[2023] KETAT 581 (KLR)

Kimani v Commissioner of Domestic Taxes (Appeal 253 of 2023) [2023] KETAT 581 (KLR) (29 September 2023) (Judgment)

Neutral citation: [2023] KETAT 581 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Appeal 253 of 2023

E.N Wafula, Chair, Cynthia B. Mayaka, RO Oluoch, EN Njeru & AK Kiprotich, Members

September 29, 2023

Between

James Kabugi Kimani

Appellant

and

Commissioner Of Domestic Taxes

Respondent

Judgment

1. The Appellant vide a Notice of Motion dated the 29th March, 2023, and supported by an Affidavit sworn by the Appellant himself, sought for the following Orders: -i.That this Honorable Tribunal be pleased to grant leave to the applicant/Appellant to file and/or lodge this Appeal out of time.ii.That, the Notice of Appeal and Memorandum of Appeal filed therein be deemed to be properly filediii.That the cost of the application be in the cause.

2. The application is based on the following grounds:i.That the delay in filling this Appeal was due to reasons beyond the Appellant’s controlii.That the delay is not inordinateiii.That the Appellant stands to suffer irreparable loss unless the application is allowed.

3. The Respondent opposed the application through its Grounds of Opposition dated 13th April, 2023, and supported by an Affidavit sworn by Wanjiru Njuguna, an advocate for the Respondent, raising the following grounds: -i.That the application is incompetent, bad in law, fatally defective and is an abuse of the Honorable Tribunal’s process.ii.That no credible reason has been advanced by the Appellant to warrant extension of time to file appeal as provided at Section 13 (4) of the Tax Tribunal Actiii.That an application of this nature requires an Appellant to prove his/her absence from Kenya, sickness or other reasonable cause.iv.That equity aids the vigilant and not the indolent. That the Appellant ought to have acted swiftly to preserve his rights. It is guilty of laches.v.That the application is an afterthought and a delay tactic by the Appellant meant to delay the conclusion of the matter, which holds substantial Government revenue.vi.That the taxes demanded herein became due on confirmation of the assessment. That the Appellant now continues to accrue interest and penalties as provided under the various tax laws as there is no valid appeal before the Tribunal thus the Appellant ought to pay 50% on the account to show commitment in the matter/for the Tribunal to consider granting the orders sought.vii.That the Appellant has not demonstrated it deserves favorable discretion of this Honorable Tribunal and the application should be dismissed with costs to the Respondent.

4. The Appellant in rebuttal thereof, filed submissions filed on 24th April, 2023, reiterating the Appellants averment’s being premised on, inter alia;a.That the application is competent and not an abuse to this Honourable Tribunal.b.That the reason advanced to warrant an extension of time to file the appeal is crediblec.That the application is not an afterthought meant to delay conclusion of the matterd.That the taxes demanded are not due as the assessment has not been confirmed and therefore there is no basis of paying the 50% on account to show commitment.e.That the Appellant has demonstrated that he deserves a favorable discretion by:i.Paying the self-assessed taxesii.Availing all the requested documents at the objection level.

Analysis and Findings 5. The Appellant’s application is primarily praying to the Tribunal for extension of time to file an appeal out of time.

6. The power to expand time for filing an appeal is donated by Section 13(3) of the Tax Appeals Tribunal Act which provides 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).”It is therefore a discretionary power and not a right to be granted to the Applicant.

7. In determining whether to expand time, courts have in the past considered a number of factors. These factors were discussed in Leo Sila Mutiso v Rose Hellen Wangari Mwangi, Civil Application Nai. 251 of 1997 where the Judge held that:“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.”

8. The court in WasikevSwala [1984] KLR 591 provided the hierarchy of the factors to consider when it 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.”

