Miller-Pocahontas Coal Co. v. COMMISSIONER OF INTERNAL REVENUE, Docket No. 18943.

• Citation: 21 BTA 1360
• Decision Date: 26 January 1931
• Docket Number: Docket No. 18943.
• Parties: MILLER-POCAHONTAS COAL CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Board of Tax Appeals

21 B.T.A. 1360 (1931)

MILLER-POCAHONTAS COAL CO., PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket No. 18943.

Board of Tax Appeals.

Promulgated January 26, 1931.

C. H. Curl, Esq., for the respondent.

OPINION.

STERNHAGEN:

The Commissioner notified the petitioner of a determination in respect of its income taxes for 1918 to 1924, inclusive. As to 1918, 1919, 1921, 1922, and 1924, no deficiency or other liability was found; as to 1923, a deficiency was found of $123.77, which petitioner has not contested; and as to 1920, the Commissioner found a deficiency of $51,740.11 after applying section 328, Revenue Act of 1918, and a penalty of $25,870.06 under section 250 (b), Revenue Act of 1918. The taxpayer filed a petition attacking both the deficiency and the penalty, and the Commissioner answered denying all the facts. Before the proceeding came on for trial, the Commissioner made a jeopardy assessment and advised the Board in accordance with section 273 (c), Revenue Act of 1928. The Board was also advised before trial by counsel for petitioner that he had withdrawn, that his information was that a receiver had been appointed and discharged, and that petitioner was in bankruptcy. When the case came on for trial no one appeared for petitioner. Counsel for respondent moved to dismiss for nonprosecution and for judgment in the amount of the deficiency and the penalty. He offered no proof of fraud to sustain the 50 per cent penalty and contends that he is entitled to judgment for the penalty nevertheless.

The revenue acts contain clear recognition of a distinction between a deficiency in tax and a penalty. Revenue Act of 1926, secs. 273, 275, 276 (b), 279 (a) (c); Revenue Act of 1928, secs. 271, 272 (e), 273 (a) (c), 293.

Section 906 (c) of the 1924 Act as amended by section 601 of the 1928 Act provides that a dismissal shall require an affirmance of the deficiency only. Section 907 (a) as so amended provides that in respect of the issue whether the petitioner has been guilty of fraud with intent to evade tax, i. e., whether the 50 per cent penalty has been properly determined, the burden of proof is on the Commissioner. Thus, it is plain that the express result of a dismissal is confined to the deficiency and is not extended as in other sections to penalties or other additional amounts, and also that, consistently with such restriction, the burden of proof as to fraud to sustain the penalty is on the respondent. The burden of proof is the prospect of failure in the absence or insufficiency of evidence. Congress, knowing that the...