
    MEMPHIS COTTON OIL CO. v. THE UNITED STATES
    [No. L-173.
    Decided May 31, 1932]
    
      Mr. Walter E. Barton for the plaintiff. Messrs. R. C. Winters and Raymond C. Cushwa were on the briefs.
    
      Mr. John A. Rees, with whom was Mr. Assistant Attorney General Charles B. Rugg, for the defendant.
   LittletoN, Judge,

delivered the opinion:

The question in this case is whether the Commissioner of Internal Revenue was justified in rejecting plaintiff’s claims for refund for 1922 and 1923 on the ground that they were insufficient to constitute claims under the statute, and in refusing to schedule the overassessments and allow a refund of the overpayments for the years involved, and whether in view of such rejection the plaintiff is entitled to maintain this suit.

We are of opinion that the Commissioner of Internal Revenue had authority under the claims as filed and the facts before him to allow the overpayments and to refund the amounts thereof after the expiration of the period of limitation within which he could have made such allowance and refund without a claim, and that upon the facts as disclosed by the findings the plaintiff is entitled to maintain this suit upon the commissioner’s rejection of the claims.

The amount of the overpayment for each year is not in question.

The claims in question were timely filed. They were finally rejected by the commissioner on the sole ground that the plaintiff did not set forth in the claims at the time they were filed the specific ground upon which the overpayment was claimed and did not set forth the detailed facts upon which it relied to show that the correct net income and correct tax for each of the years was less than the net income shown in the returns and the tax paid thereon. The claims for refund, as originally filed by the plaintiff, gave the commissioner jurisdiction over the matter of an overpayment for the years for which the claims were filed. Factors & Finance Co. v. United States, 56 Fed. (2d) 902. Lancaster Cotton Mills v. United States, No. J-596, decided this date. [Ante, p. 105.] He had authority under the statute to allow and refund such overpayment as he might determine had been made on. the basis of any facts before him at the time the claims were filed, or upon facts thereafter obtained by him from an examination of the plaintiff’s books and records.

After the refund claims were filed and before he had made any decision thereon or taken any action with respect thereto, the commissioner directed an agent of his office to make an examination and audit of the plaintiff’s books and records for the years for which the claims had been filed and to submit a report of such investigation and audit for the purpose of enabling him to determine and pass upon the merits of the claims. This investigation and audit were duly made and a detailed report thereof showing the correct net income, correct tax, and the amount of the over-assessment with a statement of the various items and amounts causing the adjustments shown, with a detailed explanation of each item. The revenue agent made this report to the commissioner on February 7, 1928, and a copy of the same was thereafter furnished to the plaintiff. Upon receipt of the report the commissioner entered upon consideration of plaintiff’s claims for refund, and in the light of facts disclosed by the returns filed, the record in the case, and the facts and information disclosed in the revenue agent’s report made an audit of the plaintiff’s tax liability for the years 1922 and 1923, and advised the plaintiff that upon review of the agent’s reports and after consideration of the claims for refund he had determined overassessments of $1,660.70 for 1922 and $1,835.76 for 1923, which were the over assessments shown in the revenue agent’s report. The commissioner,'therefore, prior to his consideration of the claims, and before he had taken any action thereon, was fully informed as to the reasons for the overpayments and the detailed facts to support the same. He was fully advised, and, so far as concerned his jurisdiction and authority to act under the statute with respect to the claimed over-payments, it made no difference whether the facts showing the overpayments were furnished in the first instance by the plaintiff as a part of its claims for refund or were already in the possession of the commissioner, or were obtained by him after the filing of the claims by an examination and audit of the plaintiff’s books of accounts. Factors & Finance Co. v. United States, supra.

The plaintiff might have amended the claims before the commissioner had acted thereon so as to state the facts relied upon, but the facts obtained by the commissioner before he had acted rendered amendment unnecessary and fulfilled the requirement of the regulations that all facts relied upon should be set forth by the taxpayer. Although we think it is ■unimportant whether the commissioner obtained the facts before or after the expiration of the period within which he could have allowed an overpayment without a claim, it appears in this case that so far as 1923 is concerned the grounds of the claim and all the facts necessary to a decision whether there had been an overpayment for the year were furnished to the commissioner on February 7, 1928, before the expiration of time within which an original claim for refund could have been filed for 1923.

The facts considered by the commissioner, and upon which he concluded that there had been overassessments in the amounts involved in this suit for the years 1922 and 1923, were supplied by the plaintiff to the commissioner through his agent and at his direction. The commissioner, therefore, was not justified in rejecting the claims and in refusing to allow the overpayments disclosed by the facts furnished him on the ground that the claims were insufficient. Nor can we agree with the defendant that the plaintiff may not maintain this suit to recover the admitted overpayments because the facts before the commissioner at the time he acted were not originally set forth by the plaintiff in the claims which it filed. We think the claims, considered in the light of the facts before the commissioner as disclosed by the record, were sufficient to entitle the plaintiff to sue upon the rejection thereof. The commissioner was not misled. He had before him all the facts that the taxpayer could furnish and he had every opportunity to correct any errors that had been made in the assessment and collection of the tax for the years involved. The rule that the taxpayer may not bring suit unless the commissioner has been informed of the matters made the basis of the suit and has been afforded an opportunity to consider the same, does not, therefore, apply in this case.

Judgment will be entered in favor of plaintiff for $6,496.46 with interest as provided by law. It is so ordered.

Whalet, Judge; Williams, Judge; Green, Judge; and Booth, Chief Justice, concur.  