Court Opinion

ID: 9731853
Source: CourtListenerOpinion
Date Created: 2023-08-26 16:00:06.209992+00
Date Added: 2024-06-11T18:26:21.607996
License: Public Domain

MR. JUSTICE RYAN dissenting: The majority opinion focuses upon the question of estoppel and the authority of the Department of Revenue to examine the books and records of Austin Liquor Mart, Inc. under the circumstances here present. It appears that the determination of this question is not necessary to the disposition of the case. We are here reviewing a trial that was had wherein certain issues were formed by the pleadings. The Department of Revenue made certain affirmative allegations in support of its assertion that it had a right to reexamine the books. It failed to present any evidence in support of its pleadings and the court properly ruled in favor of Austin Liquor Mart, Inc. The question we must decide is whether the decision of the trial court was against the manifest weight of the evidence. In my opinion it was not. Supplementing the statement of facts in the majority opinion I point out that the petition filed on December 12, 1969, by the plaintiff alleged among other things that on November 25, 1969, it had been served with a subpoena duces tecum requiring the production of books and records before the Department of Revenue, herein referred to as defendant, and that no prior demand nor notice of a pending investigation had been given; that the attorney for the plaintiff appeared before the defendant and moved to quash the subpoena for certain defects therein; that no ruling was made on the motion to quash; that on December 2, 1969, plaintiff was served with another subpoena duces tecum again requiring the production of its books and records before the defendant; that again plaintiff’s attorney moved to quash the subpoena; that on December 10, 1969, plaintiff’s attorney received a letter from the defendant denying the motions to quash and stating that the two subpoenas would be considered as first and second demands for the books and records and then referred to section 7 of the Retailers’ Occupation Tax Act (Ill.Rev.Stat. 1969, ch. 120, par. 446), which requires the keeping of books and the right of the Department to inspect the same, and section 13 of that act (par. 452), which provides a penalty for certain violations; and that on the same day plaintiff’s attorney again appeared at an office of the defendant and protested the implied threat to prefer criminal charges against the plaintiff by referring to section 13 (par. 452) in the letter. Attached to the complaint as exhibits were the transcripts of the discussion at the three appearances of the plaintiff’s attorney before the officer of the defendant, the two subpoenas duces tecum, the letter from the defendant received by plaintiff’s attorney on December 10, copies of previous notice of tax liability and of the check paying the same. The petition sought a mandatory injunction to enjoin the defendant from further investigating the plaintiff’s books for the period of August 1, 1966, to July 31, 1969. (The period covered by.the previous audit.) The answer filed by the defendant, in addition to admitting and denying the allegations of the petition, by way of “further answer” alleged that the books and records forwarded to the defendant by the plaintiff in connection with the previous audit were “in fact incomplete and faulty and did not report the total amount of gross receipts” and alleged that if defendant were permitted to examine the complete set of books the same would show a deficiency of sales tax duejor that period. In addition to the answer the defendant filed a counterclaim in which it made the same allegations and in addition alleged that the plaintiff has “intentionally and knowingly misrepresented the gross receipts” for the sole purpose of evading taxes due the State and that such misrepresentation was an “intentional fraud” against the Department of Revenue. The defendant prayed that the court order plaintiff to submit all books and records for the period in question. The plaintiff filed a reply to the answer and an answer to the counterclaim denying these allegations. Although holding that payment of a prior assessment covering the same period is not a bar to subsequent investigation, the majority opinion concedes that a taxpayer is not to be left entirely to the mercy of the Department of Revenue for it states: “Even in areas where the need is as compelling as is the necessity for public revenue the court may inquire as to the reasons underlying the request for examination and issuance of the subpoena. ” (Emphasis supplied.) In quoting from United States v. Powell, 379 U.S. 48, 58, 13 L.Ed.2d 112, 120, 85 S.Ct. 248, 255, the majority states: “Such an abuse would take place if the summons had been issued for an improper purpose, such as to harass the taxpayer or to put pressure on him to settle a collateral dispute or for any other purpose reflecting on the good faith of the