Judgment summary
The Appellant, an individual in the auctioneer services business, appealed against an Objection decision dated 19th September 2025 that confirmed Income tax and VAT additional assessments for the periods 2020 to 2024.
The Tribunal considered whether the Respondent was justified in confirming the additional assessments. It found that the Appellant had not shown that her objection had been invalidated, that her substantive grounds of appeal were being raised for the first time on appeal contrary to Section 56(3) of the Tax Procedures Act, and that she had failed to produce records to discharge the burden of proof under Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act.
The appeal was dismissed and the Objection decision upheld, with each party bearing its own costs.
Background
The Appellant is an individual whose principal business is auctioneer services (1). The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469 (2).
The Respondent issued the Appellant with Income tax and VAT additional assessments for the periods 2020 to 2024 on 26th June 2025 (3). The Appellant objected to the assessments on 28th July 2025 (4). The Respondent issued an Objection decision on 19th September 2025 confirming the assessments (5).
Dissatisfied with the Objection decision, the Appellant filed her Notice of Appeal dated 18th October 2025 on 31st October 2025 (6), premised on a Memorandum of Appeal dated 30th October 2025 filed on 31st October 2025 (7).
Core dispute
The Appellant disputed the assessments on two limbs. First, she contended that her right to fair administrative action was breached because the Respondent failed to comply with Section 51(4) of the Tax Procedures Act within the statutory timelines, alleging that 37 days elapsed between her notice of objection dated 28th July 2025 and the Respondent's email of 3rd September 2025 (61, 26).
Second, while admitting that she did not furnish the Respondent with the objection grounds, Excel reconciliation of the WHVAT certificates and Audited Financial Statements, she maintained that she had since gathered these records and was ready to avail them (61, 15, 16).
The Appellant contended the additional assessments of Kshs. 43,202,127 Principal Income tax and VAT and Kshs. 15,135,163 penalties and interest were excessive, punitive and erroneous, and referred to a total estimated principal tax under dispute of Kshs. 65,397,607.5 as tabulated per the general ledger (9, 14). The Respondent maintained that the assessments were lawful under Sections 24 and 31 of the Tax Procedures Act and that the Appellant failed to discharge her burden of proof under Section 56 of the Tax Procedures Act (45-56).
Court findings
The Tribunal found that no evidence had been placed before it showing that the Respondent had invalidated the Appellant's objection application, and that the Objection decision, not any invalidation, was the impugned decision in the appeal. It therefore declined to analyse the Section 51(4) objection-invalidation argument (66).
The Tribunal held that the substantive grounds now advanced to impugn the assessments were never placed before the Respondent at the objection stage, and that raising them for the first time on appeal, without leave, offended Section 56(3) of the Tax Procedures Act (68, 70).
The Tribunal further found that none of the documents the Appellant placed before it were substantive transactional records, and that she did not produce any of the documents the Respondent had requested, nor any records required under Section 54A of the Income Tax Act, Section 43 of the VAT Act and Section 23 of the Tax Procedures Act (71).
Relying on CMC Aviation Ltd v Cruisair Ltd (1) [1978] KLR 103, the Tribunal held that mere averments, unsupported by evidence, do not discharge the statutory burden of proof (72-73). The Tribunal concluded that the Appellant had failed to discharge the burden under Section 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act, and that the Respondent was justified in confirming the assessments (74-75).
Outcome
The Tribunal found the Appeal unmeritorious and dismissed it. The Objection decision dated 19th September 2025 was upheld. Each party was ordered to bear its own costs (76).
Major issues / areas of contention
- Whether the Respondent was justified in confirming the Income tax and VAT additional assessments (58).
- Whether the Respondent breached the Appellant's right to fair administrative action by failing to comply with the timelines in Section 51(4) of the Tax Procedures Act.
- Whether new substantive grounds raised for the first time on appeal, without leave, were barred by Section 56(3) of the Tax Procedures Act.
- 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 by producing records to disprove the assessments.