https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/104

Githambo v Commissioner of Investigations & Enforcement (Appeal E804 of 2025) [2026] KETAT 104 (KLR) (18 May 2026) (Judgment) Neutral citation: [2026] KETAT 104 (KLR) Republic of Kenya In the Tax Appeal Tribunal Appeal E804 of 2025 RM Mutuma, Chair, JM Malla, T Vikiru & G Ogaga, Members May 18, 2026 Between Bernard Wanjohi Githambo Appellant and Commissioner of Investigations & Enforcement Respondent Judgment Background 1.The Appellant is a sole proprietor whose principal economic activity is general merchandise supplies business. 2.The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469 Laws of Kenya (KRA Act). Under Section 5 (1) of the Act, KRA is an agency of the Government for the collection and receipt of all revenue. For the performance of its function under Subsection (1), the Authority is mandated under Section 5(2) of the Act to administer and enforce all provisions of the written laws as set out in Parts I and II of the First Schedule to the KRA Act to assess, collect, and account for all revenues under those laws. 3.The Respondent conducted a verification exercise to authenticate the expenses claimed by the Appellant and on 17th March 2025 proceeded to disallow some expenses. 4.On 7th April 2025, the Appellant lodged his objection on iTax and subsequently the Respondent confirmed its assessment via its Objection decision dated 5th June 2025 5.The Appellant being aggrieved by the Respondent’s Objection decision filed its Notice of Appeal dated 4th July 2025 and filed on the same date. The Appeal 6.The Appeal is premised on the Memorandum of Appeal dated 25th July 2025 and filed on even date which raised the following grounds: -a.That the Respondent erred in law and facts by not responding to the Appellant’s objection dated 7th April 2025 and instead issued an additional assessment without due regard to the provisions of the Tax Procedures Act 2015.b.That the Respondent erred in law and facts by failing to consider and examine the statements, vouchers, receipts, invoices among other supporting documents to discharge appellant’s burden of proof contrary to Tax Procedures Act 2015.c.That the Respondent erred in law and facts by ignoring the documents provided and applied subjective and anecdotal evidence which in generally was not suitable to address the Appellant’s uniqueness of operations.d.That the Respondent’s assessment violates the constitutional principle of fairness pursuant to Section 4 of Fair Administrative Action Act. Appellant’s Case 7.The Appellant’s case is also premised on the Appellant’s Statement of Facts dated 22nd July 2025 and filed on 25th July 2025, and the documents attached to it. 8.The Appellant stated that on diverse dates between January 2019 and December 2024, he supplied general merchandise and the sales proceeds thereof and related costs were claimed as deductible costs corresponding self-assessment tax returns were filed as per the provisions of Income Tax Act. 9.The Appellant submitted that Article 47 of the Constitution of Kenya 2010 and the Fair Administrative Action Act provides that “Every person has the right to administrative action, which is expeditious, efficient, lawful, reasonable and procedurally fair”. 10.He averred that he is bound to suffer double loss if the Respondent is allowed to collect taxes from the said assessment. Appellant’s Prayers 11.The Appellant prayed for the following: -a.That this Appeal be allowed;b.That the Respondent’s Objection decision dated 5th June 2025 be set aside and annulled;c.That the costs of and incidental to this Appeal be awarded to the Appellant; andd.Any other orders that the Tribunal may deem fit. Respondent’s Case 12.The Respondent’s case is premised on the following documents:a.The Respondent’s Statement of Facts dated 25th September 2025 and filed 26th September 2025 and the documents attached thereto;b.Its Written Submissions dated on 27th March 2026 and filed on 30th March 2026 13.The Respondent averred that, whereas Section 24 of the Tax Procedures Act, 2015 allows a taxpayer to submit tax returns in the approved form and manner prescribed by the Respondent, the Respondent is not bound by the information provided therein and can assess for additional taxes based on any other available information. 14.The Respondent stated that in the Appeal herein it issued an assessment based on disallowed expenses which the Appellant claimed were wholly used in generating the income. 15.The Respondent averred that it is in agreement with the Appellant that in taxing a taxpayer’s income, every legally deductible expense that was incurred in generating such income should be deducted from the taxable amounts. That this is what is provided under Section 15(1) of the Income Tax Act. 16.The Respondent contended that the provision above provides for deductions of expenses, but it also gives antecedent conditions that must be met before such deductions are made. That the first condition is that such a deduction must be allowed under Section 15 of the Income Tax Act. That the second condition is that it must be an expenditure wholly and exclusively incurred by the taxpayer in the production of income from which it is to be deducted. 17.The Respondent averred that it is mandated by law to ensure that any expenditure presented for deductions by a taxpayer meets these conditions, as such any deductions proposed must be analysed to determine whether they are allowed. 