[2024] KETAT 1436 (KLR)

Hashi Energy Ltd (in Liquidation v Commissioner of Domestic Taxes (Tax Appeal E699 of 2023) [2024] KETAT 1436 (KLR) (4 October 2024) (Judgment)

Neutral citation: [2024] KETAT 1436 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E699 of 2023

RM Mutuma, Chair, D.K Ngala, Jephthah Njagi, M Makau & T Vikiru, Members

October 4, 2024

Between

Hashi Energy Ltd (in Liquidation

Appellant

and

Commissioner of Domestic Taxes

Respondent

Judgment

Background 1. The Appellant is a company incorporated in Kenya whose its core business during the period of assessment was the sale and distribution of LPG’s and provision of food rations and related services to UN stabilization missions in the DRC. The Appellant is now in liquidation.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act Cap 469 Laws of Kenya. Under Section 5(1) of the said Act the Respondent is also an agency of the Government for the assessment, collection and receipt of all its tax revenue.

3. The Respondent carried out an audit on the Appellant’s business covering Corporation tax, Withholding tax, VAT and PAYE for the period 2017 to 2022. Vide a letter dated 16th June 2023 the Respondent demanded tax of Kshs. 7,178,023,154. 00. The Appellant objected to this demand vide its letter dated 12th July 2023.

4. The parties held several meetings where the Appellant provided some records. The Respondent reviewed the Appellant’s objection and vide a letter dated 7th September 2023 the Respondent issued an Objection Decision demanding tax of Kshs. 7,029,209,729. 00.

5. Aggrieved by the Respondent’s Decision the Appellant filed its Notice of Appeal dated and filed on 6th October 2023.

The Appeal 6. The Appeal is premised on the following grounds of Appeal as stated in the Appellant’s Memorandum of Appeal dated and filed on 19th October 2023 based on the following grounds.a.The Commissioner erred in law and fact by confirming an assessment on Income Tax of Kshs. 3,858, 227,520. 00;b.The Commissioner erred in law and fact by confirming an assessment on Income Tax of Kshs. 1,894,408, 902. 00;c.The Commissioner erred in law and fact by not considering the deductibles and expenses for the year 2021 and 2022 before making tax assessment on income;d.The Commissioner erred in law and fact by not considering brought forward losses for the year 2018 amounting to Kshs. 225,638,218. 00 as a tax deductable expense for the year 2019 before making tax assessment on income;e.The Commissioner erred in law and fact by confirming an assessment on VAT amounting to Kshs. 2,194,445,270. 00;f.The Withholding tax on interest relating non-residents related to loans/facilities advance to Hashi Energy Holdings Ltd (HEHL);g.The Commissioner erred in law and fact by confirming an assessment on PAYE of Kshs. 242,886,784. 00; and,h.The Commissioner confirmed the Notice of full Objection without due regards to all records, explanations and information provided by the company on several occasions.

The Appellant’s Case 7. The Appellant’s case is premised on its;a.Statement of Facts dated and filed on 19th October 2023 together with the documents attached thereto; and,b.Written submissions dated and filed on 2nd August 2024.

8. The Appellant stated that it met with the Respondent’s representatives on various dates where it provided explanations and documents requested. The requested documents included:a.Signed contracts for the RBU.b.Signed contract for fuel supply to UN.c.Signed loan agreements.d.Appointment letter of the liquidator, showing the name, contacts and physical address details of the liquidation.e.Audited financial statements (2019 - 2022) with accompanying ledgers.f.Loan statements mapped to bank statements.g.Bank statements showing the bank charges, attach a schedule of the detailed bank charges.h.Reconciliation of VAT turnover with Income tax turnover and the sales ledgers accompanied with supporting documents to explain why the variance.i.Employment contracts to demonstrate the employees were working in DRC.j.Proof of payment of employees.k.The Liquidation decree granted by the court.l.Sales invoices, purchase invoices stamped delivery notes.m.Invoices of the expenses claimed in the financial statements.

9. The Appellant asserted that it did not file the tax returns for years 2021 and 2022 on the due dates due to delays in completion of the annual audit. However, once the audits were completed, it supplied the Respondent with the audited financial statements for the years 2021 and 2022 although the Respondent proceeded with the default assessment for the years 2021 and 2022.

10. The Appellant averred that it explained to the Respondent through supporting documents and agreements that the food supply business to UN in DRC was carried out by the holding company, Hashi Energy Holdings (HEHL), hence this is not its income as per Section 3 (1) of the Income Tax Act. Consequently, the costs relating to HEHL operations in DRC had not been considered as business expenses in the updated books of the Appellant.

