[2025] KETAT 16 (KLR)

African Fund for Endangered Wildlife v Commissioner of Domestic Taxes (Tax Appeal E362 of 2024) [2025] KETAT 16 (KLR) (Commercial and Tax) (17 January 2025) (Judgment)

Neutral citation: [2025] KETAT 16 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Commercial and Tax

Tax Appeal E362 of 2024

CA Muga, Chair, BK Terer, EN Njeru, E Ng'ang'a & SS Ololchike, Members

January 17, 2025

Between

African Fund For Endangered Wildlife

Appellant

and

Commissioner Of Domestic Taxes

Respondent

Judgment

Background 1. The Appellant is a non-profit organisation whose main object is to provide facilities and sanctuaries for the maintenance, protection, preservation and development of flora and fauna of whatsoever kind and wheresoever situated. Among other activities, includes educating Kenyan school children and youth on their country’s wildlife and environment, as well as give local and international visitors an opportunity to come into close contact with the world’s tallest species of giraffe - Rothschild and contribute towards the maintenance of the animals and the facilities. The Appellant is non-trading.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469 Laws of Kenya (hereinafter “the Act”). Under Section 5(1), the Respondent is an agency of the Government for the collection and receipt of all tax revenue. Further under Section 5(2) with respect to the performance of its functions under subsection (1), it is mandated to administer and enforce all provisions of the written laws as set out in Part 1 and 2 of the First Schedule to the Act for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws.

3. The Respondent vide a letter dated 11th August 2023, informed the Appellant of its intention to verify the Appellant’s documents among them; the Appellant’s Tax records including audited financial statements, bank statements, and income and expense ledgers for years 2021 and 2022. The Appellant then responded to the said letter vide an electronic mail of 28th September 2023 providing the requested documents and / or information.

4. The Respondent and the Appellant then had physical meetings, exchanged electronic mail correspondence, telephone conversations and shared documentation between the months of October 2023 and 26th November 2023 in a bid to amicably settle the issues in dispute.

5. On 27th November, 2023, the Respondent vide an electronic mail issued its audit findings demanding corporation tax amounting to Kshs. 18,951,238. 00 and Value Added Tax (hereinafter “VAT”)amounting to Kshs. 1,663,009. 06 . On 29th November 2023, the Respondent, vide an electronic mail served the Appellant with an additional assessment demanding corporation tax and VAT amounting to Kshs. 20,574,246. 00 in principal taxes, penalties and interest.

6. The Appellant objected to the assessment vide its letter dated 20th December, 2023 and on 16th February, 2024 the Respondent issued the Appellant with an objection decision and confirmed the tax assessment amounting to Kshs. 20,574,246. 00 as principal taxes principal taxes, penalties and interest.

7. Aggrieved by the decision of the Respondent, the Appellant filed its Notice of Appeal dated 15th March, 2024 on 28th March 2024.

The Appeal 8. The Appeal is premised on the following grounds of Appeal as stated in the Appellant’s Memorandum of Appeal filed on 28th March, 2024:i.That the Respondent erred in law and in fact by misinterpreting and misapplying Section 15 (2) (w) as read with paragraph 10 of the 1st Schedule to the Income Tax Act, Cap 470 of the Laws of Kenya (hereinafter “ITA”) by taxing grant funds (cross-donations) given for projects to fellow non-profit organizations/entities in furtherance of its own objectives and work as allowed by its Memorandum and Articles of Association.ii.That the Respondent erred in law and in fact by failing to take into consideration the Appellant’s tax computation which was anchored on the provisions of Section 15 and 16 of the ITA, on allowable and disallowed deductions respectively.iii.That the Respondent erred in fact and in law by only considering an expense item in the Appellant’s financial statements, claimed by the Appellant as “taxes paid”. The Respondent then disallowed the expense line to arrive at “tax demand”. This is gravely erroneous as a proper tax computation would consider other expense lines pursuant to the dictates of Section 15 and 16 of the ITA.iv.That the Respondent erred in law by failing to follow customary practice procedure in raising an assessment. In this case, the Respondent issued a pre-assessment notice and on the same day confirmed the figures on the Appellant’s i-Tax portal without issuing an assessment to the Appellant.v.That the Respondent erred in fact and in law in issuing an objection decision without taking into account the relevant evidence and proof documents against the assessment and instead considered matters which were not in dispute and trivialized issues in raising the objection decision. The Respondent’s objection decision failed to meet the “litmus test” for a valid objection decision on the following grounds:a.Failing to address the areas that were raised by the Appellant;b.Failing to correctly interpret the provisions of the law in respect of the issues of law raised in the Appellant’s objection;c.Failing to admit and review the bundle of Appellant documents supporting the Appellant’s objection submitted on 14th February, 2024. vi.That the Respondent erred in law and in fact by failing to appreciate the timing difference in regards to accounting for incomes in relation to income as indicated in the Audited Accounts vis a vis Income reflected in the VAT Returns.vii.That the Respondent erred in law by curtailing the Appellant’s right to a fair hearing as enshrined in Section 4(3)(a) and 4(4)(b) of the Fair Administrative Act, CAP 7L of the Laws of Kenya (hereinafter “FAAA”) and Article 47 of the Constitution of Kenya, 2010 (hereinafter “the Constitution”).

