https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/159

Imarika Savings and Credit Cooperative Society Limited v Commissioner of Domestic Taxes (Tribunal Case E1323 of 2025) [2026] KETAT 159 (KLR) (4 May 2026) (Ruling) Neutral citation: [2026] KETAT 159 (KLR) Republic of Kenya In the Tax Appeal Tribunal Tribunal Case E1323 of 2025 RM Mutuma, Chair, G Ogaga, E Ng'ang'a & JM Malla, Members May 4, 2026 Between Imarika Savings and Credit Cooperative Society Limited Applicant and Commissioner of Domestic Taxes Respondent Ruling 1.The Applicant filed a Notice of Motion dated 5th March 2026 on 6th March 2026 seeking the following Orders: -a.That leave be granted to the Appellant to amend and merge the Statement of Facts dated 9th October 2025 and 19th November 2025 and filed with this Tribunal on the 10th October 2025 and 19th November 2025 respectively,b.That this Honourable Tribunal be pleased to grant leave to the Appellant to include and file documentary evidence and additional information in support of matters already mentioned in the Statement of Facts but which were not previously supported by documentary evidence, the said information and documents being material and necessary for the just determination of this Appeal.c.That the amended Statement of Facts be deemed as duly filed and served upon the Respondent.d.That such further or other orders as this Honourable Tribunal may deem fit and just to grant.e.That the cost of the application abides in the Appeal. 2.The Application dated 5th March 2026 is premised on the following grounds: -a.That the amendment is necessary for the just, fair, and complete adjudication of the matter before the Tribunal.b.That the Appellant inadvertently omitted to attach critical documents, specifically the member register and the volume of business from each of the category of members mentioned in the Statement of Facts.c.That the documentary evidence sought to be introduced through the proposed amendments is material and necessary for the just and effectual determination of this appeal. That they will clarify key issues and assist the Tribunal in reaching a fair and informed decision on the matter.d.That the proposed amendments will not alter the character of the original Appeal.e.That the amended Statement of Facts only seeks to bring out the factual explanation contained in the documents within the knowledge of the parties and exchanged prior to issuance of the Objection decision.f.That no prejudice shall be occasioned to the Respondent by allowing the amendment and inclusion of additional information.g.That the Applicant’s interest stands to suffer great prejudice if this application is not granted. 3.The Applicant further filed on 12th March 2026 Amended Memorandum of Appeal and Amended Statement of Facts both dated 12th March 2026 and the additional documents it referred to in its Notice of Motion Application dated 5th March 2026. 4.The Applicant filed a further a follow up Notice of Application dated 19th March 2026 on even date seeking the following orders:a.That the Amended Memorandum of Appeal and Amended Statement of Facts filed on 12th March 2026 be expunged from the record.b.That the Appellant be granted leave to substitute the same with an amended Memorandum of Appeal and a Supplementary Statement of Facts.c.That the annexures filed on 12th March 2026 be deemed as properly filed.d.That the cost of the application be in the cause. 5.The Application dated 19th March 2026 is premised on the following grounds:a.That the document currently on record contains an incorrect heading, which was inadvertently included at the time of filing.b.That save for the incorrect heading, the contents of the document remain identical to the substituted document.c.That the substitution is necessary to correct the record and ensure clarity and accuracy in the proceedings.d.That no prejudice will be occasioned to the Respondent.e.That it is in the interest of justice that the document with correct heading be placed on record. 6.The Applicant further filed on 19th March 2026 Amended Memorandum of Appeal and Supplementary Statement of Facts both dated 19th March 2026. Appellant’s submissions 7.The Appellant filed on even date its submissions in support of its Application dated 7th April 2026 submitting as follows:a.That this Tribunal has wide powers to allow the amendment of pleadings, production of additional documents/evidence, and to take evidence by way of witness statements and oral testimony by witnesses. That these powers are provided for in, inter alia, Sections 15 and 20 of the Tax Appeals Tribunal Act and Rules 10 and 21 of the Tax Appeals Tribunal (Procedure) Rules.b.That in Sergon v Commissioner of Domestic Taxes (Tax Appeal E248 of 2023) [2024] KETAT 1076 (KLR) (19 July 2024) (Ruling) this Tribunal discussed in detail the test for allowing additional or further documents and referred to various decisions of the courts, including: The Supreme Court decision in Mohamed Abdi Mahmud v Ahmed Abdullahi Mohamed & 3 Others [2018] eKLR. The Court of Appeal decision in Tarmohamed & Another