18.It stated that Section 51(3) of the Tax Procedures Act 2015 provides that for a notice of objection to be valid, the taxpayer has to precisely state the grounds of objection, has to pay all the taxes not in dispute and provide all the relevant documents in support of the objection as provided for in Section 51(3) of the Tax Procedures Act. 19.The Respondent further stated that Section 59(1) of the Tax Procedures Act, 2015 mandates the Respondent to require the production of documents from a taxpayer for the purposes of obtaining full information and this is also fortified by Section 31(1) of the Tax Procedures Act. 20.The Respondent contended that the foregoing provisions emphasise the fact that the Appellant is bestowed with the mandate to avail the requisite documents in support of its objection and failure to which the Respondent can only make a decision in light of information in its possession. That this is why the Appellant was requested to submit documents to support the expenses claimed in its income tax returns. 21.It stated that that Section 54A(1) of the Income Tax Act provides that: -“A person carrying on a business shall keep records of all receipts and expenses, goods purchased and sold and accounts, books, deeds, contracts and vouchers which in the opinion of the Commissioner, are adequate for the purpose of computing tax.” 22.The Respondent pointed out that the Appellant was requested to provide bank statements and Invoices and expenses ledgers, the Appellant failed and or refused to provide any documents in support of his Objection. 23.The Respondent stated that the final accounts have to be supported. That the expenses shown in the final accounts have to be vouched by vouchers, primary documents which act as direct evidence of transactions. 24.It maintained that it cannot be faulted for failing to deduct the alleged expenses from the understated income as the Appellant failed to provide the necessary documents to show the exact nature and extent of the expenses. 25.The Respondent further contended that the burden of proof is on the Appellants to produce the evidence challenging the Respondent’s decision to confirm the default assessments. That Section 56(1) of the Tax Procedures Act, 2025 provides that: “The burden shall be on the taxpayer to prove that a tax decision is wrong/incorrect.” 26.The Respondent averred that the documents annexed in the Appellant’s Memorandum of Appeal and Statement of Facts have been presented before the Tribunal in the first instance and the Respondent has not had an opportunity to review the same. 27.The Respondent stated that the allegations of the Appellant as laid out in its Memorandum of Appeal and Statement of Facts unless where in agreement by the Respondent are unfounded in law and not supported by evidence. 28.It was the Respondent’s position that the income was legally and procedurally charged, and the assessment legally and procedurally issued and that the Appellant’s objection was duly considered and objection decision made as per the law. 29.The Respondent averred that all its actions were taken in accordance with the provisions of the Constitution, the Tax Procedures Act, 2015, the Income Tax Act and related regulations. 30.It further averred that the Appellant was granted an opportunity to respond to the audit findings and object to the assessment in line with due process. 31.In its submissions, the Respondent rehashed its statement of facts and relied on the cases of Leah Njeri Njiru v Commissioner of Investigations and Enforcement Kenya Revenue Authority and Another [2021] eKLR to emphasize that expenditure must be supported for the Respondent to allow the expenditure as per Section 15(1) of ITA. Respondent’s Prayers 32.The Respondent prayed that the Tribunal: -a.Dismiss the Appealb.Uphold the Respondent’s assessment and decision dated 5th June 2025.c.Award the Respondent the costs of the Appeal. Issues for Determination 33.The Tribunal has considered the pleadings and the submissions made by the parties, and considers the issues for determination as follows:i.Whether the issuance of the Objection decision was valid.ii.Whether the Appellant discharged its burden of proof to demonstrate that the disallowed expenses were wholly and exclusively incurred in the production of income. Analysis and Findings I. Whether the issuance of the Objection decision was valid 34.The Appellant contended that the Respondent failed to respond to his Objection dated 7th April 2025 and instead issued an additional assessment without due regard to the Tax Procedures Act, 2015 (TPA). The Respondent on its part averred that it requested the Appellant to provide supporting documents, which the Appellant failed or refused to supply, and that the Objection decision was duly made. 35.Pursuant to Section 31(1) of the TPA, the Respondent is empowered to amend assessments and the said law provides as follows:“ 31(1)Subject to this section, the Commissioner may amend an assessment (referred to in this section as the “original assessment") by making alterations or additions, from the available information and to the best of the Commissioner's judgement, to the original assessment of a taxpayer for a reporting period to ensure that—(a)in the case of a deficit carried forward under the Income Tax Act (Cap. 470), the taxpayer is assessed in respect of the correct amount of the deficit carried forward for the reporting period;(b)in the case of an excess amount of input tax under the Value Added Tax Act (Cap. 476), the taxpayer is assessed in respect of the correct amount of the excess input tax carried forward for the reporting period; or(c)in any other case, the taxpayer is liable for the correct amount of tax payable in respect of the reporting period to which the original assessment relates.” 