https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/244

Cytonn Investment Partners Eleven LLP v Kenya Revenue Authority (Tax Appeal E367 of 2026) [2026] KETAT 244 (KLR) (29 May 2026) (Ruling) Neutral citation: [2026] KETAT 244 (KLR) Republic of Kenya In the Tax Appeal Tribunal Tax Appeal E367 of 2026 E Ng'ang'a, BK Terer, DK Rono & B Mijungu, Members May 29, 2026 Between Cytonn Investment Partners Eleven LLP Appellant and Kenya Revenue Authority Respondent Ruling 1.The Applicants filed a Notice of Motion on 26 th March 2026 under certificate of urgency supported by affidavit sworn by Jostine Moraa Orina the Applicant’s Finance Coordinator. The Applicant sought the following Orders:a.Spent.b.That the time for filing an appeal against the Respondent's decision to issue an Agency Notice dated 17th September 2025 and the late Objection Decision issued on 5th February 2026 be enlarged and/or extended, and subsequently the Applicant be granted leave to file an appeal.c.That pending the hearing and determination of this Application, this Honourable Tribunal be pleased to order the suspension and/or stay of the enforcement and implementation of the Agency Notice dated 17th September 2025 for the sum of Kshs 670,746,989 issued upon Stanbic Bank Kenya Limited.d.That pending the hearing and determination of the Main Appeal herein, this Honourable Tribunal be pleased to order the suspension and/or stay of the enforcement and implementation of the Agency Notice dated 17th September 2025 for the sum of Kshs 670,746.989 issued upon Stanbic Bank Kenya Limited.e.That pending the hearing and determination of this Application and Appeal, this Honourable Tribunal be pleased to permit the Applicant to operate its bank account held in Stanbic Bank Kenya Limited.f.That this Honourable Tribunal be pleased to restrain the Respondent, their agents, employees, and assignees from demanding or issuing further Agency Notices in relation to the amounts in issue, being Kshs 670.746.989. pending the hearing and determination of this Application and Appeal.g.That the costs of this Application be provided for. Grounds for the Application 2.The application is based on the following grounds:a.That on the 30 th November 2023, the Respondent issued a tax assessment against the Applicant in the sum of Kshs 691,697,186.00, premised on an alleged liability for withholding tax.b.That upon becoming aware of the said assessment in 2024, the Applicant sought leave from the Respondent on the 7th August 2024 to lodge an objection out of time, which leave was granted. Consequently, the Applicant filed its objection on 28th August 2024, and the same was duly lodged both electronically via email and through physical delivery to the Respondent.c.That pursuant to Section 51(11) of the Tax Procedures Act Cap 469B (TATA), the Respondent was obligated to issue an objection decision within sixty (60) days, being on or before 25th October 2024.d.That the Respondent failed to issue any objection decision within the statutory timeline, and consequently, by operation of law under Section 51(11) of the TPA, the Applicant's objection was deemed allowed, thereby extinguishing the impugned tax assessment.e.That notwithstanding the legal position that the Applicant's objection stood allowed, the Respondent proceeded to issue several demand notices founded on the very assessment that had already ceased to exist in law, namely:i.On 13th May 2025, the Respondent issued a demand notice for Kshs 136. 582, 792.00;ii.On 10th June 2025, the Respondent issued another demand notice for Kshs 670,746,989.13; andiii.The Respondent issued yet another demand notice for Kshs 670,746,989.13 on the 2nd September 2025.f.That the said demand notices were issued by different officers of the Respondent, further illustrating the irregular and uncoordinated enforcement actions undertaken in respect of a tax assessment that had already been rendered invalid.g.That thereafter, on 17th September 2025, the Respondent escalated the enforcement process and issued an Agency Notice to Stanbic Bank Kenya Limited for Kshs 670,746,989.13, which resulted in the freezing of the Applicant's bank account and the immediate disruption of the Applicant's business operations.h.That on 5th February 2026, the Applicant wrote to the Respondent and its enforcement officers via email, setting out a detailed chronology of the events surrounding the objection, the deemed allowance of the objection, and the irregular issuance of the demand and agency notices. On the same date, the Respondent, through its Tax Objection Department, purported to issue an Objection Decision, reflecting a tax claim of Kshs 342,500,180.00.i.That the purported objection decision was issued well outside the statutory timeline. was not accompanied by any proof of service, and was only transmitted to the Applicant's email on 5th February 2026, long after the objection had already been deemed allowed by operation of law.jThat on 5th February 2026, the enforcement offices acknowledged receipt of the Applicant's email correspondence and indicated that an appropriate response would be provided. That to date, no response has been received, yet the agency notices remain in force.k.That the Agency Notice issued by