https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/248

Imaginations Solutions Ltd v Kenya Revenue Authority (Tax Appeal E365 of 2026) [2026] KETAT 248 (KLR) (19 May 2026) (Ruling) Neutral citation: [2026] KETAT 248 (KLR) Republic of Kenya In the Tax Appeal Tribunal Tax Appeal E365 of 2026 E Ng'ang'a, BK Terer & B Mijungu, Members May 19, 2026 Between Imaginations Solutions Limited Applicant and Kenya Revenue Authority Respondent Ruling 1.The Applicant moved the Tribunal vide a Notice of Motion Application dated and filed on 26th March, 2026 seeking the following Orders;a.Spentb.That the Honourable Tribunal be pleased to vacate and/or suspend the Immediate Demand Notice for Tax in Arrears dated 6 March, 2026 pending the hearing and determination of the application and the Appeal filed herewith.c.That the Honourable Tribunal be pleased to Agency Notices dated 10" March, 2025 issued to Co-Operative Bank Limited and I & M Holdings Limited or any other bank pending the hearing and determination of the application and the Appeal filed herewith.d.That the Honourable Tribunal be pleased to extend the time allowed for the Applicant to file Notice of Appeal, Memorandum of Appeal, Statement of Facts and all other supporting documents.e.That the Notice of Appeal, Memorandum of Appeal, Statement of Facts both dated 26" March, 2026 filed herewith to be deemed as properly filed and servedf.That costs of this Application be provided for. 2.Which Application is based upon the grounds set out on the annexed affidavit of Cleopas Bonuke accompanying the application for extension of time to file Appeal and based upon other grounds and further grounds as may be adduced at the hearing hereof;a.That the respondent issued with income tax additional assessment notices for the 2019-2022 years of income amounting to a total of kshs. 49,302,460/=b.That the Appellant/Applicant lodged a manual Notice of Objection to the said assessments on 18th October, 2024c.That the Respondent rejected the Appellant/Applicant's objection issued the Appellant/ Applicant with an Objection Decision dated 10th December, 2024.d.That the Appellant/Applicant was supposed to lodge an Appeal to this Honourable on before the 10th January, 2025e.That the Appellant/Applicant's director who has been in conduct of the Applicant’s business affairs has been indisposed rendering him unable to attend to any business.f.That as a result the Appellant/Applicant was unable to file its Notice of Appeal to the Honourable Tribunal within 30 days pursuant to the provisions of the Tax Appeal Tribunal Act and Tax Procedures Act.g.That the Respondent has recently issued an Immediate Demand Notice for Tax in Arrears dated 6th March, 2026 for Ksh. 50,839,978/=h.That in a bid to enforce the Immediate Demand Notice above, the Respondent has issued Agency Notice dated 10th March, 2025 for Ksh. 50,839,978/~ the Applicant’s bankers. Co-Operative Bank Limited and [ & M Holdings Limited.i.That the imminent risk of that in compliance with the Agency Notices the Appellant’s Bankers are likely to transfer the said amount despite the taxes being are disputed.j.That the Appellant/Applicant has an arguable Appeal with high probability of success.k.That the Applicant stand to suffer irreparable loss and damage if the orders sought in this application are not granted as the Respondent may proceed to enforce an erroneous Assessment 3.Which Application Is Further Based on the annexed affidavit of Cleophas Bonuke, supporting on such other or further grounds, reasons and/or arguments as may be adduced or advanced at the hearing hereof 4.The Application was supported by a Sworn Affidavit of Cleophas Bonuke, theApplicant, dated and filed 26th March, 2026 citing the following grounds;a.That I am the Appellant's director herein hence competent to swear this affidavit.b.That the Respondent issued with Income Tax Additional Assessment Notices for the 2019-2022 years of Income amounting to total of Ksh. 49,302,460/= .c.That the Appellant/Applicant lodged a manual Notice of Objection to the said assessments on 18" October, 2024.d.That the Respondent partially allowed the Appellant/Applicant’s objection issued the Appellant/Applicant with an Objection Decision dated 10" December, 2024. (Attached hereto and marked A is a copy of the Objection Decision)e.That the Appellant/Applicant was supposed to lodge an Appeal to this Honourable on before the 10th January, 2025.f.That the Appellant/Applicant's director who has been in conduct of the Applicant’s business affairs has been indisposed rendering him unable to attend to any business. (Attached hereto and marked B is a copy of the Medical Report)g.That as a result the Appellant/Applicant was unable to file its Notice of Appeal to the Honourable Tribunal within 30 days pursuant to the provisions of the Tax Appeal Tribunal Act and Tax Procedures Act.h.That the respondent has recently issued an immediate Demand Notice for Tax in arrears dated 6th march, 2025 for kshs.50,839,978/=(attached hereto and marked C is a copy of the immediate demand notice)i.That in a bid to enforce the immediate demand notice above, the Respondent has issued Agency Notice dated 10th march, 2025 for ksh.50,839,978/= the applicant’s bankers; Co-operative Bank limited and I&M holdings limited.