11. It averred that the income tax assessment of Kshs. 3,858,227,520. 00 was based on estimated figures by the assessing team mainly from its DRC Food Ration Business (RBU unit). Further that it provided the revised audit accounts for the period 2019 for review which included segment reports on Food Ration Business (RBU) from DRC and the related costs.

12. It asserted that the default assessment of Kshs. 1,894,408,902. 00 for the years 2021 and 2022 was made on estimated figures in total disregard of such income despite it supplying statements which is in contravention of Section 15 (1) of the Income Tax Act.

13. On the VAT assessment of Kshs. 2,194,442,270. 00, the Appellant averred that its business mainly comprised of sale of LPG, transit transport and supplies made to UN which were either Exempt or zero-rated supplies as per VAT Act 2013. Further that in most cases the zero-rated supplies to UN in DRC were omitted in error in the VAT returns which was the main reason for the variance between sales as per income tax returns and VAT returns.

14. On the PAYE assessment of Kshs. 242,886. 784. 00, the Appellant asserted that the same was based on estimated figures which were obtained from comparing staff costs as per Income tax returns and iTax PAYE returns. It asserted further that this was erroneous as it did not have employees in DRC and that the employees in DRC were for the holding company HEHL It averred that the expenses included staff medicals, staff uniforms, staff welfare for the Kenya employees and logistics expenses in DRC which should not have been subjected to PAYE.

15. The Appellants written submissions dated and filed on 2nd August 2024 rehashed its Statement of facts. The Tribunal will therefore not regurgitate the same.

The Appellant’s Prayers 16. The Appellant prayed that;a.Our Appeal be allowed and the Respondent’s Objection Decision dated 7th September 2023 be set aside; and,b.The confirmed assessment be set aside and the Tribunal to consider the substance of the case.

The Respondent’s Case 17. The Respondent’s case is premised on its;a.Statement of Facts dated 17th November 2023 and filed on 20th November 2023 together with the documents attached thereto; and,b.Written submissions dated 18th July 2024 and filed on even date.

18. The Respondent averred that it subjected the Appellant to an audit that covered Corporation tax, Withholding tax, VAT and PAYE for the period 2017 to 2022 with the following outcomes;

a) Record Keeping and Production of Records; 19. The Respondent stated that it established that the Appellant maintained its financial statements in US Dollars which was in contravention of Section 23 (2) of the Tax Procedures Act (TPA) which provides that;“The unit of currency in books of account records, paper registers, tax returns or tax invoices shall be in Kenya shillings.”

20. Further, that during the period under review, the Appellant only supplied the Respondent with the audited financial statements for accounting periods 2017 and 2018 and that the other years were not provided contrary to Section 59 (1) of the TPA.

b) Aggregate of accounts 21. The Respondent asserted that a review of the 2017 and 2018 audited financial statements and ledgers established that the Appellant only declared income denied from its Kenyan customers and did not declare the Income from Ration Food Business and UN fuel supply contract which was accrued in or derived from Kenya. Further that during the period under audit, the Appellant had the following additional sources of income which had not been declared contrary to Section 3 (1) of the Income Tax Act; Ration Food Business

UN Fuel supply contract.

c. Ration Food Business (RBU) 22. According to the Respondent, the audit established that in the year 2018, the Appellant won a contract to supply food stuff under the Ration Food Contract to the UN peace keeping missions in the DRC. This contract entailed the construction of one godown in Mombasa and a “build and transfer” of six go downs in DRC.

23. From the interviews held with the Appellant’s staff on 22nd February 2023, the Respondent stated that it established that the Appellant would receive a six-month advance food order from UN which was based on the number of staff that were in each base which included Goma, Uvira, Bukavu, Kinshasa, Boni and Bunia. It stated further that once the order was received, the Appellant would procure the food items through its Dubai office. Once procured the food items would either be shipped to Goma DRC or to Mombasa for storage before distribution.

24. It was the Respondent’s contention that from the information available it noted the following: - The contract required the Appellant to maintain warehouses both in Mombasa and DRC from where the storage and supply of the food stuff was done.

The operations of the contract required that staff sit in Mombasa and DRC. The staff included warehouse manager, operations manager, quality control manager, store manager, logistics manager among others who were based in Mombasa. There were also staff that operated from DRC offices who also ran the operations of the Appellant.

