Judgment summary
The Tribunal considered an appeal by Caroline Mukenyi Njoroge against an Objection Decision of the Commissioner for Legal Services & Board Coordination dated 30th September 2025, which confirmed additional VAT and income tax assessments for the period 2018 to 2022.
The Tribunal found that the Appellant had not sufficiently supported her objection with the required documents, and held that the Respondent's decision was justified. The appeal was dismissed, with each party bearing its own costs.
Background
The Appellant is an individual taxpayer. The Respondent is the principal officer appointed under Section 13 of the Kenya Revenue Authority Act, mandated with collecting and administering tax laws (paras 1-2).
The Respondent conducted a compliance review on the Appellant for the period 2018 to 2022 and, by a letter dated 29th September 2023, issued a Pre-Assessment Notice for taxes amounting to Kshs. 41,222,524.50 comprising income tax and VAT (para 3).
The Respondent subsequently issued Additional Assessment Orders on diverse dates in October to December 2023 for VAT and income tax (para 4).
On 31st July 2025, the Appellant filed a Late Objection Application, which the Respondent accepted on 15th August 2025 (para 5). On 30th September 2025, the Respondent issued its Objection Decision fully rejecting the objection and confirming the additional assessments (para 6). The Appellant filed this Appeal by Notice of Appeal dated 22nd October 2025 (para 7).
Core dispute
The issue for determination was whether the Respondent's Objection Decision dated 30th September 2025 was justified (para 28).
The Appellant argued that the Respondent erred in claiming Kshs. 39,487,377.76 in VAT and income tax despite her having discharged her evidentiary burden, and that she had supplied bank statements, audited accounts and receipts which the Respondent did not verify (paras 8(a)-(b)).
She further contended that her former accountants had knowingly or maliciously made erroneous returns despite having the relevant facts and documents, wrongly painting her as a tax evader, and that she lacked access to KRA emails and iTax logins because the previous accountant held all login details, a matter under investigation (paras 8(d), 13, 30-31).
The Appellant also argued that gross revenue per the audited accounts was consistent, making the Commissioner's estimated revenue erroneous, and that the Objection Decision breached principles of natural justice, equity and Article 47 of the Constitution of Kenya 2010 as well as Section 4(1) of the Fair Administrative Action Act (para 8(e)-(g), para 32).
The Respondent maintained that its review established variances between VAT returns and gross sales from withholding certificates, that the Appellant failed to provide reconciliations, trial balances, general ledgers, invoices and receipts, and that the Appellant underdeclared annual income resulting in a turnover variance of Kshs. 112,821,294.16 for the period under review (paras 19-23). The Respondent also noted the Appellant provided only unsigned audited statements, which cast doubt on their reliability (para 23).
Court findings
The Tribunal noted that the Respondent's Objection Decision had specified the documents required from the Appellant to support her objection, including audited financial statements, trial balances, general ledgers, sales/purchases/expenses ledgers, bank statements, and reconciliations between sales declared in VAT returns and gross-up VAT withholding amounts (para 33).
The Tribunal found that the Respondent's contention that the Appellant only provided unsigned draft audited financial statements and bank statements for 2020 and 2019 had not been substantially rebutted (para 34).
The Tribunal cited Section 59 of the Tax Procedures Act (cap 469B) on the Commissioner's power to require production of documents, Section 56(1) of the Tax Procedures Act on the taxpayer's burden of proof, and Section 30 of the Tax Appeals Tribunal Act (cap 469A) on the appellant's burden of proof in Tribunal proceedings (paras 35-37).
The Tribunal referred to its earlier decision in Abyssinia Iron and Steel Ltd -vs- Commissioner of Customs and Border Control (TAT No. 435 of 2022), which held that once an appellant provides evidence that an assessment was wrong, the burden shifts to the Respondent to show the assessment was not arbitrary, capricious or imagined, before shifting back to the appellant (para 38).
The Tribunal held that the Appellant did not sufficiently support her objection against the additional VAT and income tax assessments, and that the Respondent's decision dated 30th September 2025 was justified (para 39).
Outcome
The Tribunal found that the Appeal lacked merit and ordered that the Appeal be dismissed, that the Respondent's Decision dated 30th September 2025 be upheld, and that each party bear its own costs (para 40).
Major issues / areas of contention
- Whether the Respondent's Objection Decision dated 30th September 2025 confirming additional VAT and income tax assessments was justified.
- Whether the Appellant discharged her burden of proof under Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act.
- Whether the Appellant had provided sufficient documentary evidence, including audited financial statements, trial balances, ledgers, reconciliations and bank statements, to support her objection.
- Whether the alleged conduct of the Appellant's former accountants affected her liability for the assessed taxes.
- Whether the Respondent's decision violated the Appellant's constitutional right to fair administrative action under Article 47 of the Constitution of Kenya 2010 and Section 4(1) of the Fair Administrative Action Act.