the Respondent is contrary to Section 42(14) of the TPA, as enforcement measures cannot lawfully issue where there exists no valid or subsisting tax assessment.l.That in the present circumstances, the Applicant had lodged a valid objection which was deemed allowed by operation of law, thereby extinguishing the assessment and leaving no lawful tax liability capable of enforcement.m.That the Respondent's actions in issuing demand notices and an agency notice in the absence of a valid tax assessment are therefore ultra vires, unlawful, procedurally unfair, and an abuse of statutory power.n.That the Applicant was unable to file an appeal within the prescribed time due to the issuance of the Agency Notice, which effectively hindered its ability to do so. Further, the Applicant is currently subject to ongoing liquidation proceedings in Insolvency Petition No. E063 of 2021, which also contributed to its inability to lodge an objection within the statutory timelines.o.That the Applicant subsequently sought clarification from the Respondent regarding the Agency Notice and the Demand Notices. In response, the Respondent issued an Objection Decision dated 5th February 2026. Notably, the amounts contained in the Objection Decision are substantially lower than those indicated in the Agency Notice.p.That unless this Honourable Tribunal intervenes and grants the orders of stay and suspension of the Demand Notice and Agency Notice, the Applicant's bank accounts will remain frozen, its operations will be brought to a halt, and the Applicant will suffer irreparable financial and commercial prejudice.q.That it is therefore in the interests of justice, equity, public policy, and the proper administration of tax proceedings that the orders sought in this application be issued and the Demand Notice and Agency Notice be set aside and/or vacated, pending the hearing and determination of this Application and the intended appeal. 3.The Appellant did not file written submissions. Response to the Application 4.The Respondent did not file a response to this Application. Analysis and Findings 5.The Application sought leave to appeal out of time, and to stay execution of Agency notice dated 17th September 2025. 6.The jurisdiction to hear and determine the application is derived from Section 13(3) of the Tax Appeals Tribunal Act Cap 469A (TATA) which provide that:The Tribunal may, upon application in writing, extend the time for filing the Notice of Appeal and for submitting the documents referred to in subsection (2). 7.Section 13(4) of TATA provides grounds upon which the Tribunal may enlarge time. It provides that,An extension under subsection (3) may be granted owing to absence from Kenya, or sickness, or other reasonable cause that may have prevented the applicant from filing the notice of appeal or submitting the documents within the specified period. 8.In addition to the provisions of TATA, Tax Appeals Tribunal (Procedure) Rules are instructive. In particular, rule 10 thereof reiterates that,(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. 9.The Court in Leo Sila Mutiso vs Rose Hellen Wangari Mwangi, Civil Application No. 251 of 1997 observed as follows in relation to applications for enlargement of time:“It is now settled that the decision whether to extend the time for appealing is essentially discretionary. It is also well stated that in general the matters which this court takes into account in deciding whether to grant an extension of time are, first the length of the delay, secondly the reasons for the delay, thirdly (possibly) the chances of the appeal succeeding if the application is granted and fourthly the degree of prejudice to the respondent if the application is granted.” 10.In Wasike v Swala [1984] KLR 591 the Court cited the hierarchy of the factors to consider when considering applications for enlargement of time. The Court stated that:“An applicant must now show, in descending scale of importance, the following factors: -a.That there is merit in his appeal.b.That the extension of time to institute and/or file the appeal will not cause undue prejudice to the respondent; andc.That the delay has not been inordinate.” 11.Consequently, the Tribunal is guided by the provisions of Section 13(4) of TATA, as well as principles as set in various case laws as follows: a. Whether there is a reasonable cause for the delay 12.Section 13(4) of TATA provides that the Tribunal may considered ‘‘ any other reasonable cause’’ when considering applications of this nature. Further, the Supreme Court in Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission & 7 others [2014] eKLR stated as follows in relation to this issue:"Whether there is a reasonable reason for the delay. The delay should be explained to the satisfaction of the court." 13.The Appellant asserted that it delayed to file the appeal on the basis that agency notice effectively hindered its ability to do so. Further, the Applicant stated that it is subject to ongoing liquidation proceedings in Insolvency Petition No. EO63 of 2021, which also contributed to its inability to lodge an objection within the statutory timelines. 