The contract was in operation from May, 2018 until December 2022.

The payroll cost of the DRC office staff was consolidated in the Kenyan payroll and expensed in the Appellant’s audited financial statements.

25. The Respondent averred that a review of the Appellant’s ledger provided and the filed income tax self-assessment returns for the years 2019 and 2020, established that the Appellant had not included the income from RBU in the aggregate income for the years 2019 and 2020. Further that for the period 2021 and 2022, the Appellant had also not filed its self-assessment returns and did not provide the Respondent with the ledgers for RBU income for the period.

26. It was the Respondent’s assertion that the Appellant’s income from RBU was accrued in Kenya and was therefore subject to tax in Kenya yet the Appellant did not declare the RBU income contrary to Section 3 (1) of the ITA. Further that Section 3 (2) (a) (1) of the same Act states that the income upon which tax is chargeable under this Act is income in respect of gains or profits from a business for whatever time it was accrued. This income includes gains from business income derived from both inside and outside Kenya subject to Section 4 (a) of the Income Tax Act.

27. The Respondent stated that the Appellant provided the Respondent with ledgers for the years 2019 and 2020 which indicated an income of USD 60,348,544. 00 which was equivalent to Kshs. 6,314,696,364. 00 at the prevailing rates. In subjecting this income to income tax, the Respondent premised the assessment on the provisions of Section 31 (1) of the TPA. The Respondent stated further that for the years 2021 and 2022, the Appellant neither provided the Respondent with the audited financial statements nor the RBU ledgers and that the Appellant also failed to file the self-assessment income tax returns for these years. Therefore, the Respondent charged the income to tax as provided for in Section 29 (1) of the TPA by averaging the income for 2019 and 2020 best on its best judgement pursuant to Section 29 (1) of the TPA.

d. Fuel Supply Contract to UN 28. It was the Respondent’s assertion that the Appellant provided the loan agreements wherein it was established that Hashi Energy Holdings Limited (HEHL) Mauritius entered into a trade facility arrangement in August 2015. This arrangement was with Eastern and Southern African Trade and Development Bank (PTA Bank) of USD 50 million and the Appellant being a subsidiary of HEHL Mauritius was an interested party.

29. Under the agreement, the Respondent stated that HEHL was granted the amounts to finance the buying and importation of products by referring to a “Fuel Supply and Services Agreement dated 3rd August 2015 signed between the Appellant and the United Nations where the Appellant was to purchase, deliver and sell fuel to UN stabilization mission in the DRC. The contract was in force until the year 2022.

30. The Respondent averred that the Appellant not only failed to declare income accrued from the fuel supply contract but also failed to provide the following requested documents; Contract between HEHL and the UN for the supply of Fuel.

Detailed sales ledger for the supply of fuel showing the invoice number, date of invoice, amount of the invoice and quantity supplied.

Detailed stock movement schedule with details of the quantity of oil purchased, the purchase price, the order details from the UN and the quantity supplied and the date of supply.

Evidence of payments made by the UN for the filed supply including and not limited to the end year balances as at the end of each financial year.

31. The Respondent asserted that further analysis of the Appellant’s income tax returns and general ledgers established that the Appellant claimed interest expense and profit share of Kshs. 1,495,738,313. 00 which was principally interest but renamed so as to be compliant with Sheria law. To ascertain the loan interest claimed, the Respondent requested for the following documents.a.The loan agreements held by the Appellant.b.Detailed loan statements showing the loans held by the Appellant in the years 2017-2021. c.Detailed loan interest ledgers, showing the source of the loans, monthly and annual loan interest expense.

32. In response to the request, the Respondent stated that the Appellant provided partial records being; ECO Bank Loan ledger whose review established significant variances in the interest booked against those verified from the ECO Bank Loan statements. The variances established were Kshs. 52,354,535. 00 for the years 2019/2020 and Kshs. 458,738. 074. 00 for the years 2020/2021. These variances were shared with the Appellant who was requested to do a reconciliation. However, the Respondent stated that the Appellant failed to fully account for the loan interest expensed or the profit share amounts claimed in the Income Tax Self–Assessment returns.