Appellant’s Case 9. The Appellant’s case was predicated on its statement of facts filed on 28th March, 2024 wherein the Appellant stated that it is exempted from using the word “limited” after its name.

10. The Appellant stated the chronology of the events that led to the objection decision as already outlined at the preceding paragraphs 1-7 of this Judgement. The Appellant averred that the Respondent did not issue it with an assessment letter as required under tax customary practice thereby failing to accord the Appellant reasonable time to respond to the issues raised in the audit findings. This was irregular in law and contrary to Section 4(3)(a) of the FAAA which stipulates as follows:“Where an administrative action is likely to adversely affect the rights or fundamental freedoms of any person, the administrator shall give the person affected by the decision…a.Prior and adequate notice of the nature and reasons for the proposed administrative action.”

11. The Appellant stated that on 27th November, 2023, the Respondent served on it with a pre-assessment notice. The Respondent then issued an additional assessment on 29th November, 2023 without, according the Appellant, reasonable time to respond to the findings. The Appellant stated that it was not given an opportunity to reply or question the basis of the figures stated in the Respondent’s pre-assessment notice. The manifestly hasty action of the Respondent was not procedurally fair and amounted to a violation of the Appellant’s right to fair administrative action as provided under Section 4 (3) (a) of the FAAA.

12. Upon receiving the additional assessment, the Appellant acted promptly and lodged an Objection to the Assessment vide the Appellant’s letter of objection dated 20th December 2023. The Appellant averred that its objection to the assessment was on the basis of the following grounds which it also proceeded to explain in detail as outlined below:a.Objection to assessment of tax on disallowed expenses (cross-donations / funding grants to other charities and for extension work / research).

13. The Appellant under this ground of objection stated that the Respondent erred in disallowing an item titled “donations” in the financial statements claimed by the Appellant in their audited financial statement in years 2021 and 2022. The assessment under this tax head was procedurally unfair and unreasonable as funding grants / donations were made to fellow charitable organizations / for work in line with the provisions of the Memorandum and Articles of Association of the Appellant which among others state as follows:“a)Memorandum and Articles of Association (Extract) Article No. 3 (h) – Page 2To enter, with any government or authority, supreme, municipal, local or international, or any person or company, into any arrangement that may seem to the Association to be conducive to the attainment of the objects of the Association and to obtain from any such government, authority, person or company any rights, privileges, charters, contracts, licenses or concessions which the Association may think it desirable to obtain and to carry out, exercise and comply with.b)Memorandum and Articles of Association (Extract) Article No. 3 (x) – Page 5To carry out any work which may seem to the Association to be conducive to the attainment of its objects.c)Memorandum and Articles of Association (Extract) Article No. 3 (ee) – Page 5To carry out research alone or in conjunction with other bodies having similar objectives as the Association or to foster and encourage the carrying out of research.d)Memorandum and Articles of Association (Extract) Article No. 3 (ii) – Page 6To make any donation either in cash (provided that such donation is regarded as charitable under the laws of Kenya but only to the extent that the expression “charitable” is defined or recognised under the laws of Kenya or assets for the furtherance of the objects of the Association.e)Memorandum and Articles of Association (Extract) Article No. 3 (uu) – Page 7To engage in activities with a view to making known the activities and objectives of the Association as may seem expedient….”

