Darling Bros. Co. v. Commissioner

APPEAL OF DARLING BROTHERS CO.

Darling Bros. Co. v. Commissioner

Docket No. 1573.

United States Board of Tax Appeals 2 B.T.A. 612 ; 1925 BTA LEXIS 2311 ; September 28, 1925 , Decided Submitted April 27, 1925 .

*2311 1. A taxpayer claiming that the ratio of average profits tax to net income as assessed and paid by representative corporations was lower than that adopted by the Commissioner in computing its profits tax under section 328 of the Revenue Act of 1918, must produce affirmative evidence in support of its contention.

2. In such cases taxpayer may not rely exclusively upon a subpoena from this Board directing the Commissioner to produce the comparatives and statistics used by him in computing its tax; and where it does so, the Commissioner's refusal to comply with such subpoena does not have the effect of shifting the burden of proof from the taxpayer to the Commissioner.

South Trimble, Esq., for the taxpayer.

Arthur H. Fast, Esq., for the Commissioner.

JAMES *613 Before JAMES, SMITH, and TRUSSELL.

This is an appeal from the determination of a deficiency in income and profits taxes for the year 1918 in the amount of $6,457.70.

FINDINGS OF FACT.

The taxpayer is a New York corporation with its principal offices in New York City. For the taxable year 1918 the Commissioner determined the profits tax of the taxpayer under the provisions *2312 of section 328 of the Revenue Act of 1918, and determined that the correct percentage of tax to taxable income in that year was 43.32 per cent. From this determination the taxpayer appealed on the ground that this percentage was too high, and that a proper selection of representative comparatives would produce a lower percentage and, in consequence, a lower tax.

Prior to the hearing the taxpayer caused a subpoena to be issued, directed to the Commissioner, to produce at the hearing the comparatives and the statistics of representative concerns used by him in the determination of the tax here in controversy. At the hearing the Commissioner refused to comply with this subpoena. Thereupon the taxpayer moved for a determination of no deficiency and the Commissioner then moved for judgment upon the pleadings and an affirmance of his determination upon the ground that the taxpayer had submitted no evidence in support of the allegations of its petition.

DECISION.

The determination of the Commissioner is approved.

OPINION.

JAMES: The failure of the Commissioner or his refusal, for reasons which to him appeal sufficient, to obey a subpoena of this Board can not serve to shift *2313 from the taxpayer to the Commissioner the burden or proof or of introducing evidence and establishing a prima facie case before the Board. For that reason the motion of the *614 taxpayer for a determination of no deficiency in this appeal must be denied.

In paragraph C of the petition the taxpayer makes the following allegations:

(c) The ratio of average profits tax to net income as assessed and paid by representative corporations engaged in a like or similar trade or business to that of the taxpayer is substantially lower than the rate computed by the Commissioner in the case of this taxpayer for the year 1918.

The taxpayer has submitted no evidence in support of the foregoing allegations. The burden rested upon it to establish the basis of its appeal by making at least a prima facie case. This burden it failed to sustain, and for that reason the determination of the Commissioner must be approved.

ARUNDELL not participating.