Opinion
May 19, 1959
The determination with respect to penalties is annulled and the matter remanded to the Comptroller for his determination concerning what penalties, if any, should be imposed. In all other respects, the determination is confirmed, without costs. The questions presented relate to the validity of (1) the imposition of the tax; and (2) the imposition of the penalty. With respect to the imposition of the tax, we confirm the determination. The imposition of the penalty is not sustained by the record. The returns were timely filed. The deficiency notice is dated July 28, 1950. The application for a hearing is dated August 23, 1950. The hearing commenced on January 12, 1953, and terminated March 16, 1954. The notice of final determination is dated July 11, 1958 and includes penalty interest to February 16, 1956. It thus appears that from the time that the hearing was closed until the taxpayer was informed of the final determination of the tax more than four years elapsed, and the penalty interest imposed relates to two of these four years. While we do not attempt to determine what would constitute a reasonable time for the Comptroller to process the matter after the close of hearings, on this record there is no showing that either two or four years is reasonable, and, under these circumstances, the imposition of a penalty measured thereby is unwarranted. We have held that the basis for the imposition of penalties should appear so that it may be reviewed under article 78 of the Civil Practice Act. ( Matter of McCall Corp. v. Gerosa, 2 A.D.2d 358, 361.) Settle order on notice.
Concur — Botein, P.J., Breitel, M.M. Frank, McNally and Stevens, JJ.