14. The Appellant stated that some of the beneficiaries of its projects included: The National Museum of Kenya whose objective is to assess the conservation status of the critically endangered Ruppell’s vultures in Hells Gate and Mt. Longonot.

The University of Nairobi, Centre for Advanced Studies in Environmental Law and Policy (CASELAP) whose research activity was targeted at the management and threats facing public spaces in Nairobi County.

Great Lakes University of Kenya (GLUK), Zoology Department whose research objective was targeted at the spatial distribution of potentially toxic elements in nature reserve.

AROCHA Kenya whose objective was to establish the National House Crow Eradication Program in Kenya.

15. The Appellant stated that the Respondent therefore failed to make a good judgement and the grant funds / cross-donations in the Appellant’s audited accounts were rightfully expensed and don’t fall within the law misapplied by the Respondent. Such grant funds / cross- donations are rightful costs of the Appellant. Cross donations / grant funding between charities / non-commercial entities are not excluded under any law in Kenya and are allowed by the memorandum and articles of association of the Appellant.

16. The Appellant further stated that the Respondent relied on the wrong provision of the law, Section 15 (2) (w) of the ITA as the Section does not preclude in any way grants / sub-grants / donations / gifting / extension of work through related charities / institutions or through any other party.

Objection to Assessment on grounds of under-declared income for VAT purposes. 17. The Appellant stated that the Respondent brought to charge the Appellant’s variance in declaration between VAT3 vis a vis the income tax company returns for years 2021 and 2022 and subjected the amounts to tax. The Appellant recognized / booked sales in the VAT account on the basis of when money is received and not when income was accrued and as such some incomes relating to year 2021 were recognized in year 2022 and the same case for the subsequent financial years and thus overstating income as indicated in its VAT 3 return having used the wrong basis for deriving the alleged underdeclared income.

18. The corporation taxes as reflected in the income tax company returns for years 2021 and 2022, are the true position of the incomes received by the Appellant in the respective financial years. The variances are merely differences as a result of time periods for filing. The Appellant’s plea to the Respondent was to allow for amendment of its returns to incorporate the variances was not granted and reason for refusal was never given nor allowed to be discussed.

Objection to assessment on disallowed expense (taxes paid) 19. Under this head the Appellant stated and reiterated that the Respondent premised its working on invalid estimates and erroneous assumption as to tax. The Respondent disallowed an expense line “taxes already paid” and brought it to charge. The Respondent failed to take into account the Appellant’s tax computation which was anchored on the provisions of Section 15 and 16 of the ITA, on allowable and disallowable deductions respectively. Additionally, the Appellant stated that its computation was based on figures in the audited financial statements.

Objection on the grounds of violation of rights to fair administrative action 20. The Appellant stated that the Respondent’s assessment was contrary to its legitimate expectation granted under Article 47 of the Constitution. The Appellant’s legitimate expectation was that the Respondent would allow reasonable time to the Appellant to respond to the audit findings before an assessment would be issued. The Appellant stated that instead the Respondent’s manifestly hasty decision made in one day without considering the documents and evidence given by it and ignoring matters previously discussed and agreed upon, was contrary to the Appellant’s rights under the “Citizens’ Service Delivery Charter” published by the Respondent.

21. The Appellant stated that its tax agent had a meeting with the Independent Review of Objections (IRO) team on 25th January 2024 wherein the Respondent requested further documents and / or information in respect to break-down of interest income, acknowledgement receipts of donations disbursed and funding agreement.

22. The Appellant stated that on 7th February 2024 a further meeting was held between the Appellant’s tax agent and the IRO, where the Appellant’s tax agent submitted a file with the funding (grant) agreements and receipts of payments (cross-donations) made to the beneficiaries of the Appellant. The Respondent adamantly refused to receive / review the documents even after having earlier asked for the information.

23. The Appellant stated that the Respondent without taking into consideration the material evidence it submitted, proceeded to issue an objection decision dated 16th February, 2024 demanding taxes amounting to Kshs. 20,574,246. 00 in principal taxes, penalties and interest (for the period 2021 to 2022).

