https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/117

Dola Feeds (K) Ltd v Commissioner of Legal Services and Board Coordination (Appeal E956 of 2025) [2026] KETAT 117 (KLR) (30 June 2026) (Judgment) Neutral citation: [2026] KETAT 117 (KLR) Republic of Kenya In the Tax Appeal Tribunal Appeal E956 of 2025 RM Mutuma, Chair, JM Malla, T Vikiru & G Ogaga, Members June 30, 2026 Between Dola Feeds (K) Limited Appellant and Commissioner of Legal Services and Board Coordination Respondent Judgment Background 1.The Appellant is a private limited liability company. 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 issued the Appellant with Income tax additional assessments for the years 2013, 2014, 2015, 2016 and 2017 on 6th May 2019. 4.The Appellant objected to the assessments on 25th March 2019. 5.The Respondent issued an Objection invalidation decision and confirmation assessment notices on 24th May 2019. 6.The Appellant, being dissatisfied with the Respondent’s decision, filed its Notice of Appeal dated 3rd September 2025 on the same date having been granted leave by the Tribunal to Appeal out of time. The Appeal 7.The Appeal is premised on the Memorandum of Appeal dated 3rd September 2025 and filed on the same date which raised the following grounds: -a.That the Respondent erred in law and in fact by declaring the Appellant’s objection as not validly lodged against Income Tax Assessments for the periods 2013, 2014, 2015, 2016, 2017.b.That the Respondent erred in law and fact by confirming the assessments as issued without considering the allowable deductions under Section 15 of the Income Tax Act.c.That the Respondent erred in law and fact by disregarding the supporting information and documents provided by the Appellant in making its decision.d.That the Appellant provided reasonable grounds as required by Section 51(7) of the Tax Procedures Act.e.That the Respondent's actions have amounted to gross violations of Article 47 of the Constitution of Kenya, which guarantees the Appellant a right to fair. Appellant’s Case 8.The Appellant’s case is premised on the following documents filed before the Tribunal:a.Its Statement of Facts dated 25th September 2025 and filed on 26th September 2025; andb.The Appellant’s Written Submissions dated and filed on 4th May 2026. 9.The Appellant stated that the Respondent issued Income tax assessments for the periods 2013, 2014, 2015, 2016, 2017 on 6th March 2019. 10.That the Appellant lodged its Objection on 25th March 2019 and received objection acknowledgment numbers KRA201903370437, KRA201903370256, KRA201903370109, KRA201903369838 and KRA201903367854. 11.That the Respondent issued its decision , and the Appellant appealed the decision to the Tribunal. 12.The Appellant stated that its director has been out of the country hence was unable to object to the Respondent's assessments within the stipulated timelines. 13.The Appellant submitted that Section 51(7) of the Tax Procedures Act provides for a cure for a situation such as the Appellant's by allowing a taxpayer who was out of the country at such a time to make an application for extension of time. 14.The Appellant asserted that it did not unreasonably delay lodging its objection but rather had a reasonable cause for delay. 15.That additionally, by denying the Appellant a chance to object to the assessments, the Respondent went ahead to confirm the assessments without considering the fact that there were expenses incurred in the making of the income. 16.That by disallowing expenses which were wholly and exclusively incurred in making the income in violation of Section 15 of Income Tax Act; Cap 470. 17.That it is only costs incurred wholly or exclusively in the production of income of a person is tax deductible. That had the Appellant been given a chance to object, it would provide evidence of the said expenses. That the specific expenses that the Appellant claimed met this threshold. 18.That the Commissioner was therefore wrong in confirming the assessments disregarding the fact that expenses were incurred in making of the income. 19.The Appellant stated the Respondent denied it a chance to fair hearing and the Respondent’s actions have amounted to gross violations of Article 47 of the Constitution of Kenya, which guarantees the Appellant a right to fair administrative action that is reasonable and procedurally fair. Appellant’s Submissions 20.The Appellant considered that the Appeal raises the following key issues for determination as analysed hereunder: Whether the Objection was Validly Lodged or ought to have been Admitted 21.The Appellant averred that the Respondent’s primary basis for confirming the assessments was that the Appellant’s Objection was invalidly lodged. The Appellant contended that this position is legally untenable. 22.The Appellant submitted that Section 51(7) of the Tax Procedures Act expressly grants the Commissioner discretion to admit a late objection where the taxpayer demonstrates reasonable cause, including absence from Kenya, and where there is no unreasonable delay. 23.The Appellant maintained that it has demonstrated that its director was out of the country during the material period, thereby preventing timely lodging of the objection. That this falls squarely within the statutory grounds contemplated under Section 51(7). 