Appeal of the Buffalo Slag Co.

[752] OPINION. Korner: In view of the decisions of this Board in Mitchel's Appeal, 1 B. T. A. 143, Garneau's Appeal, 1 B. T. A. 75, and Term [753] inal Wine Company’s Appeal, 1 B. T. A. 697. the fundamental and underlying question first for consideration is whether there was a final determination of a deficiency, under the provisions of section 250(d) of the Revenue Act of 1921, before the making of the assessment referred to in the findings of fact. If there was not, then we are of opinion that the assessment was erroneous, mistaken, and not pursuant to law, and may be ignored in this appeal in so far as it may be argued to be an evidence of a prior determination. Mitchel's Appeal, supra. Under such circumstances the abatement claim filed and the argument and data in support thereof, constituted only a supplement to the taxpayer’s appeal. An assessment in form having been listed and forwarded to the collector for collection, the exigencies of the situation necessitated a claim for abatement— otherwise the benefits of the taxpayer’s appeal would be lost to it because, notwithstanding its pending appeal, payment might be enforced by the collector. The record discloses that taxpayer received a registered letter dated December 18, 1922, advising it of a proposed additional assessment and granting 30 days for an appeal therefrom. The taxpayer did so appeal within 30 days and asked for a hearing. In its appeal it set up three grounds as a basis for its contention. One of these grounds was a request for special assessment under section 210 of the Revenue Act of 1917. The taxpayer was not accorded a hearing nor given an opportunity to present and argue the main points on which it relied in its appeal, viz, the admissibility of certain contracts for invested capital purposes and the deduction of depreciation thereon. In the absence of such hearing, and presentation of its case by the taxpayer, the Bureau recomputed the tax by applying section 210 of the Revenue Act of 1917 and notified the taxpayer by registered letter dated July 27, 1923, of its proposal to assess the deficiency shown by this latter letter. The taxpayer was advised that a period of 30 days would be granted in which to appeal from this letter of July 27,1923. Counsel for the Commissioner argued that in so far as the letter of July 27, 1923, granted the taxpayer an appeal, it was a nullity because only one appeal is provided for by section 250(d) of the Revenue Act of 1921, and that the appeal filed on January 11, 1923, from the assessment letter of December 18, 1922, constituted the only appeal of the taxpayer. It was further argued that, pursuant to the appeal of January 11, 1923, the Commissioner finally determined the deficiency in accordance with section 250(d). With this position we are unable to agree. To do so would be to ignore a portion of section 250(d). That section provides for notice to taxpayer of a proposed additional assessment from which the taxpayer may appeal. The section then continues: Opportunity for bearing shall be granted and a final decision thereon shall be made as quickly as practicable. Any tax or deficiency in tax then determined, to be due shall be assessed * * *. (Italics ours.) The obligation on the Commissioner to grant an opportunity for hearing is no less binding than that requiring him to make a decision thereon as quickly as practicable. It appears that although the taxpayer requested a hearing, none was had. The record does not disclose that the principal basis of [754] taxpayer’s appeal was given consideration at that time. The subsequent events, as well as the communications from the Bureau to the taxpayer, disclosed by the record, indicate that consideration of these contentions occurred only after the so-called assessment. We do not deem it necessary to review at length the chronology of events transpiring in the progress of this case through the Bureau. We believe the findings of fact present this graphically. We are of opinion that-the so-called first appeal ivas not finally closed in accordance with section 250(d) of the Revenue Act of 1921, but that the principal contentions of the taxpayer raised in that appeal were constantly before the Bureau and under consideration by it until the fall of 1924, when they were finally determined adversely to the tax-' payer. The picture presented by the record in this appeal leads irresistibly to this conclusion. Since the appeal filed by the taxpayer was not finally determined in accordance with section 250(d) of the Revenue Act of 1921, it follows that the assessment made on December 9, 1922, was made by mistake. It then becomes unnecessary to decide what was the effect of the assessment letter of July 27, 1923. It is sufficient to say the appeal of the taxpayer was pending in the Bureau from January 11, 1923, until its final determination, of which taxpayer was notified by Bureau letter of November 4, 1924. Taxpayer’s appeal therefrom to this Board is controlled, in our opinion, by the rule in the Appeal of Ormsby McKnight Mitchel, 1 B. T. A. 143.