[VOID ASSESSMENT DUE TO ABSENCE OF LOA] [NEW ROs MAY BE DEEMED AUTHORIZED TO CONDUCT THE AUDIT WITHOUT THE NEED FOR ISSUANCE OF A NEW LOA IF THE ASSISTANT COMMISSIONER/ HEAD REVENUE EXECUTIVE ASSISTANT OF THE LARGE TAXPAYERS’ SERVICES SIGNED]

Petitioner Commissioner of Internal Revenue (CIR) filed a Petition for Review seeking to reverse the earlier decision of the Court in Division cancelling the assessment issued against the Respondent BASF Philippines, Inc. due to absence of authority to conduct audit. Petitioner argued that the assessments are valid since the Revenue Officer (RO) and Group Supervisor (GS) are duly authorized by the Petitioner to oversee and to continue the tax audit. Moreover, the audit conducted through a Memorandum of Agreement (MOA) was valid pursuant to Revenue Memorandum Order (RMO) No. 8-2006. In contrast, Respondent countered that there is no new LOA issued, and upon scrutiny of documents, only the Revenue District Officer (RDO) who signed the MOA. In ruling, the Court held that the new ROs may be deemed authorized to conduct the investigation without the need for issuance of a new LOA if the Assistant Commissioner/Head Revenue Executive Assistant of the Large Taxpayers Services signed the said letter or notice or memorandum. However, records showed that the MOA was only signed by the RDO, hence, not authorized. Likewise, estoppel cannot be applied to ratify the validity of the tax assessments made. The rules have provided that the authority of the ROs who conducted the audit investigations are vital to the assessment process. The active participation of the Respondent in the investigation conducted by the new ROs should not be a basis for the validity of the assessments. Thus, the Petition was DENIED due to lack of merit, and the subject tax assessments were CANCELLED and SET ASIDE. [COMMISSIONER OF INTERNAL REVENUE VS. BASF PHILIPPINES INC., CTA CASE NO. 9747, AUGUST 2, 2021]