Photo/Illutration The Tokyo Regional Taxation Bureau in the capital’s Chuo Ward (Hiroshi Nakano)

The National Tax Tribunal has overturned a decision by regional tax authorities that ordered the founder of Sazaby League Ltd. and an asset management firm to pay a total of 8 billion yen ($69 million) in back taxes, sources said.

The tribunal cited a lack of clear basis for the order, according to the sources.

It is unusual for the tribunal to revoke an order for such a massive amount.

Sazaby League, the Tokyo-based operator of the Afternoon Tea Living household goods stores, as well as apparel shops and restaurants, was delisted in 2011 after it was taken over by an investment firm headed by a relative of Rikuzo Suzuki, the founder of Sazaby League, through a tender offer bid.

During the takeover bid, Suzuki and Mikiya, a Tokyo-based asset management company headed by Masatoku Mori, chairman of Sazaby League, bought a total of 60,000 new shares issued at 50,000 yen per share by the investment firm to raise funds for the bid.

Suzuki and Mikiya declared a total of 900 million yen in profits from the sales of the shares at a price of 80,000 yen per share to the investment firm after its successful tender offer.

But the Tokyo Regional Taxation Bureau determined that the shares were worth more than 10-fold that amount at 840,000 yen per share, citing a significant increase in the investment firm’s assets following the takeover.

The bureau concluded that Suzuki and Mikiya failed to declare a total of 21 billion yen in income due to understating profits from the share sales, ordering the payment of a total of 8 billion yen in back taxes, including penalties.

In 2019, Suzuki and Mikiya filed a complaint with the National Tax Tribunal, asking it to review the order.

In the ruling, dated Jan. 20, the tribunal accepted their claim that the price of 80,000 yen per share was appropriate because it was set according to the articles of the investment firm.

The tribunal concluded that the price per share, as calculated by the tax authorities, has no clear basis.

The Tokyo Regional Taxation Bureau declined to comment on the ruling.