33. The Respondent stated that it further established the existence of another facility held with BGFI of DRC whose loan agreements and statements were not provided hence the Respondent was unable to ascertain that the interest claimed by the Appellant under both profit share and loan interest expense was incurred in its normal course of business as provided for under Section 15 (1) of the ITA. In addition, the Appellant was not able to demonstrate that the income from the sale of fuel to the UN under fuel supply contract had been declared. Consequently, the Respondent disallowed the total interest and profit share claimed by the Appellant for Kshs. 653,823,875. 00, Kshs. 255,493,268. 00, Kshs. 784,055,474. 00 and Kshs. 1,495,738,313. 00 for the years 2017, 2018, 2019 and 2020 respectively.

34. The Respondent asserted that a review of the Income Tax Self-assessment return filed by the Appellant established that the Appellant claimed bank charges of Kshs. 248,515,233. 00. In order to ascertain whether the expense was incurred wholly and exclusively in the generation of income as provided for in Section 15 (1) of the ITA, the Respondent requested the Appellant to avail bank statements. However, the Appellant failed to provide the documents as requested. The Respondent therefore disallowed the bank charges in entirety.

e) PAYE: variances between PAYEI I-Tax returns and staff remuneration expenses in the Audited Financial statements. 35. The Respondent asserted that an analysis of the PAYE returns filed on iTax and the employment costs claimed in the Income Tax Returns established variances of Kshs. 94,211,796. 00 for the year 2019 and Kshs. 506,026,699. 00 for the year 2020. The Appellant had alleged that the variances were as a result of RBU employment costs that were claimed in the filed audited financial statements, but no PAYE was deducted as the employees were based in DRC and therefore the PAYE was not due on the emoluments.

36. The Respondent however established that: -a.The Appellant was the owner of the contract and was domiciled in Kenya.b.The management and control of the company was undertaken by directors and management staff that were domiciled in Kenya. For instance, the head of Human Resources Dr. Asmahan Aden and the Human Resources Director Dr Aarti Dwarka Deejore were in control of the Appellant’s Kenya’s operations.c.The expenses of RBU have been claimed in Kenya.

37. It was the Respondent’s contention that the expense was in relation to employee costs on account of services rendered to the Appellant. The Respondent argued therefore that the Appellant’s assertion was in contradiction to Sections 3 (1), 3 (2) (ii) and 5 (1) (6) of the ITA. Further that pursuant to Section 5 (2) (b) of the ITA, the Appellant was required to operate PAYE on the emoluments paid to the employees in the RBU in accordance with Section 5 (1) (b) of ITA. The Respondent stated that it therefore assessed for PAYE of Kshs. 242,886,784. 00 which was inclusive of penalty and interest for the years 2019 and 2020.

f) VAT Income variance between VAT Returns and the Audited Financial Statements. 38. The Respondent asserted that it made a comparison of sales declared in the Appellant’s audited financial statements, sales in the general ledgers and the sales declared in the filed VAT returns and established significant variances for the years 2018, 2019 and 2020 which it shared with the Appellant on 22nd December 2022 wherein it requested the Appellant to provide supporting reconciliation of the same. However, the Appellant failed to provide any reconciliation to explain away the variances.

39. The Respondent stated that a review of the Appellant’s sales established that it had the following sources of income; Sale of LPG: The sale was zero rated for the purpose of VAT.

Leasing of trucks: The sale was subject to VAT.

Hospitality Income. The income was subject to VAT.

Transit transport: zero rated.

Sale of fuel products to UN DRC: Zero-rated.

40. In the absence of proper supporting reconciliation from the Appellant, the Respondent stated that it was unable to ascertain the composition of the sales declared in the income tax returns as the Appellant did not provide a breakdown of the same.

41. The Respondent established the variances of Kshs. 103,582,186. 00, Kshs. 2,206,279,100. 00 and Kshs. 7,635,065,361. 00 for the years 2018, 2019 and 2020 and argued that given that the Appellant had taxable supplies, the variances were deemed taxable supply under Section5 (1) (a) of the VAT. It therefore brought the variances to charge and returns for the period amended in accordance with Section (1) (c) of the TPA.

g) Withholding Income Tax: Withholding Income Tax on Interest Expense. 42. It was the Respondent’s contention that a review of the withholding income tax ledger, books of accounts and the loan agreements provided established that the Appellant had loans provided by the following institutions; Eco Bank limited.

Eastern and Southern African Trade Development Bank.

BGFI Bank Group S.A-DRC a financial services conglomerate in Central West and East Africa, with subsidiaries in ten countries.

43. The Respondent stated that from the Withholding tax ledgers provided, it established that the Appellant did not withhold income tax on interest paid contrary to the provisions of Section 35 (1) of the ITA.