(attached hereto and marked D are copies of the Agency notices)j.That the imminent risk of that in compliance with the Agency Notices the Appellant's Bankers are likely to transfer the said amount despite the taxes being are disputed.k.That there s no inordinate delay in filing this application. delay in filing the Appeal is not as a result of the indolence on its part and has well been explained above.l.That the Appellant/Applicant has an arguable Appeal with high probability of success.m.That the applicant stand to suffer irreparable loss and damage if the orders sought in this application are not granted as the Respondent may proceed to enforce an erroneous Assessment.n.That Appellant therefore prays for leave to file the Appeal out of time.o.That it is in the interest of justice and pursuant to Article 159 of the Constitution that this Honourable Tribunal ignore procedural technicalities and determine this dispute on merit.p.That I have been advised by tax agent on record, which advise I believe to be that this Honourable Tribunal has the powers to extend the time of filing the pleadings as granted by Section 13 (3) and (4) of the Tax Appeals Tribunal Act 2013 and Rule 10 of the Tax Appeals Tribunal (procedure) Rules 2015.q.That in the premises, it is only fair and in the interests of that the orders sought herein be granted.r.That I swear this affidavit knowing it to be true to the best of knowledge, information and belief. 5.In Response to the Application, The Respondent did not file grounds of opposition an therefore Application determined on its merits. Analysis and Findings 1.The Tribunal on the 2nd April 2026 directed the Respondent to file serve their submissions by the 16th April 2026 together with Appellant submissions, directions that were not fulfilled and therefore the Tribunal would make decision on the merits of the Application. 2.The issue at hand arises from the Applicant’s Notice of Motion dated and filed on 26th March, 2026, in which it seeks both interim protective orders and substantive leave to regularize its appeal before the Tax Appeals Tribunal. The Applicant’s principal grievance stems from the Respondent’s enforcement actions premised on an alleged tax liability arising from Income Tax Additional Assessments for the years of income 2019–2022, amounting to Kshs. 49,302,460/=. 3.Following the issuance of the assessments, the Applicant lodged a manual Notice of Objection on 18th October, 2024. The Respondent subsequently issued an Objection Decision dated 10th December, 2024, which allegedly either rejected or partially upheld the objection. Under the statutory timelines, the Applicant was required to file its appeal by 10th January, 2025 but failed to do so. 4.The Applicant attributes the failure to lodge the appeal within time to the indisposition of its director, who is said to have been solely responsible for the management of its affairs, thereby rendering the company unable to act within the prescribed statutory period. Despite the lapse, the Respondent proceeded to escalate enforcement by issuing an Immediate Demand Notice dated 6th March, 2026 for Kshs. 50,839,978/=. 5.In furtherance of recovery efforts, the Respondent also issued Agency Notices dated 10th March, 2025 to the Applicant’s bankers, Co-operative Bank Limited and I&M Holdings Limited, placing the Applicant’s funds at risk of attachment. The Applicant contends that these enforcement actions threaten imminent and irreparable financial prejudice, particularly because the underlying tax liability is still disputed and the intended appeal has high chances of success. Consequently, the Applicant seeks extension of time to file its appeal out of time, validation of the already filed appeal documents, and suspension or vacation of the enforcement notices pending determination of both the application and the substantive appeal. The Respondent did not file any grounds of opposition, leaving the application to be determined on its merits. 6.The Applicant relied on its indisposition as a director and as the principal explanation for its failure to lodge the appeal within the statutory timelines following the Objection Decision dated 10th April, 2025, which required an appeal to be filed on or before 10th May, 2025. 7.The medical evidence on record indicates that the director was unwell for a limited period between 16th February, 2024 and 21st February, 2024. This period of illness occurred approximately one year and two months before the issuance of the Objection Decision, and therefore well before the operative appellate timeline arose. 8.The Applicant nevertheless contends that this indisposition impaired the continuity of its tax compliance and internal management capacity, thereby contributing to the failure to act timeously once the objection process was concluded. 