v Lakhani & Company [1958] EA 567. The Court of Appeal decision in Wanjie & Others v Sakwa & Others [1984] KLR 275. c.That the additional documents that the Appellant seeks to produce are critical in assisting the Tribunal to clarify the facts of the dispute and to arrive at a just and fair determination. That the amendments to the Memorandum of Appeal, information introduced in the Supplementary Statement of Facts and the additional documents all relate to matters that were already pleaded but which needed to be made clearer and further supported with additional material.d.That the additional documents go to the crux of the Appellant’s challenge to the tax assessment and are thus likely to have an influence on how the Tribunal will reach its decision after the interrogation of the documents. That if the documents have the potential of influencing the Tribunal’s decision, they ought to be admitted as excluding them will lead to a decision made without the benefit of all relevant documents.e.That while filing the appeal, the additional documents that the Appellant now seeks to produce were inadvertently left out of the bundle of documents filed before the Tribunal.f.That the additional documents that the Appellant seeks to produce were already made available to the Respondent during the objection process and during an ADR exercise conducted during the pendency of this appeal. That the Objection process and ADR process are part of the tax dispute resolution process which is anchored in law. That where material demonstrating that an assessment is erroneous is produced during the objection or ADR process, it ought to persuade the Respondent to settle the tax items that are demonstrated to have been erroneously assessed. That the additional evidence having been made available to the Respondent during those processes which were unsuccessful, it is only fair that the Tribunal also has sight of it and considers it when determining the appeal.g.That the additional evidence sought to be produced by the Appellant will remove any vagueness or doubt over the dispute and will have a direct bearing on the main issue in the appeal. That the documents clarify and further support points that have already been made by the Appellant when originally filing the appeal.h.That the additional documents are not too voluminous and will not be difficult or impossible for the Respondent to review and respond to effectively. That the documents had, in any event, been shared with the Respondent during the objection process and ADR process and have already been reviewed by the Respondent.i.That the Respondent has not demonstrated to the Tribunal any grave prejudice that they are likely to suffer should the additional documents the Appellant seeks to adduce be admitted by the Tribunal. That if anything, the Respondent does not stand to suffer any prejudice. That as a Commissioner of the State agency for the collection of revenue, the Respondent does not have any interest in collecting taxes that are not due or in overcharging taxes. That in addition, the Respondent will have an opportunity to review, analyse and respond to the evidence produced by the Appellant. That on the other hand, the Appellant will suffer immense prejudice if production of the additional documents is not allowed as he is likely to be subjected to the payment of taxes that are not due. 8.The Respondent did not file a response to the Applications. Analysis and Findings 9.The Tribunal has considered the orders sought by the Applicant in the Notice of Motion Application dated 19th March 2026 to have the Amended Memorandum of Appeal and Amended Statement of Facts both dated and filed on 12th March 2026 expunged from the record and substituted with the Amended Memorandum of Appeal and Supplementary Statement of Facts both dated and filed on 19th March 2026, and the grounds in support thereof. 10.The Applicant averred that the document dated and filed on 12th March 2026 contains an incorrect heading, which was inadvertently included at the time of filing, and that save for the incorrect heading, the contents of the document remain identical to the substituted document. 11.The Tribunal has reviewed the Amended Memorandum of Appeal and Amended Statement of Facts which the Appellant had filed on 12th March 2026 and notes that the pleadings presented in those documents are identical to the substituted documents, being the Amended Memorandum of Appeal and Supplementary Statement of Facts filed by the Applicant in the Application dated 19th March 2026, as asserted by the Applicant. 12.The Tribunal finds that the substitution of the earlier submitted documents with the pleadings submitted on 19th March 2026 would ensure that the pleadings on record contain the correct heading as prayed by the Applicant. 13.Based on the foregoing, the Tribunal finds that expunging the Amended Memorandum of Appeal and Amended Statement of Facts both dated and filed on 12th March 2026 from the record and allowing their substitution with the Amended Memorandum of Appeal and Supplementary Statement of Facts both dated 19th March 2026 and filed with the Notice of Motion Application dated 19th March 2026 would not occasion prejudice to the Respondent. 