1994.09.13

1990 (A) 1095

Keishu Vol. 48, No. 6 at 289

Decision concerning whether or not the act of putting and retaining part of sales proceeds in the deposit account opened under a fictitious name or borrowed name, while keeping books in which accurate data of sales proceeds are entered, can be regarded as a scheme for income concealment which constitutes the crime of tax fraud by failure to file

Case charged for violation of the Income Tax Act

Decision of the Third Petty Bench, dismissed

Tokyo High Court, Judgment of October 1, 1990

Even in the case where the taxpayer has kept books in which accurate data of sales proceeds are entered, and has not actively carried out any scheme such as concealing these books from the tax authorities intentionally or keeping false books separately, as long as the taxpayer's act of putting and retaining part of sales proceeds in the deposit account opened under a fictitious name or borrowed name is found to have derived from the intention of tax fraud, it should be regarded as a scheme for income concealment which constitutes the crime of tax fraud by failure to file.

Article 238, paragraph (1) of the Income Tax Act
A person who has, by deception or other wrongful acts, evaded payment of income tax for the amount of income tax prescribed in Article 120, paragraph (1), item (iii) (Amount of Income Tax Related to Final Income Tax Return) (including cases where applied mutatis mutandis pursuant to Article 166 (Application Mutatis Mutandis to Nonresidents)), or received a refund of income tax pursuant to the provision of Article 142, paragraph (2) (Refund by Carryback of Net Loss) (including cases where applied mutatis mutandis pursuant to Article 166) shall be punished by imprisonment with work for not more than five years or a fine of not more than five million yen, or both.

The final appeal is dismissed.

The reasons for final appeal argued by the defense counsels, KAMIBAYASHI Hiroshi, and other two, are assertions of errors in fact finding or unappealable violation of laws and regulations, and none of these assertions can be regarded as a reason for final appeal permissible under Article 405 of the Code of Criminal Procedure.
The defense counsels argue that the facts indicated in I and II of the judgment in first instance only constitute the crime of simple failure to file set forth in Article 241 of the Income Tax Act and they do not constitute the crime of tax fraud set forth in Article 238, paragraph (1) of said Act. Having examined their argument, we make a determination by this court's own authority.
According to the facts found by the judgment in prior instance, in this case, the accused, who operates three mah-jong parlors, with the intention of tax fraud, put and retained part of the sales proceeds from the parlors in the deposit account opened in advance under a fictitious name or borrowed name, and failed to file a return reporting such proceeds as business income, etc. The defense counsels argue that the accused, in order to understand the business standing, had the managers of the parlors keep books in which they entered accurate data of sales proceeds of their parlors, and there is no evidence to show that the accused actively carried out schemes such as concealing these books from the tax authorities intentionally or keeping false books separately. However, even in such case, it is not assured that the tax authorities will be able to ascertain the content of said books through examination and criminal investigation, and therefore, by putting and retaining part of sales proceeds in the deposit account opened under a fictitious name or borrowed name, the accused in effect made it difficult for the tax authorities to identify his/her income. As far as this act is found to have derived from the intention of tax fraud, it should be regarded as a scheme for income concealment, and the failure to file through such scheme for income concealment can be deemed to constitute the crime of tax fraud set forth in Article 238, paragraph (1) of the Income Tax Act. Consequently, the judgment in prior instance is justifiable for its conclusion.

Therefore, according to Article 414 and Article 386, paragraph (1), item (iii) of the Code of Criminal Procedure, the decision has been rendered in the form of the main text by the unanimous consent of the Justices.

Justice SONOBE Itsuo
Justice KABE Tsuneo
Justice ONO Masao
Justice CHIKUSA Hideo
Justice OZAKI Yukinobu