36.Section 51 of the TPA Act allows a taxpayer who disputes an assessment to lodge an objection to the Commissioner. Section 51(1) of the Tax Procedures Act provides as follows:“ 51.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.” 37.Section 51(3) outlines mandatory requirements for a taxpayer to validly lodge a notice of objection against a tax assessment. The said provision states that:“ 51.Objection to tax 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.(b)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 or has applied for an extension of time to pay the tax not in dispute under section 33(1); and(c)all the relevant documents relating to the objection have been submitted.” 38.Where an objection has been validly lodged in pursuant to Section 51(3), Section 51(11) of the Tax Procedures Act (TPA) 2015 provides a statutory time limit for the Commissioner to make a decision on a taxpayer’s notice of objection. Section 51(11) provides as follows:“ 51.(11)The Commissioner shall make the objection decision within sixty days from the date of receipt of a valid notice of objection failure to which the objection shall be deemed to be allowed.” 39.The Tribunal has examined the chronology of events and notes that the Objection was lodged on 7th April 20205, and Respondent confirmed the assessment on 5th June 2025. 40.The Tribunal notes the Appellant’s argued that the Respondent ignored documents provided. However, from the Respondent’s averments, the Appellant failed or refused to provide the requisite supporting documents (bank statement, invoices, expense ledgers) during the verification exercise and the objection stage. The Respondent further provided evidence in form of an email of 16th April 2025 reminding the Appellant that his objection notice of 7th April 2025 had not been lodged validly as provided under Section 51(3) of the Tax Procedures Act and requested the Appellant to validate the objection. 41.It is the Tribunal’s view that the Appellant cannot unilaterally declare that documents were provided without demonstrating by way of the Respondent’s acknowledgment that such documents were indeed received by the Respondent. It would have been prudent if the Appellant provided proof of his response to the Respondent’s request and provision the requested documents. In the absence of such evidence, the Respondent cannot be faulted for proceeding on the basis of the information available to it. 42.The Tribunal further notes that the period from 7th April 2025 to 5th June 2025 is fifty-nine days. Accordingly, the Respondent acted within the statutory timeline for making and Objection decision. 43.Based on the foregoing, the Tribunal finds that the issuance of an additional assessment following a verification exercise is lawful under Section 31(1) of the TPA, which empowers the Respondent to amend an assessment if there is information that a taxpayer has understated income or claimed ineligible deductions. The Respondent’s decision dated 5th June 2025 constitutes the statutory response to the objection. 44.Consequently, the Tribunal finds and holds that the issuance of the Objection decision was valid. II. Whether the Appellant discharged its burden of proof to demonstrate that the disallowed expenses were wholly and exclusively incurred in the production of income. 45.In the Appeal herein, the Respondent issued an assessment based on disallowed expenses which the Appellant claimed were wholly used in generating the income. The core of this dispute lies in the disallowance of expenses claimed by the Appellant for lack of supporting documentation. The Appellant argued that he provided statements, vouchers, receipts, and invoices while the Respondent contended that no such documents were availed for verification. 46.The law provides that the Respondent’s decision enjoys legal presumption of correctness. In particular, Section 50 (1) (a) of the TPA provides a rebuttable presumption that the Respondent’s decision is conclusive and correct. Section 50 (1) (a) of the TPA provides as follows:“(1)Except in proceedings under this Part—(a)the production of a notice of an assessment or a document under the hand of the Commissioner shall be conclusive evidence of the making of the assessment and that the amount and particulars of the assessment are correct.’’ 47.Pursuant to Section 50 (1) (a) of the TPA, the Appellant has to rebut the presumption that the Respondent’s decision is correct. To rebut the presumption, the Appellant has to adduce documents which would aid in discharging the burden of proof. 48.Section 56 (1) of TPA places the burden of proof upon the taxpayer. It provides that:“In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.’’ 49.To discharge the burden, the taxpayer has to adduce documents to support its notice of objection. The taxpayer has to keep records to enable determination of its tax liability. Section 23 (1) (b) of the TPA provides that:‘‘a person shall—(a)maintain any document required under a tax law so as to enable the person's tax liability to be readily ascertained.’’ 