Judgment summary
Teekay Limited appealed against additional income tax assessments issued by the Kenya Revenue Authority dated 30th September 2024 for the year 2022 and for the period December 2021 to January 2022. The Appellant's objection was disallowed by an Objection Decision dated 23rd December 2024, prompting the appeal to the Tax Appeals Tribunal.
The Respondent raised a preliminary objection seeking to strike out the appeal, which the Tribunal dismissed. The Tribunal then considered whether the assessments were statutorily time barred and whether the Respondent erred in confirming the assessments.
The Tribunal found that the assessments were issued within the five-year period allowed under Section 31(4) of the Tax Procedures Act and were therefore not time barred. On the merits, the Tribunal found that the Appellant had not adduced the supporting documents it claimed to have provided during objection, and had therefore failed to discharge its burden of proof under Section 56(1) of the TPA and Section 30 of the Tax Appeals Tribunal Act.
The appeal was dismissed and the Objection Decision dated 23rd December 2024 was upheld.
Background
The Appellant is a limited liability company incorporated in Kenya (para 1). The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469, mandated under Section 5 of the Act to assess, collect and account for revenue (para 2).
The Respondent issued the Appellant with income tax Additional Assessments dated 30th September 2024, comprising Income Tax Company for the year 2022 amounting to Kshs 5,069,140 and Income Tax Company for the period December 2021 and January 2022 amounting to Kshs 9,424,500.48 (para 3).
The Appellant objected via a Notice of Objection dated 30th October 2024, filed both on iTax and manually (para 4). The Respondent issued an Objection Decision dated 23rd December 2024 (para 5).
Aggrieved, the Appellant filed a Notice of Appeal dated 8th January 2025, received by the Tribunal on 25th January 2025 (para 6). The Appellant later filed a Notice of Motion dated 3rd May 2025 seeking leave to file the appeal out of time, and by consent of both parties, leave was granted on 12th September 2025 (para 7).
Core dispute
The Appellant lodged a memorandum of appeal dated 25th January 2025 raising six grounds, including that the Respondent misapplied the Income Tax Act, that the assessments were raised outside the Tax Procedures Act and were therefore null and void, that the Respondent failed to consider the Appellant's objection grounds on merit, that the assessed amounts were not correctly reflected, that the Respondent disregarded documents provided at objection in violation of fair hearing rights, and that additional assessments on income tax and VAT were wrongly raised for December 2021 and January 2022 despite the Appellant having made no sales in those months (para 8).
The Appellant stated it had supplied bank statements, sales banking analysis for 2021, a stock sheet as at 31st December 2021, audited accounts for 2021 and 2022, debtors lists for 2021 and 2022, and ledgers for 2021 and 2022 (para 10). It argued these documents, together with a detailed explanation in the Notice of Objection under Section 51(3)(a) of the TPA, discharged its evidential burden under Section 56(1) of the TPA (paras 11-13). It also argued the Respondent misapplied Section 3(1) of the ITA as to what constitutes income (para 14).
The Appellant sought to have the objection decision set aside, and the principal tax, penalties and interest totalling Kshs 14,493,640.48 vacated, with costs (para 16).
The Respondent did not file a statement of facts opposing the appeal but instead lodged a preliminary objection dated 18th August 2025, arguing that the Notice of Appeal, Memorandum of Appeal and Statement of Facts (all dated 25th January 2025) were invalid, null and void ab initio, for offending Section 52 of the TPA and Sections 12 and 13 of the TATA, and sought to have the appeal struck out with costs (paras 17-18).
Court findings
The Tribunal first dismissed the Respondent's preliminary objection, noting that the Appellant had already been granted leave by consent on 12th September 2025 to file the appeal documents out of time (paras 19-21).
On the time-bar issue, the Tribunal applied Section 31(4) of the TPA, which permits the Commissioner to amend an assessment within five years of the relevant self-assessment return or notification date. The Tribunal found that the additional assessments issued on 30th September 2024 for the years 2021 and 2022 fell within the five-year statutory period, and the Appellant failed to demonstrate that the Respondent acted outside that period (paras 25-27).
On the merits, the Tribunal noted that the objection decision indicated the assessments arose from variances between the turnover declared in the 2021 income tax returns and expected income per a banking analysis method, and from unaccounted stock in 2021 and 2022 to which a markup was applied to determine undisclosed income (paras 30-31).
The Tribunal applied Section 50(1)(a) of the TPA, under which a notice of assessment is conclusive evidence that the assessment is correct unless rebutted, and Section 56(1) of the TPA and Section 30 of the TATA, which place the burden of proof on the taxpayer (paras 32-37). Citing Katambo v Attorney General & another and Commissioner of Domestic Taxes v Bosky Industries Limited, the Tribunal reiterated that the taxpayer must first tender evidence of legitimate transactions before the burden can shift to the Commissioner (paras 36, 42).
The Tribunal found that although the Appellant asserted it had furnished the Respondent with invoices, bank statements, sales banking analysis, stock sheets, audited accounts, debtors lists and ledgers, it did not file these documents to support the appeal, and its statement of facts did not address why the assessments were issued (paras 44-45). As to the VAT issue, the Tribunal found the Appellant's own objection letter dated 30th October 2024 referenced specific VAT acknowledgement return numbers (KRA202459700912 and KRA2024596996772), showing the Appellant was aware of the VAT default assessments despite claiming it had not been served with them (paras 46-47).
The Tribunal concluded that the Appellant failed to discharge its burden of proof under Section 56(1) of the TPA and Section 30 of the TATA, and therefore failed to demonstrate that the Respondent erred in confirming the assessment (para 48).
Outcome
The Tribunal held that the appeal was devoid of merit and dismissed it. The Objection Decision dated 23rd December 2024 was upheld. Each party was ordered to bear its own costs (paras 49-50).
Major issues / areas of contention
- Whether the Respondent's preliminary objection to strike out the appeal should be upheld.
- Whether the additional income tax assessments were statutorily time barred under Section 31(4) of the Tax Procedures Act.
- Whether the Respondent erred in confirming the assessment in the Objection Decision.
- Whether the Appellant discharged its burden of proof under Section 56(1) of the TPA and Section 30 of the TATA by adducing the documents it claimed to have provided at objection stage.
- Whether the Appellant had been served with, or was otherwise aware of, the VAT default assessments referenced in the objection.