14.The Tribunal took judicial notice that there is insolvency petition pending against the Applicant. Insolvency proceedings, more involuntary insolvency proceedings are not ordinary proceedings. If successful, a corporation’s existence is terminated. Such proceedings in most cases, brings to a halt or frustrate normal operations of corporations. On this basis, the Tribunal finds that the Applicant established a reasonable cause for the delay. b. Whether the delay is inordinate 15.Leave to file an appeal out of time may be granted even when the delay is inordinate. What is key is that the delay must be explained to the satisfaction of the Tribunal. The Supreme Court in Nicholas Kiptoo Arap Korir Salat case asserted that the Applicant has to demonstrate that there is a reasonable cause for the delay and that the delay is explained to the satisfactorily. Similarly, in the case of Joseph Odide Walome v David Mbadi Akello [2022] eKLR the Court had the following to say about this issue:‘Where a party is aggrieved and wishes to pursue an appeal, it would be fair to exercise discretion in his favour and especially where the delay in filing the appeal is not inordinate or even if the delay is inordinate, it is explained to the satisfaction of the court and the adverse party will not be prejudiced in any way.’ 16.The period of time that amounts to inordinate delay is not defined in law.In the case of Andrew Kiplagat Chemaringo v Paul Kipkorir Kibet [2018] eKLR the Court held that:“The law does not set out any minimum or maximum period of delay. All it states is that any delay should be satisfactorily explained. A plausible and satisfactory explanation for delay is the key that unlocks the court’s flow of discretionary favour. There has to be valid and clear reasons, upon which discretion can be favourably exercisable.” 17.The Tribunal notes that the Objection decision was issued on 25th October 2024 yet the Applicant approached the Tribunal in 2026 seeking leave to appeal against the said Objection decision. There is no doubt that the Applicant delayed to lodge its appeal what matters is not the length of delay, but the reason behind it. 18.The Tribunal has already pointed out above that the Applicant demonstrated that it had a reasonable justification that caused the delay, and is satisfied by the explanation given by the Applicant. c. Whether there is merit in the appeal 19.In Leo Sila Mutiso case (supra) the Court held that the chances of the appeal succeeding if the application is granted should be considered. In Stanley Kangethe Kinyanjui v Tony Keter and others (2013) eKLR, the Court shed more light on this issue as follows:“On whether the appeal is arguable, it is sufficient if a single bonafide ground of appeal is raised, an arguable appeal is not one which must necessarily succeed, but one which ought to be argued fully before the court: one which is not frivolous.” 20.The Tribunal examined the proposed Memorandum of appeal and noted that one of the grounds of appeal was that the Objection decision was issued outside 60 days contrary to Section 51(11) of the TPA. Should the Appellant demonstrate and prove this assertion, then the appeal would succeed. Therefore, the Respondent should respond to the issue. 21.Consequently, the Tribunal finds that the intended appeal is arguable. d. Whether the Respondent will be prejudiced if time is enlarged 22.The Tribunal has the mandate to establish whether the Respondent would be prejudiced should the application be allowed. In Nicholas Kiptoo Arap Korir Salat case (supra) and Leo Sila Mutiso case (supra) the Superior Courts emphasized that the Courts must weigh whether the Respondent maybe prejudiced. 23.The Respondent did not file a response to this application therefore; it could not demonstrate whether it would be prejudiced should the application be allowed. 24.The Tribunal notes that the Respondent will still recover the principal sum plus interest should the appeal fail. Therefore, the Respondent will not be prejudiced should this application be allowed. 25.Considering the foregoing analysis, the Tribunal is persuaded to grant leave to the Applicant to file the appeal out of time. Disposition 26.The Tribunal in the circumstances is persuaded to exercise its discretion in favour of the Applicant and accordingly proceeds to issue the following Orders: -i.The Notice of Motion dated 26th March 2026 and filed on the even date be and is hereby allowed in the following terms:a.The Appellant be and is hereby granted leave to file the appeal out of time.b.The Notice of appeal dated 18th March 2026 and filed on 26th March 2026; Memorandum of appeal and Statement of facts both dated and filed on 26th March 2026 be and are hereby deemed as dully filed and served;c.The Agency Notice dated 17 th September 2025 issued upon Stanbic Bank Kenya Limited be and is hereby lifted pending hearing and determination of the appeal;d.The Applicant to serve the Notice of appeal, Memorandum of appeal and Statement of facts upon the Respondent within 14 days of this ruling for the Respondent to file its response if any, within the statutory timelines.ii.No orders as to costs. 27.It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 29TH DAY OF MAY 2026SIGNED BY/FOR:HON. EUNICE NJERI NGANGAHON. BONIFACE KIBIY TERERHON. DOMINIC KIPKEMOI RONOHON. BILLY GRAHAM OKUMU MIJUNGU