24.The Appellant referred to the holding by the High Court in Republic v Kenya Revenue Authority Ex Parte M-Kopa Kenya Ltd which emphasized that the Commissioner must exercise discretion under the Tax Procedures Act reasonably, fairly, and in a manner that promotes substantive justice rather than technical rigidity. That the Court held that tax administration must not defeat legitimate taxpayer rights through procedural technicalities. 25.That similarly, in Republic v Commissioner of Domestic Taxes Ex Parte Bata Shoe Company (Kenya) Ltd, the Court underscored that the Commissioner’s discretion must be exercised judiciously and not arbitrarily, particularly where a taxpayer provides reasonable explanation for delay. 26.The Appellant averred that in the present case, the Respondent failed to properly consider the explanation given by the Appellant and instead adopted a rigid and mechanical approach, thereby fettering its statutory discretion. Whether the Respondent erred in Disallowing Deductible Expenses 27.The Appellant submitted that the Respondent confirmed the assessments without considering allowable deductions under Section 15 of the Income Tax Act. 28.That Section 15 clearly provides that expenses wholly and exclusively incurred in the production of income are deductible. 29.That the Court of Appeal in Commissioner of Domestic Taxes v Total Kenya Limited affirmed that tax liability must be determined based on net income after deducting legitimate business expenses, and that failure to consider such expenses leads to an erroneous and inflated assessment. 30.That further, in Kenya Revenue Authority v Man Diesel & Turbo SE, the Court held that the Commissioner must consider all relevant documentation provided by the taxpayer and cannot disregard evidence arbitrarily. 31.That in the instant case, the Respondent confirmed the assessments without evaluating the Appellant’s expenses, thereby contravening both statute and binding judicial precedent, and which resulted in an unjust enrichment of the tax authority at the expense of the taxpayer and violated the fundamental principle that income tax is chargeable only on taxable profit, not gross receipts. Whether there was a Violation of Article 47 of the Constitution 32.The Appellant submitted that Article 47 of the Constitution guarantees every person the right to administrative action that is lawful, reasonable, and procedurally fair. It argued that the Respondent’s conduct violated this constitutional guarantee in several respects. 33.That first, the Respondent failed to give the Appellant a fair opportunity to be heard by rejecting the objection on technical grounds. Second, the Respondent ignored material evidence submitted by the Appellant. Third, the Respondent issued a decision that was unreasonable and disproportionate. 34.That the Court of Appeal in Suchan Investment Limited v Ministry of National Heritage & Culture held that administrative decisions must meet the standards of legality, reasonableness, and procedural fairness under Article 47. 35.That additionally, in Republic v Kenya Revenue Authority Ex Parte Yaya Towers Limited, the Court held that KRA is bound by constitutional standards and must act fairly and transparently in tax assessments and enforcement. 36.The Appellant maintained that the Respondent’s actions in the present case fall short of these constitutional standards and are therefore invalid. Failure to consider Relevant Material and Evidence 37.The Appellant submitted that it is a settled principle of administrative law that a decision-maker must take into account relevant considerations and disregard irrelevant ones. 38.That in Republic v Commissioner of Customs Services Ex Parte Unilever Kenya Limited, the Court held that failure to consider relevant evidence renders a tax decision irrational and subject to being set aside. 39.The Appellant provided supporting documentation and explanations regarding its expenses and delay in lodging the objection. The Respondent failed to consider these materials, thereby rendering its decision fundamentally flawed. Principle of Substantive Justice in Tax Disputes 40.The Appellant submitted that tax dispute resolution must be guided by substantive justice rather than procedural technicalities. 41.That the Tribunal in various decisions has consistently emphasized that tax disputes should be resolved on their merits, particularly where documentation exists and the dispute is reconcilable. 42.According to the Appellant, the present dispute is fundamentally a reconciliation issue, as acknowledged by the Appellant’s intention to pursue Alternative Dispute Resolution (ADR). That the Respondent’s rigid approach defeats the very objective of ADR as encouraged under the Tax Procedures Act. 43.The Appellant submitted that it has demonstrated that: the Respondent improperly exercised its discretion under Section 51(7) of the Tax Procedures Act; the Respondent unlawfully confirmed assessments without considering allowable deductions under Section 15 of the Income Tax Act; the Respondent violated the Appellant's constitutional right to fair administrative action under Article 47; and the Respondent failed to consider relevant evidence and acted unreasonably. Appellant’s Prayers 44.The Appellant prayed that the Tribunal grants the following:a.That the Appeal be allowed and the Commissioner’s decision as contained in the Objection decision dated 24th May 2019 be set aside.b.That the Respondent's actions to demand additional taxes be declared arbitrary, unreasonable, unfair, and contrary to the fair administration of justice and legitimate expectation of a taxpayer.c.That the Honorable Tribunal awards the costs of this Appeal and any other remedies that it deems just and reasonable to the Appellant. Respondent’s Case 45.The Respondent’s case is premised on the following documents filed before the Tribunal:a.The Respondent’s Statement of Facts dated 27th October 2025 and filed on 4th November 2025; andb.Its Written Submissions filed on 30th April 2026. 