14.The Applicant in the Notice of Motion Application dated 5th March 2026 seeks to amend its Memorandum of Appeal and Statement of Facts, and to submit documents that were allegedly inadvertently omitted from its bundle of documents. The Applicant asserts that these are documents that had been sighted by the Respondent prior to the issuance of the Objection decision. 15.The Tribunal’s power in determining applications of this nature is anchored in Section 13(3) and (4) of the Tax Appeals Tribunal Act which provides thus: -“ 13.…(3)The Tribunal may, upon application in writing or through electronic means, extend the time for filing the notice of appeal and for submitting the documents referred to in subsection (2).(4)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.” 16.The determination before the Tribunal is whether to allow the Applicant to file additional documents in support of its Appeal. Section 13(6) of the Tax Appeals Tribunal Act provides as follows with regard to the determination of an appeal on the basis of documentation filed before the Tribunal:-“The appellant shall, unless the Tribunal orders otherwise, be limited to the grounds stated in the appeal or documents to which the decision relates.” 17.Consequently, in determining whether to allow additional or further documents, the Tribunal should be cognizant of whether the documents that the Applicant seeks to produce are limited to the decision against which it had lodged an appeal. 18.In this regard, the Tribunal is further guided by the case of Commissioner of Income Tax vs Total Kenya Limited [2021] eKLR, where it was held: -“In Tarmohamed & Another v. Lakhani & Company [1958] EA 567, the Court of Appeal for Eastern Africa adopted the decision in Ladd v. Marshall [1954] WLR 1489 and stated:"Except in cases where the application for additional evidence is based on fraud or surprise: to justify the reception of fresh evidence or a new trial, three conditions must be fulfilled: first, it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; secondly, the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; thirdly, the evidence must be such as is presumably to be believed, or in other words, it must be apparently credible, though it need not be incontrovertible."” 19.From the foregoing, it is clear that the power to admit additional evidence is discretionary. However, it should be exercised restrictively. That the evidence should be necessary and not meant to patch up an applicant’s case on appeal. Finally, the power should be exercised sparingly for the ends of justice. 20.In the present case, the Applicant has shown evidence that it had shared these documents with the Respondent at the pre-assessment, assessment and objection stages of the tax dispute, but the said documents were inadvertently omitted from its bundle of documents. This fact has not been demolished or proved to be false by the Respondent. 21.From the documents adduced by the Applicant, the Tribunal notes that the Respondent makes reference to the same documents presented by the Applicant, including member registers, audited financial statements, the SACCO by-laws, and the information contained therein in its pre-assessment notice, notice of assessment and Objection decision. From the Tribunal’s cursory perusal, these documents appear to be the basis of what informed the Respondent’s decision, that is, the Applicant’s membership composition. 22.It is the Tribunal’s considered view that failure to admit these documents would prejudice the Applicant if the Tribunal ends up making a decision without sighting or citing these documents which appear to have been supplied to the Respondent. On the other hand, the Respondent would suffer no prejudice as it would have the chance to file supplementary pleadings and reflect on whether the documents have probative value. 23.The Supreme Court has also spoken to this issue in the Mohamed Abdi Mahmud-vs-Ahmed Abdullahi Mohamed & 3 Others [2018] eKLR when it expressed itself thus: -“ 79.We therefore lay down the governing principles on allowing additional evidence in appellate courts in Kenya as follows:(a)The additional evidence must be directly relevant to the matter before the court and be in the interest of justice.(b)It must be such that, if given, it would influence or impact upon the result of the verdict although it need not be decisive;(c)It is shown that it could not have been obtained with reasonable diligence for use at the trial, was not within the knowledge of, or could not have been produced at the time of the suit or petition by the party seeking to adduce the additional evidence.(d)Where the additional evidence sought to be adduced removes any vagueness or doubt over the case and has a direct bearing on the main issue in the suit;(e)The evidence must be credible in the sense that it is capable of belief.(f)The additional evidence must not be so voluminous as to make it difficult or impossible for the other party to respond effectively.