jurisdiction to decide the possible application of section 722 where the Commissioner determines a deficiency in excess profits tax but does not advise in the notice of the rejection of an application for relief under section 722. Uni-Term Stevedoring Co., 3 T. C. 917; Pioneer Parachute Co., 4 T. C. 27; American Coast Line, Inc. v. Commissioner, 159 Fed. (2d) 665, affirming 6 T. C. 67: Pohatcong Hosiery Mills, Inc. v. Commissioner, 162 Fed. (2d) 146, affirming a Tax Court memorandum ©pinion. Likewise, it has no jurisdiction to determine the tax liability under the general provisions of Subchapter E where the Commissioner, in one notice, rejects the application for relief under section 722 and determines an overassessment of excess profits tax imposed under the general provisions of Subchapter E. Cf. Ideal Packing Co., supra. The scheme of Subchapter E is that the correct tax liability under the general provisions, without the benefit of section 722, must first be fixed before the question of possible relief by refund or credit of a part of that amount can be considered. Uni-Term, Stevedoring Co., supra; Pioneer Parachute Co., supra; Ideal Packing Co., supra. See section 722 (d). Separate limitation periods apply. Different claims for refund are required. This Court can grant relief in a section 722 case only on grounds properly set forth in the claim filed with the Commissioner. United States v. Felt & Tarrant Mfg. Co., 283 U. S. 269; Real Estate-Land Title & Trust Co. v. United States, 309 U. S. 13; Pelham Hall Co. v. Carney, 111 Fed. (2d) 944. Cf. Angelus Milling Co., 1 T. C. 1031, affd., 144 Fed. (2d) 469, 325 U. S. 293. No ground for relief under section 722 could be properly set forth in a claim under that provision except one of the grounds for relief set forth in section 722. Thus, no issue arising under the general provisions of Subchapter E could properly be in issue in a case before the Tax Court based upon the denial of a claim for^relief under section 722. The relief under section 722 is a refund of a part of the tax computed without reference to section 722. Our jurisdiction based upon that section authorizes the entry of whatever decision is necessary to. grant all, a part, or none of the relief sought. The over-assessment here mentioned is in the tax under the general provisions without reference to and before any possible consideration of section 722. Suppose that the Commissioner had sent a notice of deficiency in excess profits tax, the taxpayer had filed a petition in the Tax Court raising all issues which it desired to raise, those issues were decided by the Tax Court, and the decision became final after appeal to the higher courts — is the petitioner, in a second proceeding in the Tax Court based solely upon a later rejection of a claim for relief under section 722, to have another chance to raise issues unrelated to section 722 and not properly set forth in the claim for relief or is the proceeding based upon the rejection of the claim under section 722 limited to the consideration of issues relating to relief under that section which have been properly set forth in the claim ?' Orderly procedure requires the latter conclusion. The two jurisdictions are separate. Ideal Packing Company, supra. The one we have under the notice, the other we have not.

Reviewed by the Court.

Decision will be entered for the respondent.