46.The Respondent stated that the dispute arose when the Respondent disallowed deductions of expenses income tax return and raised additional assessments for the periods 2013, 2014, 2015, 2016 and 2017 on 6th March 2019. 47.That the Appellant lodged an objection notices on iTax dated 25th March 2019. 48.The Respondent subsequently issued its confirmation assessment notices dated 24th May 2019. That being dissatisfied with the Respondent’s decision, the Appellant filed an appeal. 49.The Respondent averred that the Appellant failed to provide documentary evidence requested by the Respondent. That this was inconsistent with provisions of Section 56(1) of the Tax Procedures Act. 50.In the Respondent’s considered view, the following are issues for determination in this matter: Whether the Respondent erred in the computation and confirming the additional assessment; and Whether the Appellant discharged its burden of proof. 51.That in exercising her mandate under Section 31 of the Tax Procedures Act, the Respondent issued additional assessment against the Appellant to ensure that the Appellant’s returns reflected the true tax position of the Appellant. 52.The Respondent submitted that upon receipt of the additional assessment, the burden of proof shifts to the Appellant to disprove the Respondent’s position. That ideally, the Appellant is meant to demonstrate that the Respondent erred in coming to the tax position. The Respondent referred Section 56(1) of the Tax Procedures Act. 53.Further on the issue of burden of proof, the Respondent refers to the case of Grace Njeri Githua V Commissioner of Investigations & Enforcement (TAT No. 102 of 2018), where the Tribunal emphasized the fact that the burden is on the Appellant to prove the assessment was wrong. 54.That additionally, the Respondent made reference to the case of Mulherin vs Commissioner of Taxation [2013] FCAFC 115, where the Federal Court of Australia held that in tax disputes, the tax payer must satisfy the burden of proof to successfully challenge income tax assessments. The onus is on the taxpayer in proving that assessment was excessive by adducing positive evidence which demonstrates the taxable income on which tax ought to have been levied. 55.The Respondent argued that in order to shift the burden of proof from itself to the Respondent, the Appellant was meant to raise an objection against the assessment as provided for under Section 51 of the Tax Procedures Act. 56.The Respondent submitted that an objection is subject to legal requirements to ensure validity as provided for under Section 51(3) of the Tax Procedures Act 57.The Respondent affirmed that Section 3(1) of the Income Tax Act charges tax on all income generated in Kenya. That it relied on Section 15(1)of the Income Tax Act that provides for deductions allowed and Section 16 of the Income Tax Act that provides for deductions not allowed. 58.The Respondent further relied on Section 23(1) of the Tax Procedures Act which requires the Appellant to keep records that enable the Respondent to assess its tax liability. 59.The Respondent placed reliance on the provisions of Section 59 of the Tax Procedures Act on the production of documents. The Respondent averred that the Appellant failed to provide documentary evidence requested by the Respondent. 60.The Respondent made reference to the case of TAT No. 55 of 2018 Boleyn International Limited vs Commissioner of Domestic Taxes, where it was held: -“…on 8th March 2018, the Appellant lodged an objection with the Respondent. However, the said objection did not reiterate the grounds of objection, the corrections required to be made and the reasons for the amendments. Neither did the Appellant provide the relevant documents in support of its alleged objection. Therefore, there was no conceivable way the Respondent would have considered the Appellant’s objection as the same did not place itself within the parameters of Section 51 (3) of the Tax Procedures Act” 61.That furthermore, the Respondent quoted the case of TAT No. 70 of 2017 Afya Xray Centre Limited vs Commissioner of Domestic Taxes in which it was held that: -“From the foregoing chain of events, it is our understanding that the Appellant failed in its duty in providing these documents, in order that a comprehensive audit of its affairs be done. Accordingly, the Respondent can hardly be faulted for raising the assessment in accordance with the availed documents. Moreover, the Appellant had an opportunity to counter the Respondent’s finding after the preliminary finding and after the confirmation of the assessment. Both are instances, where the Appellant could have produced its books of accounts to counter the Respondent’s assessment after all the Appellant by law