5.  The applicant was born in 1976 and lives in Igar. 6.  Between 25 April 2004 and 3 December 2004 the Fejér County Regional Centre for Taxes (the “Tax Authority”) carried out a tax audit of the applicant for the assessment of the years 1999-2001. The Tax Authority drafted an audit report on which the applicant submitted comments. 7.  Having regard to the audit report, the testimonies of the applicant and her father and the applicant’s comments, the Tax Authority levied on her additional personal income tax in the amount of 10,961,884 Hungarian forints (HUF) (approximately 39,100 euros (EUR)), tax surcharges in the amount of HUF 5,480,808 (EUR 19,500) and interest in the amount of HUF 6,551,884 (EUR 23,300). The Tax Authority dismissed the testimonies of the applicant and her father to the effect that the disputed funds, invested in her company as an equity loan, had been given to her by her father as personal credit. Relying on a targeted tax inspection (célvizsgálat) of the father, the Tax Authority observed that, despite an invitation to do so, the applicant’s father had failed to provide any documentary evidence of the fact that at the material time he had been in possession of the disputed amount. 8.  On appeal, the second-instance tax authority upheld the first-instance decision on 5 May 2005. It stressed that the applicant’s father had only alleged but not proven in any manner the origin of the disputed amount and noted that since the tax scrutiny had been carried out to investigate the absence of an adequate source of revenue on the taxpayer’s side (adózói forráshiány), it was for the applicant to prove the origin of the amount in question. The Tax Authority also noted that it was implausible that the applicant’s father had provided a large loan to his daughter so that she could provide a financial service to a cooperative whose majority shareholders were her own parents.
The applicant sought judicial review of these decisions. 9.  On 28 February 2006 the Fejér County Regional Court sitting as a single judge held an oral hearing and then overturned the decisions of the Tax Authority. The court based its decision essentially on testimony given by the applicant’s father as to the origin of the money in question. The court noted that, contrary to the findings of the Tax Authority, the applicant’s father was under no obligation to prove the existence and origin of his income and property which had served as personal credit for his daughter.
The Tax Authority filed a petition for review with the Supreme Court, insisting in particular that the applicant’s allegations should have been supported by bookkeeping evidence, an argument already developed in the tax administration proceedings.
In reply to these arguments, the applicant submitted, in a memorandum to the Supreme Court, that, in her view, her father’s statement was of as good probative value as any bookkeeping evidence would have been. She did not request an oral hearing, a possibility provided under section 274(1) of the Code of Civil Procedure. 10.  On 12 April 2007 the Supreme Court, sitting as a three-judge panel, granted the Tax Authority’s petition for review, without holding an oral hearing.
The Supreme Court observed that in the circumstances – that is, because the plaintiff was required to refute the Tax Authority’s tax estimate – the burden of proof lay, statutorily, with the applicant to prove, providing credible evidence (hitelt érdemlő bizonyíték), the origin of the amount (as per leading case no. 2006/104). It found the testimony given by the applicant’s father implausible, given that it was not accompanied by any bookkeeping evidence demonstrating any transfer of funds, any bank statement, any contract or the like. It held, in particular, that although the applicant had made a statement about her father’s assets at the time of the alleged transaction, she had never produced any evidence about the availability of a sufficiently large amount of money on his side. It further noted that “it seems to be very implausible ... for a father to lend a large amount of money to his daughter so that she can provide financial services to a cooperative owned (mostly) by her parents. He could have done this ... directly, without his daughter’s involvement”. The Supreme Court noted that the applicant could not give any reasonable explanation for this complicated scheme and held that although the applicant attempted to refute the Tax Authority’s findings, the evidence proposed, consisting of a mere statement made by her father, was insufficient.
In sum, the Supreme Court concluded that the applicant’s assertions fell short of being supported by “credible evidence” within the meaning of section 109(3) of Act no. XCII of 2003 on the Rules of Taxation. Consequently, it reversed the Regional Court’s decision and found for the Tax Authority, relying on section 275(4) of the Code of Civil Procedure.
No further remedy lay against this decision. This decision was served on the applicant on 21 May 2007.