44. The Respondent averred that during the course of the audit it continuously requested for the loan statements and the loan agreements, which the Appellant did not provide. Further that the law provides that the Appellant should have withheld Income Tax when making payment for the interest at the appropriate rate. However, the Appellant failed to operate withholding tax on the interest paid to BGFI and since the Appellant did not withhold and remit the withholding tax, the Respondent demanded Kshs. 316,348,653. 00 of the years 2020/2021 as guided by Section 39 A of the TPA.

45. The Respondent reiterated that the Objection Decision was based on information and documents provided by the Appellant and that as per Section 24 (2) of the TPA, it is not bound by the information provided by the Appellant and may assess the Appellant to the best of its judgement, which it did. It stated further that Sections 23 and 59 of the TPA mandate the Appellant to keep records and avail documents when requested for tax assessment. It argued therefore that the Appellant ought to have provided the requested documents in order to support its grounds of objection and that in absence of the same it was entitled fully to rely on the information available and as such confirmation of the assessment was proper.

46. The Respondent reiterated further that the Appellant’s objection was allowed to the extent supported by law therefore the grounds of the Appeal were unmerited, unfounded in law and not supported by evidence.

47. The Respondent’s written submissions dated and filed on 18th July 2024 submitted on the five issues raised in its Statement of Facts.

48. The Respondent submitted that during the period under review the Appellant only supplied the Respondent with audited financial statements for accounting periods 2017 and 2018. The other years being 2019, 2020, 2021 and 2022 were not provided contrary to Section59 (1) of the TPA. A review of the 2017 and 2018 audited financial statements and ledgers established that the Appellant only declared income derived from Kenya customers and did not declare income from Ration Food Business and UN Fuel supply contract which was accrued in or derived from Kenya.

49. It was the Respondent’s submissions that the bottom line of the various tax heads subject to this Appeal was that no supporting evidence/information was provided by the Appellant to demonstrate that the assessment as issued was erroneous or in any way excessive. It submitted further that the Appellant merely made assertions in its pleading despite having knowledge of the basis of the assessment and the documents information required to discharge the burden of proof.

50. The Respondent relied on the High court case of National Social Security Fund Board of Trustees vs. Commissioner of Domestic Taxes, Kenya Revenue Authority [2016] eKLR which affirmed at paragraph 36;“there is a world of difference between assertion and proof. That which a party puts to be his case is an assertion. The party needs to adduce evidence to support his said assertion with a view to supporting his case”

51. The Respondent further relied on the judgement in the case of CMC Aviation Ltd vs. Cruisair Ltd (1) (1978) KLR, where Madan J as he then was observed that:“Pleadings contain the averments of parties’ concerned. Until they are proved or disproved, or there is an admission of them, by the parties, they are not evidence and no decision could be founded upon them. Proof is the foundation of evidence. Evidence denotes the means by which an alleged matter of fact, the truth of which is submitted for investigation. Until their truth has been established or otherwise, they remain unproven. Averments in no way satisfy, for example the definition of “evidence” as anything that makes clear or obvious; ground of knowledge, indication or testimony that which makes truth evident, or render evident to the mind that its truth”

The Respondent’s Prayers 52. It therefore prayed that this Honourable Tribunal;a.Upholds the Respondent’s decision; and,b.Dismisses the Appeal with costs to the Respondent as the same is devoid any merit.

Issues For Determination 53. The Tribunal has considered the parties’ pleadings, documentation and the Respondent’s submissions and is of the view that this Appeal raises a sole issue for determination.Whether the Respondent’s Assessment was justified

Analysis And Findings 54. Having identified the single issue for determination, the Tribunal will proceed to analyse it as herein under:

55. The Respondent carried out an audit on the Appellant for various tax heads covering the period 2017 to 2022. It had submitted that it sought for documentation and information from the Appellant most of which the Appellant failed to avail. Further that it requested the Appellant to avail financial statements for the accounting periods 2017 to 2022. However the Appellant only provided for accounting periods 2017 and 2018.

56. In its Statement of Facts, the Appellant stated that it met the Respondent on various dates where it provided explanations and documentation. It stated that it was asked to provide the following documents listed at paragraph 8 herein above. However, the Respondent argued that it never received some of the crucial documents which would have assisted to ascertain the taxes due despite several requests to do so.

