Admissibility of a restriction on the power of review before a further cantonal appeal instance pursuant to Art. 145 LIFD

Facts

The Administrative Court of the Canton of Zurich dismissed the appeal of spouses A.X. and B.X. against a decision of the cantonal Tax Appeal Commission II in a discretionary assessment procedure. In doing so, it limited its power of review to a legal review and did not consider the new documents submitted by A.X. and B.X. The Federal Court dismisses their administrative court appeal, insofar as it enters into it.

Considerations

The Federal Court adheres to its case law that the cantons, which provide for two judicial instances for the harmonized cantonal taxes, must also provide for the same legal remedy for the direct federal tax. This is justified in order to avoid contradictory decisions on the same legal issues.

Art. 145 LIFD allows the cantons to provide for a two-tier instance system also for the direct federal tax. In this context, it is permissible to restrict the cognition of the second instance and to limit the right to submit new evidence. This serves the economy of the proceedings and can counteract an abusive conduct of the proceedings.

However, the proceedings before the second cantonal appeal instance must meet the minimum requirements of Art. 98a para. 3 OG. In particular, the right to appeal and the…