24. The Appellant, in buttressing its averments cited the case of Nizaba International Trading Company Limited v Kenya Revenue Authority [2000] eKLR, where the High Court held that failure to consider material facts presented by a party against whom an assessment had been raised amounts to an abuse of legislative provisions and such an assessment cannot be acted upon. Further, the Appellant also cited the case of Republic v Kenya Revenue Authority ex-parte Amsco Kenya Limited [2014] eKLR where it was held as follows:“Further an administrative action cannot be said to be procedurally fair where a decision is arrived at based on an opinion formed as a result of the consideration of the version of only one side since by a consideration of one side one cannot be said to have felt certain about the truth of the matter in dispute.”

25. The Appellant also cited the holding of the High Court in the case of Kenya Medical Association Housing Cooperative Society Limited v Attorney General & another [2016] eKLR where it was held that it was a breach of the rules of natural justice to fail to give consideration to the person against whom a decision is made. Citing Lord Reid in Ridge v Baldwin [1963] 2 ALL ER 66 where the Court emphasized the effect of this as follows:“Time and again in the cases I have cited it has been stated that a decision given without regard to the principle of natural justice is void.”

26. The Appellant submitted that the Respondent acted in a manner that was procedurally unfair and in contravention of the law and made the following prayers to the Tribunal:a.This Appeal be allowed;b.That the Respondent’s decision as contained in its letter dated 16th February 2024 be set aside in its entirety.c.That the Principal tax and resulting penalties and interest demanded by the Respondent amounting to Ksh. 20,547,246. 00 as contained in the Objection Decision dated 16th February 2024, be vacated in its entirety.d.That the costs of and incidentals to this Appeal be awarded to the Appellant.e.Any other orders that the Tribunal may deem fit.

Respondent’s Case 27. The Respondent relied on its statement of facts dated 26th April, 2024 and filed on 29th April, 2024 to address the Appellant’s grounds of Appeal.

28. The Respondent reiterated its position as outlined in its objection decision refuting all the Appellant’s allegations in its documents of Appeal. The Respondent also identified 7 issues for determination which it proceeded to analyse as hereinunder:

Whether the Respondent erred in law and fact by misinterpreting and misapplying Section 15(2) (w} as read together with paragraph 10 of the 1st schedule of the ITA 29. The Respondent stated that it issued assessments as a result of the outcome of the audit conducted. The Appellant claimed that it had made allowable donations to third parties. The Respondent also stated that the treatment of donations is provide under section 15 (2) (w) of the ITA which provides as follows:“Without prejudice to subsection (1), in computing for a year of income the gains or profits chargeable to tax under section 3(2)(a), the following amounts shall be deducted –"any cash donation in that year of income to a charitable organization registered or exempt from registration under the Societies Act or the Non-Governmental Organizations Coordination Act, 1990, and whose income is exempt from tax under paragraph 10 of the First Schedule to this Act, or to any project approved by the Minister for Finance;"

30. The Respondent further stated that paragraph 10 of the 1st schedule of the ITA provides as follows:“Subject to section 26, the income of an institution, body of persons, or irrevocable trust, of a public character established solely for the purposes of the relief of the poverty or distress of the public, or for the advancement of religion or education: -a.established in Kenya; orb.whose regional headquarters is situated in Kenya,in so far as the Commissioner is satisfied that the income is to be expended either in Kenya or in circumstances in which the expenditure of that income is for purposes which result in the benefit of the residents of Kenya: Provided that any such income which consists of gains or profits from a business shall not be exempt from tax unless those gains or profits are applied solely to those purposes and either -i.the business is carried on in the course of the actual execution of those purposes; orii.the work in connection with the business is mainly carried on by beneficiaries under those purposes; oriii.the gains or profits consist of rents (including premiums or similar consideration in the nature of rent) received from the leasing or letting of land and chattels leased or let therewith and provided further that an exemption under this paragraph-(A)shall be valid for a period of five years but may be revoked by the Commissioner for any just cause; and(B)shall, where an applicant has complied with all the requirements of this paragraph, be issued within sixty days of the lodging of the application.

31. The Respondent stated that during the audit and at the current Appeal, the Appellant provided evidence that the donation was made to an entity that met the requirement of section 15 (2) (w) of the ITA. The Appellant did not provide any evidence that entity which received the donations were registered or exempt from registration under the Societies Act, CAP 108 of the laws of Kenya (hereinafter “Societies Act”) or the Non-Governmental Organizations Coordination Act, CAP 134 of the Laws of Kenya (hereinafter “NGO Act”).