57. The Tribunal notes that whereas the Appellant acknowledges it was requested specific documents by the Respondent, it did not specify which documents it provided. The Respondent in its pleadings has been specific as to which documents the Appellant failed to avail despite several requests, an allegation which the Appellant has not controverted. Section 23 (1) of the Tax Procedures Act mandates a taxpayer to keep records to facilitate ascertainment of one’s tax liabilities. It provides as follows;“23 Record-keeping 1. A person shall –(a)maintain any document required under a tax law, in either of the languages;(b)Maintain any document required under a tax law so as to enable the person’s tax liability to be readily ascertained;(c)Subject to subsection (3) retain the document for a period of five years from the end of a reporting period to which it relates or such shorter period as may be specified in a tax law”

58. Further Section 59 (1) of the Tax Procedures Act empowers the Respondent to request for documents to aid in determining the taxpayer’s tax obligation. It provides as follows;“For the purposes of obtaining full information in respect of the tax liability of any person or class of persons, or for any other purposes relating to a tax law, the Commissioner or an authorized officer may require any person, by notice in writing to –a)Produce for examination, at such a time and place as may be specified in the notice, any documents (including in electronic format) that are in the person’s custody or under the person’s control relating to the tax liability of any person,b)Furnish information relating to the tax liability of any person in the manner and by the time as specified in the notice; orc)Attend, at the time and place specified in the notice, for the purpose of giving evidence in respect of any matter or transaction appearing to be relevant to the tax liability of any person”.

59. The Tribunal also notes that the Respondent was detailed in how the various variances occurred in the tax heads under review. However Appellant not only failed to respond or controvert the Respondent’s findings but made mere assertions without providing evidence that would persuade the Tribunal, considering that in tax matters, the Appellant bears the burden of proof as per Section 56 (1) of TPA, to challenge the Respondent’s demand as it is the custodian of the documents and information relating to its business. Section 56 (1) of the TPA provides as follows;“In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision in incorrect”

60. The Tribunal relies on the case of Kenya Revenue Authority vs. Maluki Kitili Mwendwa [2021] eKLR where Mativo J addressed the issue of onus of burden of proof;“The pertinent issue in this appeal as I see it is the question of the taxpayers’ burden of proof in tax cases. The party with the obligation of persuasion-what Wigmore termed the risk of non-persuasion-is said to bear the burden of proof. The effect of non- persuasion on a party with the burden of proof is that the particular issue at stake in the litigation will be decided against the party. Generally, the taxpayer has the burden of proof in any tax controversy. The taxpayer must demonstrate that the Commissioner’s assessment is incorrect. The taxpayer must prove the assessment is incorrect. The position enjoys statutory backing courtesy of section 56(1) of the TPA which provides that in any proceeding under the part, the burden shall be on the taxpayer to prove that a tax decision is incorrect. As if to underscore the import of the above provision, the legislature deployed the word “shall” in the said section meaning that the provision is couched in peremptory terms”.

61. The Respondent has stated in its submissions that the Appellant failed to include the income from the RBU in the aggregated income in its returns for the years 2019 and 2020. The Tribunal notes that although the Appellant has attached copies of financial statements for the years 2019-2022, it has not attempted speak on the same to the satisfaction of the Tribunal. It is also worth noting that the Appellant did not file its self-assessment returns for the period 2021 and 2022 and has not adduced them as evidence to in any way persuade the Tribunal. Further that by its own admission at paragraph 5 of its Statement of Facts the Appellant acknowledges that it did not file the tax returns for the year 2021 and 2022 due to delays in completion of the annual audits. In the circumstances the Respondent cannot be faulted for using the available information and its best judgement as empowered under Sections 24 (2) and 31 (1) of Tax Procedures Act.

62. In view of the fact that the Appellant failed to discharge its burden of proof and further failed to file its self–assessment returns for the years 2021 and 2022, the Tribunal finds that the Respondents assessment on the Appellant was justified.

63. Consequently, the Appellant’s Appeal fails.

Final Decision 64. The upshot of the foregoing is that the Appeal is bereft of merit and the Tribunal proceeds to make the following final Orders;a.The Appeal be and is hereby dismissed;b.The Respondent’s Decision dated 7th September 2023 be and is hereby upheld; and,c.Each party to bear its own costs.

65. Orders accordingly.

DATED AND DELIVERED AT NAIROBI THIS 4TH DAY OF OCTOBER 2024ROBERT M. MUTUMA - CHAIRMANDELILAH K. NGALA - MEMBERJEPHTHAH NJAGI - MEMBERMEMBER MEMBER - MEMBERMUTISO MAKAU - MEMBERDR. TIMOTHY B. VIKIRU - MEMBER