The opinion of the court was delivered by: INCH
This is a suit by the Government against a taxpayer to recover the sum of $ 3,024.83, with interest, which was begun on August 11, 1955.
The complaint, in substance, alleges that on or about October 12, 1949, the Commissioner of Internal Revenue assessed a deficiency income tax for 1944 against the taxpayer in the sum of $ 3,024.83, and the assessment list carrying said assessment was received in the office of the local Collector of Internal Revenue, that thereafter and prior to the institution of this suit, notice and demand for payment of said tax was made upon the taxpayer by said Collector and that no part of said sum has been received by said Collector in payment thereof. The answer, in substance, alleges that the taxpayer is without sufficient knowledge or information to form a belief as to the truth of the allegations in the complaint with respect to said assessment and admits the allegations in the complaint with respect to said notice and demand and said nonpayment and sets forth a defense that said assessment was and is illegal and void, in that no notice of a deficiency was mailed to the taxpayer, as required by statute, and this suit is void and of no force and effect, because it is based on an illegal and void assessment, in violation of statute, a defense that this suit is barred by a six-year statute of limitations and a defense that, in truth and fact, this suit is a proceeding to recover an erroneous refund and is barred by a two-year statute of limitations.
At the trial no testimony was offered, but a stipulation of facts and defendant's interrogatories with plaintiff's answers and supplemental answers thereto were received in evidence, as Court Exhibits No. 1 and No. 2, respectively, and counsel for both parties presented their oral arguments on the facts and the law. Thereafter, they submitted four briefs thereon.
The facts agreed to be true by said stipulation, and the exhibits annexed thereto, are as follows:
1. On March 14, 1945, defendant filed his income tax return for the calendar year 1944. (Annexed are true copies of said return and the schedule of itemized traveling expenses, marked Exhibit A, and a photostat copy of the original of said return, marked Exhibit A-1.)
2. On January 9, 1946, a check for $ 2,623.03, a letter and a notice of refund were mailed by the Treasury Department to defendant; subsequently, said check, letter and notice were received by defendant. (Annexed are photostat copies of the originals of said letter and notice, marked Exhibit B.)
3. On June 3, 1948, a 30-day letter, setting forth a proposed deficiency in the sum of $ 2,369.80, with a report, stating the reasons therefor, were mailed to and received by defendant. (Annexed are photostat copies of said letter and report, marked Exhibit C.)
4. On or about July 2, 1948, defendant set a letter protesting said proposed deficiency to the Internal Revenue Agent in Charge. (Annexed is a copy of said letter, marked Exhibit C-1.)
5. No jeopardy assessment was made.
6. Defendant executed consents, extending the time for assessing income tax to June 30, 1949 and June 30, 1950. (Annexed are copies of said consents, marked Exhibits D and E.)
7. On August 12, 1949, the Commissioner of Internal Revenue assessed a tax for 1944 against defendant in the sum of $ 3,024.83. On August 16, 1949, the assessment list was received in the office of the local Collector of Internal Revenue.
8. A notice and demand dated September 13, 1949, for payment of said tax and interest thereon was received by defendant. (Annexed is a copy of said notice and demand, marked Exhibit F.)
Plaintiff, in its supplemental answers to defendant's interrogatories, showed that the sum of $ 3,024.83 was based on a deficiency, but stated that it does not claim any deficiency income tax for 1944, and that no notice of a deficiency was mailed to defendant.
In the oral argument on the facts and the law, plaintiff's counsel, in substance, contended that this suit is a suit for the recovery of an erroneous refund in the sum of $ 3,024.83, with interest, although, on August 12, 1949, the Commissioner of Internal Revenue assessed a deficiency tax against defendant in said sum, and, on August 11, 1955, within six years after said assessment, this suit was begun against defendant to recover said tax in said sum, and defendant's counsel, in substance, contended that, according to the complaint, plaintiff's answers to defendant's interrogatories and the evidence, this suit is a suit to recover a deficiency income tax assessed against defendant in the sum of $ 3,024.83, and, as such, it is not legally authorized or maintainable, because it is based upon an invalid and void assessment, in that the determination of the assessment was arbitrary and excessive and void and the assessment was made without the ...