2013 (Taxation) Bar Exam Questions: Multiple Choice Question 20

[Discuss/answer the question below. Or see Taxation Instructions; Taxation Essay Questions: 12, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12; Taxation Multiple Choice Questions: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, and 19; See also 2013 Bar Exam: Information, Discussions, Tips, Questions and Results]

XX.

The BIR, through the Commissioner, instituted a system requiring taxpayers to submit to the BIR a summary list of their sales and purchases during the year, indicating the name of the seller or the buyer and the amount. Based on these lists, the BIR discovered that in 2004 ABC Corp. purchased from XYZ Corp. goods worth P5,000,000. XYZ Corp. did not declare these for income tax purposes as its reported gross sales for 2004 was only P1,000,000.

Which of the following defenses may XYZ Corp. interpose in an assessment against it by the BIR? (1%)

(A) The BIR has no authority to obtain third party information to assess taxpayers.

(B) The third party information is inadmissible as hearsay evidence.

(C) The system of requiring taxpayers to submit third party information is illegal for violating the right to privacy.

(D) None of the above.

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