https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/276

**REPUBLIC OF KENYA** **IN THE TAX APPEALS TRIBUNAL AT NAIROBI** **TAX APPEAL NO E988 OF 2025** **ATHI RIVER STEEL PLANT LIMITED ……………….…………………..…....... APPLICANT** **VERSUS** **COMMISSIONER OF INVESTIGATION AND ENFORCEMENT………..…RESPONDENT** **RULING** **BACKGROUND** 1. The Applicant moved the Tribunal vide a Notice of Motion dated 15th June, 2026 and filed on 16th June, 2026 seeking the following Orders; * 1. That the Applicant be granted leave to file fresh documents in support of its case. 2. That if prayer 1 is granted then the annexed documents be deemed as filed and served upon the Respondent. 3. That cost be in the course. 2. The Application was supported by a sworn affidavit of Phillip Odeny, the Applicant’s tax agent and was dated 15th June, 2026 and filed on 16th June, 2026 wherein the Applicant cited the following grounds: * 1. That the documents sought to be filed are essential documents for purposes of meritorious disposition of the matter. 2. That the documents sought to be added were the same documents adduced at the ADR hence no prejudice will be occasioned to the Respondent. 3. In response to the Application, the Respondent filed an opposing replying affidavit dated 1st July 2026 sworn by Mr. Nafula Odonya, an officer of the Respondent stating the following grounds: 4. That the documents are being introduced for the first time on Appeal before the Tribunal, that the said documents having not been provided by the Appellant during audit and at objection review. 5. That the Tax Tribunal's mandate is to adjudicate over appeals by taxpayers on the Respondent's decisions and to consider the documents therein, that the Tribunal in doing so shall be sitting not as an appellate body as per its statutory mandate but as the Respondent. 6. That the objection review process is an elaborate mechanism by which the Respondent reviews and validates the documentation in question. That the Appellant ought to have provided the said documents at the audit and or objection stage for the Respondent's consideration prior to issuance of the objection decision subject to the Appeal herein. 7. That the Appellant admits to the Tribunal that the documents sought to be provided are fresh documents and as such, the Tribunal's consideration of the said documents that do not form part of the objection decision would be exercising a mandate not provided for in law. 8. That the assessments in question were majorly based on disallowed purchases. The documents sought to be admitted or that the Appellant seeks that the Tribunal considers, are documents that seek to support the Appellant's declarations and more so, the purchases, which were already impugned as either overstated or fictitious. 9. That the Respondent further averred that only a single supplier acknowledged having dealt with the Appellant thus putting the documentation in question into further serious doubt that would require forensic examination and analysis as well as contacting the suppliers to confirm their authenticity and why the suppliers never made the said declarations if established to be existent. 10. That consequently, the Respondent is opposed to the introduction of the said documents at this stage of Appeal, given that the said documents are fresh documents not availed to the Respondent at either the audit stage or the objection stage. 11. That should the Tribunal allow the said documents, that would be contrary to statute 12. That the application herein be struck out with costs to the Respondents. **ANALYSIS AND FINDINGS** 1. The Tribunal notes that the Applicant herein was seeking the indulgence of the Tribunal to allow it to file additional documents to corroborate the evidence already tendered in support of its Appeal. The Applicant filed an appeal against the Respondent’s objection decision where the Respondent rejected the objection and confirmed taxes upon the Applicant. 2. The Applicant’s grounds in the instant application are that the documents sought to be adduced are essential for the meritorious disposition of the matter and that the same had been adduced during the ADR process hence there will be no prejudice occasioned if the documents are allowed. The Respondent contested this position on the ground that it would be prejudiced as it did not sight the documents when making its objection decision and that the nature of documents sought to be adduced being documents in support of disallowed purchases require thorough examination by the Respondent in order to ascertain their validity. 3. The Tribunal's power to determine an Application of this nature is anchored on the provisions of Rule 10 of the Tax Appeals Tribunal (Procedure) Rules 2015 which provides as follows: *“10. Extension of time for submitting documents* *(1) Where the documents referred to in rule 3(2) are not filed within the time specified therein, the Tribunal may, upon application in writing, extend the time for submitting the documents.* *(2) An application for extension of time referred to in rule 10(1) shall be—* *(a) supported by an affidavit stating reasons why the applicant was unable to submit the documents in time;* *(b) served on the respondent by the applicant within two days of filing with the clerk.* *(3) The Tribunal may grant the extension of time if it is satisfied that the applicant was unable to submit the documents in time for the following reasons—* *(a) absence from Kenya;* *(b) sickness; or* *(c) any other reasonable cause.* *(4) The respondent may respond to the application by filing an affidavit within fourteen days from the date of service of the application.* *(5) The Tribunal shall set down the hearing date for the application.”