32. The Respondent stated that the Appellant having not provided the exemption certificates of the beneficiaries therefore it did not qualify for exemption as outlined under Section 15(2)(w) of the ITA which precisely states as follows:“any cash donation in that year of income to a charitable organization registered or exempt from registration under the Societies Act or the Non-Governmental Organizations Coordination Act, 1990, and whose income is exempt from tax under paragraph 10 of the First Schedule to this Act, or to any project approved by the Minister for Finance;"

33. The Respondent further stated that according to the Appellant, it contended that being a non-profit making organization, it was exempt from paying tax subject to paragraph 10 of the first schedule of the ITA. This was and is a miscomprehension of the section. The section has the following proviso:“any such income which consists of gains or profits from a business shall not be exempt from tax unless those gains or profits are applied solely to those purposes and either the business is carried on in the course of the actual execution of those purposes, or the work in connection with the business is mainly carried on by beneficiaries under those purposes;

34. The Respondent stated that the Appellant having donated to a third party, such an expense was not covered under the exemption. In considering the above provision, the Respondent stated that it did not misinterpret the provision of Section 15(2)(w) of the ITA and that the assessments issued to the Appellant were proper in law.

Whether the Respondent erred in law and in fact by failing to take into consideration the Appellant's tax computation which was anchored on the provisions of Section 15 and 16 of the ITA on allowable and disallowed deductions 35. In response to this ground, the Respondent stated that the assessments were in line with Section 15 and 16 of the ITA. Section 16(2)(j) of the ITA provides as follows:“Notwithstanding any other provision of this Act, no deduction shall be allowed in respect of -gross interest paid or payable to related persons and third parties in excess of thirty per cent of earnings before interest, taxes, depreciationProvided that-(i)any income which is exempt from tax shall be excluded from the calculation of earnings before interest, taxes, depreciation and amortization; and..”

36. The Respondent stated that the Appellant failed to provide the evidence requested to prove that it was exempted from tax therefore making their income allowable subject to the above provision and averred that the court in Osho Drapers Limited vs. Commisisoner of Domestic Taxes, TAT No. 159 of 2018 held that the tax payer has to produce documents to discharge its burden of proof.

Whether the Respondent erred in fact and in law by only considering an expense item in the Appellant's financial statements claimed by the Appellant as "taxes paid" and disallowing the expense line to arrive at "tax demand" 37. In response to this ground, the Respondent stated that there were inconsistencies between tax computations and the financial statements provided by the Appellant. The Respondent also stated that the Appellant had claimed expenses that were not allowable for tax purposes as provided for under Section 16 of the ITA. The Respondent averred that expenses like donations, taxes paid and interests were not added back to the tax computations.

38. The Respondent averred that the donations specifically did not meet the requirements of Section 15(2)(w) of the ITA for the same to be treated as an allowable deduction. Further under section 16 of the ITA, taxes paid, interest, and penalties are not an allowable deduction for tax purposes. The Respondent's assessments were therefore raised in line with the law and the evidence provided by the Appellant.

Whether the Respondent erred in law by failing to follow customary procedure in raising assessments. 39. In response to this ground, the Respondent stated that the assessments were on time and the same was communicated to the Appellant on time. The Appellant stated that the Respondent issued a pre-assessment notice and on the same day confirmed the figures on the Appellant's i­ Tax portal without issuing an assessment to the Appellant. The Respondent stated that that was a miscomprehension of the timelines as provided under the Tax Procedures Act, CAP 469B of the Laws of Kenya (hereinafter “TPA”). The Audit process was conducted as follows:i.The Respondent issued the Appellant with the Notice of intention to verify records on 11th August, 2023;ii.The Parties had deliberation and meetings wherein the Appellant provided further information and issues on which consensus was not reached lead to the assessment;iii.The Parties again held meetings including on 17th October 2023;iv.Following the deliberations, the pending issues were reduced to an electronic mail on the 27th November 2023 and a formal assessment which the Appellant can object to was forwarded on 29th November, 2023 in line with section 31 of the TPA;v.The Appellant objected to the assessments on 20th December 2023 as provided under Section 51 (1) of the TPA; andvi.The parties again held further meetings and on 16th February, 2024, the Respondent issued an objection decision.

40. The Respondent averred that the Appellant was given the chance to object to the assessments whereby it lodged its notice of objection on 20th December 2023. The Respondent having considered the Appellant's grounds of objection proceed to issue an objection decision confirming the assessments on 16th February 2024.