bears the burden of proof…” 62.The Respondent also wishes to point out that Appellant even before this tribunal has not made any attempt to discharge the pending burden of proof. The Respondent makes reference to Section 107 of the Evidence Act states that: 63.That the Respondent having established that no error in its additional assessment, the Respondent submits that the assessment and the Confirmation Assessment Notices were right in law. Respondent’s Prayers 64.The Respondent prayed that the Tribunal:a.Upholds the Respondent’s Confirmation Assessment Notices dated 24th May 2019.b.That this Appeal be dismissed with costs to the Respondent. Issue for Determination 65.The Tribunal has considered the pleadings and the submissions made by the Parties, and considers the issue for determination as follows:Whether the Appeal is against an appealable decision. Analysis and Findings 66.Having identified the issue for determination, the Tribunal proceeds to analyse the same as hereunder. 67.The Tribunal examined the decision contained in the letter dated 24th May 2019 and noted that the Respondent in the said letter rejected the Appellant’s Objection as it declared the Objection invalid for its failure to meet the requirements of Section 51(3) of the Tax Procedures Act (TPA). 68.Specifically, the letter stated that the Appellant’s reconciliations and explanation received on 23rd May 2019 did not include all the relevant documents relating to the objection. 69.Contrary to the Appellant’s assertion that the decision was made under Section 51(7) of the Tax Procedures Act, the Tribunal clarifies that the decision was an Objection invalidation decision and not a late objection rejection decision. 70.The TPA mandates a taxpayer who disputes a tax decision to first lodge an objection against that tax decision under Section 51 of the Tax Procedures Act before proceeding under any other law. In this regard, Section 51(1) to the TPA provides as follows: -“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.’’ 71.What constitutes a validly lodged objection is outlined in Section 51(3) of the TPA, and Section 51(4) of the TPA vests in the Commissioner the powers to determine whether a notice of objection is validly lodged. In particular, Section 51(3) and 51(4) of the TPA provide as follows:“51.…(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.(4)Where the Commissioner has determined that a notice of objection lodged by a taxpayer has not been validly lodged, the Commissioner shall within a period of fourteen days notify the taxpayer in writing that the objection has not been validly lodged and request the taxpayer to submit the information specified in the notice within seven days after the date of the notice.” 72.The Tribunal notes that Section 51(4) of the TPA grants the Respondent the discretion to determine and notify a taxpayer who has lodged an objection when a notice of objection has not been validly lodged. In the event that the Respondent declares a notice of objection as not being valid, the legal consequence is that the taxpayer is regarded as not having filed a notice of objection at all and the taxpayer is barred from invoking the jurisdiction of this Tribunal under the Tax Appeals Tribunal (TAT) Act, pursuant to Section 51(1) of the TPA, therefore, the Tribunal lacks jurisdiction to entertain the Appeal. 73.The High Court in the case of Commissioner of Investigations & Enforcement v Vyas t/a Rocon Enterprises (Income Tax Appeal E144 of 2021) [2022] KEHC 16027 (KLR) observed that the Tribunal does not have jurisdiction to entertain decisions that are not appealable decisions when the Court analysed whether the Commissioner’s decision under Section 51(7) of the TPA is an appealable decision. The High Court held: -“15.The letter of January 13, 2020 declined the application for a late objection by the respondent under section 51(7) of the TPA. He did not make or communicate his decision in relation to any assessment under section 52 of the Act.16.The same having not been an objection decision, it could only be challenged by way of judicial review and not appeal to the tribunal. Definitely the tribunal had no jurisdiction to entertain the appeal before it.” 74.The Tribunal notes that the Respondent’s refusal to admit an objection that is not validly lodged is an administrative exercise of discretion under Section 51(4) of the TPA. The Tribunal notes that discretional administrative decisions by the Respondent do not amount to appealable decisions however if the Appellant is aggrieved by such decision, they are entitled to challenge the alleged impropriety or unfairness of the decision through judicial review. 75.Consequently, the Tribunal finds that the invalidation decision that the Appellant appealed against is not an appealable decision, therefore there is no valid Appeal on record. Final Decision 76.The upshot of the above analysis is that the Tribunal finds that the Appeal is incompetent. The Tribunal accordingly proceeds to issue the following Orders:a.The Appeal be and is hereby struck out.b.Each party to bear its own costs. 77.It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 30TH DAY OF JUNE 2026.……………………………..….ROBERT M. MUTUMACHAIRMAN……………………………… ……..….……..……………..JIMMY M. MALLAMEMBER……………………………… ……..….……..……………..DR. TIMOTHY B. VIKIRUMEMBER……………………………..….GLORIA A. OGAGAMEMBER