Actor Jang Keun-suk / Courtesy of Coupang Play

An appeals court has ruled against the entertainment company founded by actor Jang Keun-suk's mother in a lawsuit that the firm filed to cancel an order to pay penalty tax for underreporting its income in 2012, judicial officials said Thursday.

The company, Bom Bom, formerly known as Tree J Company, had failed to report some 5.38 billion won ($4.04 million) of income to tax authorities, while keeping the money in an overseas account, but the tax authorities found the omission in 2016.

The company later paid taxes on the omitted income, but the tax authorities levied an additional 320 million won of penalty tax for underreporting its income, and the company filed an administrative suit seeking to cancel the order.

The company claimed it had no intention to evade taxes, but the Seoul Administrative Court ruled in favor of the tax authorities, saying tax evasion happened as the company received money in the overseas account that was hard for tax authorities to track and failed to record the income in its ledger.

The Seoul High Court has recently upheld the previous ruling. (Yonhap)