41. The Respondent cited the following provisions of Section 51 of the TPA:“Objection to tax decision 1. A taxpayer who wishes to dispute a tax decision shall first lodge an objection against that tax decision under this section before proceeding under any other written law.

2. A taxpayer who disputes a tax decision may lodge a notice of objection to the decision, in writing, with the Commissioner within thirty days of being notified of the decision.

3. A notice of objection shall be treated as validly lodged by a taxpayer under subsection (2) if-a.the notice of objection states precisely the grounds of objection, the amendments required to be made to correct the decision, and the reasons for the amendments; andb.in relation to an objection to an assessment, the taxpayer has paid the entire amount of tax due under the assessment that is not in dispute.

8. Where a notice of objection has been validly lodged within time, the Commissioner shall consider the objection and decide either to allow the objection in whole or in part, or disallow it, and Commissioner's decision shall be referred to as an "objection decision".

9. The Commissioner shall notify in writing the taxpayer of the objection decision and shall take all necessary steps to give effect to the decision, including, in the case of an objection to an assessment, making an amended assessment.”

42. The Respondent reiterated its statement that according to the above provisions, the Appellant was duly served with a notice of assessment on time and given a chance to object to the assessments as such no law was breached. The Respondent did not at any point deny the Appellant any right or opportunity provided by statute.

Whether the Respondent erred in fact and in law in issuing an objection decision without taking into account of the Relevant Appellant's evidence and proof documents against the assessment and instead considered matters which were not in dispute and trivialized issues in raising the objection decision. 43. In response to this ground, the Respondent stated that all the Appellant's evidence was put into consideration before issuing the objection decision and that Appellant had not, in this Appeal, pointed out to any evidence which was ignored, which if allowed would have changed the tax position.

44. In any case, the issues herein were points of law, whether taxes paid, interest and penalties are allowable under section 16 of the ITA and whether all donations are deductible under section 15 (2) (w) of the ITA. the only thing the Appellant can avail to reduce the taxes is the registration or exemption from registration certificates for the entities which it made the donations to.

45. The Respondent averred that the objection decision was in line with the assessments and the evidence provided by the Appellant. The Respondent further averred that the Appellant failed to provide a reconciliation of sales and the evidence requested leading to the decision in the objection decision. It followed therefore that the Respondent complied with the law in issuing the assessments.

Whether the Respondent erred in law and in fact by failing to appreciate the timing difference in regards to accounting for incomes in relation to income as per the audited accounts vis a vis income as per the VAT returns 46. In response to this ground, the Respondent stated that the Appellant did not provide a reconciliation of sales and evidence as requested by the Respondent. The Respondent also stated that a comparison of the Appellant's declarations on i-Tax between income sales and VAT declarations indicated that there were variances noting the Appellant’s objection wherein it stated that it had declared sales in its VAT return upon payment rather than when income was accrued.

47. The Respondent stated that it was the Appellant's position that some of the payments relating to the year 2021 were recognized in the year 2022 and the year 2023, which led to the overstating of income pursuant to the VAT3 return. The Respondent further averred that the Appellant's explanation did not meet the requirements of Section 12 of the Value Added Tax Act , CAP 476 of the Laws of Kenya (hereinafter “VAT Act”) which provides for the time of supply of goods and services.

48. The Appellant did not however, demonstrate the payments it was referring to neither did it provide any reconciliation for the same. The Respondent stated that it ensured that it only took into account income and VAT as declared by the Appellant. In any case, the Appellant did not at any point make any application under section 31 of the TPA to amend it returns in case it thought it had an error.

Whether the Respondent erred in law by curtailing the Appellant's right to a fair hearing as enshrined in Section 4(3}(a) and 4(4)(b) of the FAAA and Article 47 of the Constitution 49. In response to this ground, the Respondent stated that the Appellant was granted its right to fair hearing and that the Respondent did not curtail the Appellant's right to fair hearing. The Respondent also stated that it held a series of meetings with the Appellant and that the Appellant was actively involved in discussing all its grounds of objection.

50. The Respondent further stated that there was a series of electronic mail correspondence between the Respondent and the Appellant where the Respondent engaged the Appellant in regards to the provision of additional documents and reconciliation of undeclared income. The Respondent also stated that the Appellant was further granted an opportunity to lodge its Notice of Objection where the Respondent carefully considered their grounds of objection and fairly issued an objection decision.