* 1. The Tribunal also notes the following provisions of Section 13 (6) of the TATA: *"The appellant shall, unless the Tribunal orders otherwise, be limited to the grounds stated in the appeal or documents to which the decision relates.* " 1. The Tribunal is also guided by the following holding in the case of **Commissioner of Income Tax-vs-Total Kenya Limited [2021] eKLR** in making its determination on whether to allow the Applicant to fileadditional documents: *"In* ***Tarmohamed* & *Another v. Lakhani* & *Company [1958] EA 567,*** *the Court of Appeal for Eastern Africa adopted the decision in* ***Ladd v. Marshall [1954] WLR 1489*** *and stated:* - *Except in cases where the application for additional evidence is based on fraud or surprise: to justify the reception of fresh evidence or a new trial, three conditions must be fulfilled: first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; secondly, the evidence must be such that, if given. it would probably have an important influence on the result of the case, though it need not be decisive; thirdly, the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible.* *In* ***Wanjie* & *Others v. Sakwa* & *Others {19841 KLR 275.*** *in considering the need for restricting reception of additional evidence under Rule 29 of the Court of Appeal Rules, Chesoni JA observed at pg 280 thus:* - *“This rule is not intended to enable a party who has discovered fresh evidence to import it nor is it intended for a litigant who has been unsuccessful at the trial to patch up the weak points in his case and fill up omissions in the Court of Appeal. The Rule does not authorise the admission of additional evidence for the purpose of removing lacunae and filing in gaps in evidence. The appellate court must find it needful. Additional evidence should not be admitted to enable a plaintiff to make out a fresh case in appeal. There would be no end to litigation if the rule were used for the purpose of allowing the parties to make out a fresh case or to improve their case by calling further evidence. It follows that the power given should be exercised very sparingly and great caution should be exercised in admitting fresh evidence.”* *“From the foregoing, it is clear that the power to admit additional evidence is discretionally. However, it should be exercised restrictively. That the evidence should be needful and not meant to patch up an applicant's case on appeal. Finally, the power should be exercised sparingly but for the ends of justice. In the present case, the evidence was in the possession of the applicant during the trial before the tribunal. However, it was contended, and not controverted, that it was not produced at the trial because the parties knew or conducted themselves in a manner suggesting that it was not necessary. This is so because, the parties with knowledge that the mutual agreement process had collapsed, resorted to the appeal before the Tribunal before and without considering the Alternative Dispute Resolution required under Article 24 of the Double Taxation Agreement. This is the Article the Tribunal relied on to determine the matter against the applicant.”* *“The Court has considered that the evidence sought to be relied on is needful. This is so because there was no contention that the respondent had raised the issue of jurisdiction before the Tribunal. It was submitted that that was the case because the parties knew of the position of the MAP that there was no requirement for ADR before approaching the Tribunal.* *“The Court is persuaded that, if it be true that the Tribunal's decision was based on the unavailability of the intended evidence and reliance thereon was suo motto, that piece of evidence would have been crucial to the applicant's case. There would be no prejudice to be suffered if the said evidence is adduced at this stage.* " 1. In the case of **Mohamed Abdi Mahmud-vs-Ahmed Abdullahi Mohamed & 3 Others [2018] eKLR** the Supreme Court expressed itself by holding as follows: *"We therefore lay down the governing principles on allowing additional evidence in appellate courts in Kenya as follows:* 1. *the additional evidence must be directly relevant to the matter before the court and be in the interest of justice;* 2. *it must be such that. if given. it would influence or impact upon the result of the verdict although it need not be decisive;* 3. *it is shown that it could not have been obtained with reasonable diligence for use at the trial, was not within the knowledge of, or could not have been produced at the time of the suit or petition by the party seeking to adduce the additional evidence;* 4. *Where the additional evidence sought to be adduced removes any vagueness or doubt over the case and has a direct bearing on the main issue in the suit;* 5. *the evidence must be credible in the sense that it is capable of belief,* 6. *the additional evidence must not be so voluminous making it difficult or impossible for the other party to respond effectively;* 7. *whether a party would reasonably have been aware of and procured the further evidence in the course of trial is an essential consideration to ensure fairness and due process;* 8. *where the additional evidence discloses a strong prima facie case of wilful deception of the Court;* 9. *The Court must be satisfied that the additional evidence is not utilized for the purpose of removing lacunae and filling gaps in evidence. The Court must find the further evidence needful.* *(j) A party who has been unsuccessful at the trial must not seek to adduce additional evidence to, make a fresh case in appeal, fill up omissions or patch up the weak points in his/her case.