Peerless Woolen Mills v. Rose

• Decision Date: 31 October 1928
• Docket Number: No. 5256.,5256.
• Citation: 28 F.2d 661
• Parties: PEERLESS WOOLEN MILLS v. ROSE, Collector of Internal Revenue.
• Court: U.S. Court of Appeals — Fifth Circuit

28 F.2d 661 (1928)

PEERLESS WOOLEN MILLS v. ROSE, Collector of Internal Revenue.

No. 5256.

Circuit Court of Appeals, Fifth Circuit.

October 31, 1928.

Robert C. Alston, of Atlanta, Ga., and J. Robert Sherrod, of Washington, D. C. (A. W. Taber, of Chattanooga, Tenn., Miller & Chevalier, of Louisville, Ky., and Alston, Alston, Foster & Moise, of Atlanta, Ga., on the brief), for appellant.

C. P. Goree, Asst. U. S. Atty., of Atlanta, Ga., William E. Davis, Sp. Atty. Bureau Internal Revenue, of Washington, D. C. (Clint W. Hager, U. S. Atty., of Atlanta, Ga., on the brief), for appellee.

Before WALKER, BRYAN, and FOSTER, Circuit Judges.

BRYAN, Circuit Judge.

This suit was brought by appellant to enjoin appellee, as collector of internal revenue, from proceeding to sell some of its property which he had levied upon under a warrant of distraint against it to enforce collection of income and excess profit taxes for the fiscal year ending June 30, 1919.

On September 15, 1919, appellant filed a return under section 301 of the Revenue Act of 1918 (40 Stat. 1089), showing a tax liability of $116,630.58, but attached to this return a letter claiming that the tax should be calculated under sections 327 and 328 of that act, in order that it might receive the benefit of the average tax of other representative corporations engaged in a similar business. One-half of the tax shown on the return was promptly paid, but appellant refused to pay more, contending it had paid as much as was due under sections 327 and 328. On October 30, 1919, the Commissioner of Internal Revenue assessed the tax at the full amount shown by the return, which left an unpaid balance of $58,315.28, claimed as still due. Various waivers were signed by the taxpayer, extending the statutory period of limitations for assessment and collection. Finally, on December 18, 1925, the Commissioner of Internal Revenue made a deficiency assessment of $18,658.98 in excess of the original assessment. Thereupon appellant filed an appeal to the Board of Tax Appeals for a re-determination of the deficiency, and claiming that the original assessment was barred by the statute of limitations. While this proceeding was pending, appellee, as collector, caused a distraint warrant to be issued and levied upon appellant's property, and gave notice that the property would be sold at public auction.

The District Judge, being of opinion that the Board of Tax Appeals acquired jurisdiction only of the assessment for the deficiency, held that R. S. § 3224 (26 USCA § 154), prohibits a suit to enjoin the collection of the original assessment. Consideration of this appeal has been postponed until the Board of Tax Appeals should decide the appeal pending before it. In an opinion rendered October 17, 1928, the Board of Tax Appeals decided that it had jurisdiction of the original assessment, as well as of the deficiency assessment. In that opinion it was also held that appellant was liable for the full amount of the deficiency assessment, but that the original assessment was barred by the statute of limitations. The correctness of those rulings on the merits is not now before us for consideration, but it is proper that we should at this time pass upon the appeal from the District Court.

On the question of jurisdiction of the Board of Tax Appeals, we are of opinion that the conclusion of the District Judge was wrong. That Board was given the power...