51. Finally, the Respondent averred that the objection decision was proper in law and made the following prayers to the Tribunal:a.That the Respondent’s objection decision dated 16th February, 2024 be found as proper in law.b.That this Appeal be dismissed with costs to the Respondent.

Partie’s Submissions 52. Parties were directed by the Tribunal to file submissions on or before the 24th October, 2024. Neither party complied and therefore, during the hearing on 13th November, 2024, the Tribunal directed that the case would proceed on the basis of the pleadings of either party.

Issues For Determination 53. The Tribunal has considered the parties pleadings and documentation and is of the view that this Appeal distils into the following single issue for determination:Whether the Appeal is properly before the Tribunal.

Analysis And Findings 54. The Tribunal having established the issue for determination will proceed to analyse it as follows:

Whether the Appeal is properly before the Tribunal 55. This dispute arose when upon carrying out a verification exercise of the Appellant’s financial statement and books of account, the Respondent raised additional assessments in respect to income tax and VAT. The Appellant also argued, in its pleadings that it ought to be allowed to amend its returns to incorporate variances, that the cross donations were wrongly classified as disallowable expenses and that its rights as a taxpayer to fair administration and justice were violated when the Respondent acted too quickly without giving it ample time to respond to the queries and to provide documents. The Respondent denied the Appellant’s assertions and was adamant that it followed the law in issuing its objection decision.

56. The Tribunal notes the following provisions of section 13 (1) and (2) of the Tax Appeals Tribunal Act, CAP 469A of the Laws of Kenya (hereinafter “TATA”):“(1)A notice of appeal to the Tribunal shall—(a)be in writing or through electronic means;(b)be submitted to the Tribunal within thirty days upon receipt of the decision of the Commissioner.(2)The appellant shall, within fourteen days from the date of filing the notice of appeal, submit enough copies, as may be advised by the Tribunal, of—(a)a memorandum of appeal;(b)statements of facts; and(c)the appealable decision; and(d)such other documents as may be necessary to enable the Tribunal to make a decision on the appeal.”

57. The Tribunal notes that the objection decision was issued on 16th February, 2024 and that the Appellant proceeded to file its Notice of Appeal dated 15th March, 2024 on 28th March, 2024 without leave of the Tribunal having first been granted. The Notice of Appeal ought to have been filed on or before 16th March, 2024 and in any case if it was filed after the 30-day statutory period as provided by TATA, then the Appellant ought to have sought leave to file its Appeal out of time.

58. The Tribunal notes the opinion of J Mativo [as he then was] in Equity Holdings Ltd vs Commissioner of Domestic Taxes Civil Appeal E069 and E025 of 2020(2021) KEHC 25(KLR) that express statutory edicts are not procedural technicalities and that further, Article 159 (2) (d) of the Constitution was not meant to oust express statutory provisions and to open a window for disregard of statutory requirements. It is the Tribunal’s firm view that the law is settled that statutory timelines are not a procedural technicality. Statutory timelines are set in mandatory terms and are express statutory edicts.

59. The Tribunal cites the following holding of Justice Nyarangi in the case Owners of Motor Vessel “Lilian S” V Caltex Oil (K) Limited (1989) eKLR’s :‘Jurisdiction is everything. Without it, a court has no power to make one more step. Where a court has no jurisdiction, there would be no basis for a continuation of proceedings pending other evidence. A court of law downs tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction...’

60. The Tribunal will down its tools since it is without jurisdiction in this matter on the basis that the Appeal was filed out of time without its leave. Accordingly, the Tribunal finds that this Appeal is not properly before it and is available for striking out.

Final Decision 61. The upshot of the foregoing is that the Appeal herein fails and accordingly the Tribunal proceeds to make the following Orders:a.The Appeal be and is hereby struck out.b.Each party to bear its own costs.

62. It is so Ordered.

DATED AND DELIVERED AT NAIROBI ON THIS 17TH DAY OF JANUARY, 2025. CHRISTINE A. MUGA - CHAIRPERSONBONIFACE K. TERER - MEMBERELISHAH N. NJERU - MEMBEREUNICE N. NG’ANG’A - MEMBEROLOLCHIKE S. SPENCER - MEMBER