* *(k) The court will consider the proportionality and prejudice of allowing the additional evidence. This requires the court to assess the balance between the significance of the additional evidence, on the one hand, and the need for the swift conduct of litigation together with any prejudice that might arise from the additional evidence on the other.* " 1. The Tribunal notes that the additional evidence that the Applicant seeks to adduce through this application was neither provided during the audit stage nor during the formative period, of the dispute. However, the applicant submitted that the evidence was provided to the Respondent during the ADR process, on its part, the Respondent stated that it was the first time the said documents were being introduced on Appeal. 2. The Respondent contended further that the documents that the Appellant prays to adduce at the Appeal stage are documents that seek to support the Appellant's declarations and more so, the purchases, which were already impugned as either overstated or fictitious. That the additional documents would require forensic examination and analysis as well as contacting the suppliers to confirm their authenticity and why the suppliers never made the said declarations if established to be existent. 3. The Tribunal has the jurisdiction to hear appeals against the decision of the Respondent whilst the ADR process is an independent process guided by the provisions of the Tax Procedures (Settlement of Tax Disputes Out of Court or Tribunal) Regulations, Legal Notice No. 23 of 2020 and the Respondent’s internal procedures and guidelines. The Tribunal cannot therefore delve into the issue of whether the said documents were indeed provided during the ADR proceedings. 4. The further view of the Tribunal is the question is not that documents were not reviewed or considered during ADR but that in compliance with Order 10 of the Tax Appeals Tribunal (Procedure Rules), 2015, a party to the proceedings may wish to seek extension of time to file a document where it did not do so within the statutory timeline. In order to determine whether or not to allow such a document or documents, the Tribunal would have to consider whether such a document or documents would cause either party to suffer prejudice. 5. The Tribunal has the discretion, pursuant to the provisions of section 13 (6) of the TATA, to limit whether or not it may consider any new documentary evidence that is adduced at any stage of the dispute. The fact that documents may have been provided to assist with the ADR process is not a reason for the Tribunal not to admit the same into evidence. The only limit to the discretion of the Tribunal as outlined in Section 13(6) of the TATA is that pursuant to the following provisions of Rule 21 of the Tax Appeals Tribunal (Procedure Rules), 2015: *“21. Amendment of pleadings* *A party may at any time before the closure of the case, orally apply to amend its pleadings and the Tribunal may, at its discretion, allow such application on such terms and conditions including granting leave to the other party to amend its pleadings provided the amendments.”* 1. The Tribunal perused the documents sought to be adduced by the Applicant and noted that the additional documentary evidence is not entirely new and that the documents include creditors schedules and bank analyses which are intended to corroborate evidence already before the Tribunal hence the additional evidence goes to the root of the dispute. Given its potential probative value, the additional documentary evidence will be interrogated by the Tribunal and will influence how the Tribunal will make its decision. 2. It is the view of the Tribunal that the tests prescribed in **Mohamed Abdi Mahmud case (supra)** have been met to the extent that the additional evidence sought to be adduced will eliminate vagueness or doubt over the dispute and has a direct bearing on the main issue in the Appeal. The Tribunal has not found any evidence to suggest the Applicant’s additional documentary evidence are calculated to be utilized for the purposes of removing lacunae and filling gaps in evidence. The documents are relevant to the Appeal and it is in the interests of justice and fairness to allow the same to be admitted in evidence. 3. The Tribunal reiterates its holding in the case of **Alliance Tobacco Limited vs Commissioner of Legal Services & amp; Border Control [TAT Appeal No. 42 of 2024]** to support the position that the guiding principle in applications to amend pleadings is that the same will be liberally and freely permitted unless prejudice and injustice will be occasioned to the opposite party. 4. The Respondent did not prove the grave prejudice it is likely to suffer should the additional documentary evidence be admitted by the Tribunal. 5. The Tribunal is therefore inclined to exercise its discretion in favour of the Applicant and allow a similar latitude in filing any additional documents by the Respondent for the purposes of balancing out the competing interests of the parties in the Appeal. **DISPOSITION** 1. The upshot of the foregoing is that the application is merited and the Tribunal accordingly proceeds to issue the following Orders: 2. The Applicant be and is hereby granted leave to file additional documents limited to the documents identified in the application. 3. The additional documents attached to the application be and are hereby deemed as properly filed and served. 4. The Respondent is hereby granted corresponding leave to file and serve its response and additional documents (if necessary) within Fourteen (14) days of the date of this ruling. 5. It is so Ordered. **DATED AND DELIVERED AT NAIROBI THIS 14TH DAY OF AUGUST 2026.** **……………………………..….** **ROBERT M. MUTUMA** **CHAIRMAN** **……………………………… ……..….……..……………..** **DR. TIMOTHY B. VIKIRU JIMMY M. MALLA MEMBER MEMBER** **……………………………..….** **GLORIA A. OGAGA** **MEMBER**