50.This being an income tax issue, Section 54A of the Income Tax Act provides as follows in Section 54A(1) regarding keeping of records:“(1)A person carrying on a business shall keep records of all receipts and expenses, goods purchased and sold and accounts, books, deeds, contracts and vouchers which in the opinion of the Commissioner, are adequate for the purpose of computing tax.’’ 51.When filing an objection to a tax decision, the taxpayer has a duty to supply the Respondent with supporting documents. Section 51 (3) (c) of the TPA provides as follows:“(3)A notice of objection shall be treated as validly lodged by a taxpayer under subsection (2) if—(c)all the relevant documents relating to the objection have been submitted.” 52.The duty to adduce documentary evidence and to discharge the burden of proof does not terminate at the objection stage. Upon filing an Appeal to this Tribunal, the Appellant has to prove that the Respondent’s decision was incorrect. In this regard, Section 30 of the Tax Appeals Tribunal Act provides that:“In a proceeding before the Tribunal, the appellant has the burden of proving—(a)Where an appeal relates to an assessment, that the assessment is excessive; or(b)In any other case, that the tax decision should not have been made or should have been made differently.’’ 53.In the case of Singapore Motors Limited v Commissioner of Domestic Taxes (Income Tax Appeal E039 of 2021) [2024] KEHC 2443 (KLR), the High Court held as follows:“This Court has remained emphatic that under section 30 of the Tax Appeals Tribunal Act (TATA) and section 56 of the Tax Procedures Act (TPA), the burden of proving that an assessment is wrong or excessive remains upon the taxpayer.” 54.Further, in Tumaini Distributors Company (K) Limited v Commissioner of Domestic Taxes [2020] eKLR the High Court held that the taxpayer has a burden to prove that the tax decision is wrong. In Sagna Holding Ltd v Commissioner of Domestic Taxes (Appeal 266 of 2023) [2024] KETAT 606 (KLR) this Tribunal also emphasized that the taxpayer has a duty to demonstrate that where an Appeal relates to an assessment that the assessment is excessive; or in any other case that the tax decision should not have been made or should have been made differently. 55.The Tribunal perused through the Appellant’s filed documents in support of this Appeal and noted that the Appellant provided the following documents: Objection decision dated 5th June 2025, return acknowledgement receipts for return numbers KRA20201280313, KRA202114545987, KRA202211930705, KRA202312919916, KRA202452113164 and assessment orders numbers KRA202577687698, KRA202577687959, KRA202577688038, KRA202577688239 and KRA202577688481. Not a single invoice was adduced. 56.Whereas the Appellant asserted that the Respondent failed to consider and examine the statements, voucher, receipts, invoices among other supporting documents to discharge Appellant’s burden of proof, the Tribunal has pointed out above that the duty to adduce documentary evidence and to discharge the burden of proof does not terminate at objection stage and upon filing an appeal to this Tribunal, the Appellant has to prove before this Tribunal that the Respondent’s decision was incorrect. Consequently, the Appellant had a duty to file all documents that it presented to the Respondent for the Tribunal’s consideration, which the Appellant failed to do. 57.The Appellant averred that the Respondent ignored the documents provided and instead applied subjective and anecdotal evidence which was not generally suitable to address the Appellant’s unique operations. He further stated that he supplied general merchandise, and related costs were claimed as deductible costs. In this regard, Section 15(1) of the ITA provides in part as follows:“(1)For the purpose of ascertaining the total income of any person for a year of income there shall, subject to section 16 of this Act, be deducted all expenditure incurred in such year of income which is expenditure wholly and exclusively incurred by him in the production of that income…” 58.The examination of Section 15 (1) of the ITA indicates that it mandates the taxpayer to prove that it incurred an expenditure, and secondly, demonstrate that the expenditure was incurred wholly and exclusively in the production of that income. Documentary evidence is needed to demonstrate these facts which the Appellant failed to file. 59.The Appellant failed to adduce any of the source documents provided in Section 54A(1) of the ITA (cited above) including bank statements, invoices, expenses ledgers, contracts, vouchers. Productions of these documents would have enabled the Tribunal to critique the Respondent’s decision. Put differently, the Appellant failed to demonstrate that the Respondent’s decision to confirm the assessment was erroneous or excessive. 60.Consequently, the Tribunal finds and holds that the Appellant did not discharge his burden of proof to demonstrate that the disallowed expenses were wholly and exclusively incurred in the production of income. Final Decision 61.The upshot to the foregoing is that the Tribunal finds and holds that the Appeal is devoid of merit and makes the following orders: -a.The appeal be and is hereby dismissed.b.The Objection decision dated 5th June 2025 be and is hereby upheld.c.Each party to bear its own costs. 62.It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 18TH DAY OF MAY 2026.………………………………ROBERT M. MUTUMACHAIRMAN………………………………JIMMY M. MALLAMEMBER………………………………DR. TIMOTHY B. VIKIRUMEMBER………………………………GLORIA A. OGAGAMEMBER