(g)Whether a party would reasonably have been aware of and procured the further evidence in the course of the trial is an essential consideration to ensure fairness and due process.(h)Where the additional evidence discloses a strong prima fade case of willful deception of the Court;(i)The Court must be satisfied that the additional evidence is not utilised for the purpose of removing lacunae and filling gaps in evidence. The Court must find the further evidence needful.(j)A party who has been unsuccessful at the trial must not seek to adduce additional evidence to, make a fresh case in appeal, fill up omissions or patch up the weak points in his/her case.(k)The court will consider the proportionality and prejudice of allowing the additional evidence. This requires the court to assess the balance between the significance of the additional evidence, on the one hand, and the need for the swift conduct of litigation together with any prejudice that might arise from the additional evidence on the other.” 24.Based on the foregoing guidance by the Supreme Court, the Tribunal has interrogated whether the said evidence seeking to be adduced is relevant to the case, and to this, the Tribunal is of the view that the documents listed in the Application which the Applicant seeks to adduce before the Tribunal are critical in assisting the Tribunal towards clarifying the facts of the dispute and in helping the Tribunal in arriving at a just and fair determination. 25.On whether it would impact or influence the result of the case if adduced, the Tribunal is of the view that the said documents appear to go to the crux of the Applicant’s argument against the tax assessment, therefore, the same are likely to have an influence on how the Tribunal is likely to reach its decision after the interrogation of such documents. 26.The Tribunal has also looked into the list provided by the Applicant and finds that the additional documents are not overtly voluminous, therefore, it might not be difficult or impossible for the Respondent to respond effectively. It is also apparent from the pre-assessment notice, notice of assessment and Objection decision that the Applicant had shared the documents with the Respondent during the audit and objection proceedings. 27.The Tribunal has not been shown any evidence to suggest that the Applicant’s intended documents indicate a calculated willful deception of the Tribunal by the Applicant, nor does it seem to be the case that the documents sought to be produced are calculated to be utilised for the purposes of removing lacunae and filling gaps in evidence. The documents are relevant to the Appeal, and it is in the interest of justice and fairness to allow the same to be admitted in evidence. 28.The Respondent, noting that it failed to respond to the Application, has also not demonstrated to the Tribunal any grave prejudice it is likely to suffer should the additional documents the Applicant seeks to adduce be admitted by the Tribunal. 29.It is thus the view of the Tribunal that the tests prescribed in the Mohamed Abdi Mahmud case (supra) have been met to the extent that the additional evidence sought to be adduced will generally help the Tribunal to resolve the issue in dispute and make a fair determination on whether the Respondent’s tax assessment against the Applicant was justified. 30.The balance of convenience thus falls in favour of the Applicant who has shown a prima facie case deserving of the orders sought thereto. 31.The Tribunal is, in the circumstances, inclined to exercise its discretion in favour of the Applicant and allow a similar latitude in filing any additional documents to the Respondent for the purposes of balancing out the competing interests of the Parties in the Appeal. Disposition 32.Based on the foregoing, the Tribunal finds that the Application is meritorious and accordingly proceeds to issue the following Orders: -a.The Applications dated 5th March 2026 and 19th March 2026 be and are hereby allowed.b.The Amended Memorandum of Appeal and Amended Statement of Facts both dated and filed on 12th March 2026 be and are hereby expunged from the record.c.The Appellant be and is hereby granted leave to file its Amended Memorandum of Appeal and Supplementary Statement of Facts both dated 19th March 2026, and the additional documents limited to the documents identified in the Application dated 19th March 2026.d.The Amended Memorandum of Appeal and Supplementary Statement of Facts both dated 19th March 2026, and the additional documents be and are hereby deemed to have been duly filed and served to the Respondent.e.The Respondent be and is hereby granted a corresponding leave to file and serve a Supplementary Statement of Facts and additional documents (if necessary) within Fifteen (15) days of the date of the delivery of this Ruling.f.No order as to costs. 33.It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 4TH DAY OF MAY 2026.……………………………..….ROBERT M. MUTUMA - CHAIRMANGLORIA A. OGAGA - MEMBER*EUNICE N. NG’ANG’A - MEMBER*JIMMY M. MALLA - MEMBER