particular investigation.” Assuming, arguendo, the correctness of the criteria of the majority, I am of the opinion that the trial court correctly decided the issues. The court had before it admitted allegations of the complaint concerning the prior assessment and payment, the two subpoenas and the letter from the defendant to the plaintiff’s attorney referring to the criminal sanction section of the statute. At an early hearing on a motion, the court was informed of the fact that certain officers of the plaintiff had been arrested by agents of the defendant for failure to produce the books and records upon demand, and that this arrest had taken place just two days after the attorney for the plaintiff had appeared at the office of the defendant and objected to the implied threat of criminal sanctions contained in the letter which he had received. As against these facts the court had before it only the bare allegations of irregular conduct on the part of the plaintiff which the defendant made in both its answer and its counterclaim. In the colloquy between court and counsel at the hearing on the complaint and counterclaim, the court stated that it wanted to hear the evidence on the defendant’s charge that the books and records which plaintiff had forwarded to defendant were incomplete and faulty. The court informed counsel for the defendant that in the answer and counterclaim they had raised issues of fact which they had to support. The court on several occasions asked counsel for the defendant if there was any evidence to prove these allegations. When no evidence was presented, the court granted the plaintiff’s prayer for injunctive relief and denied the prayer of defendant’s counterclaim for an order on the plaintiff'to produce the books and records. Although the question of estoppel was mentioned by the court and argued by counsel for both the plaintiff and the defendant, the order entered by the court reflects that the decision was based not on the principal of estoppel but on the findings of the court on the issues created by the pleading. I think the court did “inquire as to the reasons underlying the request for examination” as the majority holds it may do. I think the admitted allegation of the complaint gave the court adequate reason for making such an inquiry. When defendant failed to produce any evidence to support the allegation as to why it wanted another examination of the plaintiff’s books and records, the court properly held it was not entitled to such an examination. These were the issues that were tried and determined by the trial court. The issue was not a question of estoppel. I reiterate, the opinion of the court focuses on the question of law which is only indirectly involved in this case and not determinative of the issues. Strengthening the above analysis is the provision of the statute (Ill.Rev.Stat. 1969, ch. 120, par. 443) which provides that the tax return as corrected by the Department “shall be prima facie correct and shall be prima facie evidence of the correctness of the amount of tax due, as shown therein.” In this lengthy section of the Act the legislature repeated this premise several times. This court has held on many occasions that the amount of tax assessed by the Department is prima facie correct and that the taxpayer contesting the assessment must overcome this prima facie case. Once he does, the burden shifts to the Department to prove its case by competent evidence. (Walters and Company v. Department of Revenue (1969), 44 Ill.2d 95; Young v. Hulman (1968), 39 Ill.2d 219; Miller v. Department of Revenue (1951), 408 Ill. 574; Tatz v. Department of Finance (1945), 391 Ill. 131; Lutkus v. Department of Finance (1944), 385 Ill. 221; Novicki v. Department of Finance (1940), 373 Ill. 342.) True, these cases all involved situations wherein the taxpayers were contesting assessments. However, the statute does not say that the assessment shall be prima facie evidence only against the taxpayer. Nor does it limit the use of the corrected assessment as prima facie proof to the Department. Clearly under the statute the prima facie correctness inures to the benefit of either party and will constitute prima facie proof of correctness on behalf of either the taxpayer or the Department of Revenue. Following the reasoning of the above cited cases, after the plaintiff had pleaded and the defendant had admitted the prior assessment this constituted prima facie proof of the correctness of the assessment and it was incumbent upon the Department of Revenue to come forward with some facts which would overcome this prima facie case. The defendant pleaded sufficient facts to overcome the prima facie case in both its answer and its counterclaim; however, it offered no proof to support these allegations. Accordingly the court correctly ruled in favor of the plaintiff and against the defendant. For these reasons I would affirm the circuit court of Cook County. SCHAEFER and KLUCZYNSKI, JJ., join in this dissent.