9.However, when the chronology is examined holistically, a clear temporal disconnect emerges between the alleged sickness period and the actual default complained of. The statutory obligation to appeal arose after 10th April, 2025, yet the medical incapacity relied upon had already resolved by 21st February, 2024, with no evidence of continuing illness or renewed incapacity during the critical window between April and May 2025. 10.In contrast, the record shows an extended period of procedural activity by the Applicant namely the filing of a late objection in February 2024, participation in the objection process, and receipt of the Objection Decision in April 2025 which demonstrates that the dispute remained active and being prosecuted despite the earlier illness episode. On that basis, the sickness episode appears isolated and temporally remote from the failure to file the appeal, weakening its probative value as a standalone justification for delay. 11.In applications for extension of time, illness may constitute “sufficient cause” only where a direct causal link is established between the incapacity and the default. Here, the gap between February 2024 illness and the May 2025 appeal deadline breaks that causal chain. 12.The prolonged intervening period, during which the Applicant engaged with the tax dispute process, suggests that the delay was not continuously occasioned by medical incapacity but rather by other unexplained administrative or procedural shortcomings. 13.This lack of comprehensive medical history raises concerns about the extensive delay the Tribunal cannot rely solely on a few days medical report from 16th February, 2024 and 21st February, 2024. in determining the merits of this application. The Tribunal notes that in the instant Application, there was an inordinate delay in filing an Appeal and that it is therefore necessary for the Tribunal to determine whether there was a reasonable explanation for the inordinate delay. In order to exercise its discretion under the following provisions of Section 13(3) and (4) of the TATA:“Section 13(3) and (4) of the Tax Appeals Tribunal Act the Tribunal can allow an application by a taxpayer for extension of time for filing the Notice of Appeal under subsection (4) :-a.owing to absence from Kenyab.or sicknessc.Other reasonable cause that may have prevented the Taxpayer from filing the notice of Appeal or submitting the documents within the specified filling period.” 14.Under Section 13(3) and (4) of the TATA, a taxpayer is required to show that the Tribunal’s discretionary authority to enlarge time is invoked for the purpose of addressing a real and substantive injustice, rather than to cure delays occasioned by indolence, poor planning, or want of due diligence. This ensures that the integrity of the Tribunal’s procedural framework is preserved and not compromised. In arriving at its determination on whether the Applicant should be permitted to lodge the Appeal out of time, the Tribunal is guided by the principles set out in the authorities cited herein, which establish the relevant conditions for the proper exercise of that discretion; Nicholas Kiptoo Arap Korir Salat v Independent Electoral and Boundaries Commission and 7 others [2014] eKLR Leo Sila Mutiso vs Rose Hellen Wangari Mwangi, Civil Application Nai. 251 of 1997 Wasike v Swala [1984] KLR 591 15.Indeed, similar findings have also been upheld in the case under consideration.Commissioner of Domestic Taxes vs Mayfair Insurance [ Income Tax Appeal No. 31 of 2017] eKLR where the court held that as follows:“One of the reasons stated under the Rule is that the court may extend timewhere there is reasonable cause for the delay. Effectively, the court's powers and discretion to extend time is unlimited. It is however not to be capriciously exercised. Time, in other words, is not to be extended as a matter of right. Each case is to be viewed sui generis and on its own circumstances and facts. The starting point is that the Applicant ought to advance sufficient and reasonable grounds for any delay on its part." 16.Accordingly, while the indisposition may be relevant background history, it does not, on its own, adequately account for the failure to comply with the statutory timeline for filing the appeal. It is therefore the finding of the Tribunal that the Applicant did not provide undoubtful evidence to prove that the illness of its director was sustained for a longer period within disputed range of time thereby limiting his ability to file an Appeal at the Tribunal. The Applicant did not adduce any reasonable justification as to why there was an inordinate delay in filing its Appeal. Disposition 17.From the foregoing, the Tribunal accordingly makes the following Orders:-a.The Notice of Motion dated 26th March 2026 be and is hereby dismissedb.No orders as to costs. 18.It is so ordered. DATED AND DELIVERED AT NAIROBI ON THIS 19TH DAY OF MAY 2026.SIGNED BY/FOR:HON. EUNICE NJERI NGANGA HON. BONIFACE KIBIY TERERHON. BILLY GRAHAM OKUMU MIJUNGUThe Judiciary of KenyaDoc IDENTITY: 436693227062201459095124097671Tracking Number:OORU3D2026