9. The Tribunal, guided by the principles set out in Leo Sila Mutiso v Rose Hellen Wangari Mwangi, Civil Application Nai. 251 of 1997, WasikevSwala [1984] KLR and Section 13 of the Tax Appeals Tribunal Act 2013 used the following criteria to consider the application:a.Whether there is a reasonable cause for the delay.b.The merits of the complained action.c.Whether there will be prejudice suffered by the Respondent if the extension is granted.

a. Whether there is a reasonable cause for the delay. 10. The Tribunal refers to the case of Mombasa County Government v Kenya Ferry Services & another [2019] eKLR where the Supreme Court quoted the Nick Salat case in which the Court stated as follows:-“… it is clear that the discretion to extend time is indeed unfettered. It is incumbent upon the applicant to explain the reasons for delay in making the application for extension and whether there are any extenuating circumstances that can enable the Court to exercise its discretion in favour of the applicant…”

11. One of the compelling considerations is whether an Applicant seeking condonation of the Tribunal has been able to demonstrate any extenuating circumstances leading to the delay in filing of its appeal within the statutory period. A reasonable cause for delay is ground for delinquency which would appear to a person of ordinary prudence and intelligence as a reasonable cause for delay and which clearly indicates an absence of willful neglect.

12. The Appellant in this case avers that at the time or period the decision dismissing the Appellant’s objection was arrived at his tax agent who he had appointed to handle the issue was not updating him on the progress and therefore the decision never reached the Appellant at all.

13. That the Appellant came to know about the decision of the dismissal of objection when he tried to apply for a Tax Clearance Certificate and that his request was declined on the account of unpaid tax balance.

14. That the Appellant thereafter engaged the Respondent and requested to know why it still wanted to recover the assessed amount after lodging an objection for the same and furnishing all the necessary documents to support his claim

15. That after the objection of 31st December, 2021, the Appellant did not specify when he engaged the Respondent and why he filed this application on 29th March, 2023, which is one year and three months later.

16. That in considering what constitutes reasonable reason for delay the court in Balwant SingvJagdish Sigh & Ors (Civil Appeal No 1166 of 2006) held that:“The test is whether or not a cause is sufficient to see whether it could have been avoided by the party by the exercise of due care and attention”

17. The Appellant while he in agreement that he lodged the Appeal late, he did so when the Respondent wanted to recover and enforce collection- of taxes yet all along he expected the that his objection decision had been disallowed due to the failure by the Respondent to make an objection decision on time as provided by law. Although the Appellant avers that he only came to be aware when he went to apply for a tax compliance certificate, the Appellant does not mention the date therefore the Tribunal could not determine whether the Appellant has brought the application without due delay.

18. The Tribunal relies on the court’s holding in Nicholas Kiptoo Arap Korir Salat v IEBC & 6 Others [2013] eKLR where the court stated as thus;“This Court, indeed all courts, must never provide succor and cover to parties who exhibit scant respect for rules and timelines. Those rules and timelines serve to make the process of judicial adjudication and determination fair, just, certain and even-handed. Courts cannot aid in the bending or circumventing of rules and a shifting of goal posts for, while it may seem to aid one side, it unfairly harms the innocent party who strives to abide by the rules. I apprehend that it is in the even-handed and dispassionate application of rules that courts give assurance that there is a clear method in the manner in which things are done so that outcomes can be anticipated with a measure of confidence, certainty and clarity where issues of rules and their application are concerned…”

19. In relations to the merits of the case and whether there will be prejudice to be suffered by the Respondent, the Tribunal is persuaded by the decision of the court in Abdul Aziz Ngoma v Mungai Mathayo [1976] Kenya LR 61, 62, whereby the court stated that:“We would like to state once again that this Court’s discretion to extend time under rule 4 only comes into existence after ‘sufficient reason’ for extending time has been established and it is only then that other considerations such as the absence of any prejudice and the prospects or otherwise of success in the appeal can be considered.”

20. In the case of Income Tax Appeal No. 31 of 2017: Commissioner of Domestic TaxesvMayfair Insurance Company Limited (2017) eKLR the court held as follows: -“One of the reasons stated under the Rule is that the court may extend time where there is reasonable cause for delayEffectively, 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 the delay on its part”

21. From the circumstances proffered by the parties, it is evident that the Appellant was not intending on filling an appeal save for the realization that the Respondent was about to enforce the collection of taxes which the Appellant believed to have fallen due by reason of the Respondent’s perceived default in the issuance of the objection decision within the statutory timelines.

22. The Tribunal in the circumstances finds the Appellant’s explanation for delay to not to be sufficient and that the Appellant also failed to provide any reasonable cause for the delay in approaching the Tribunal with its Appeal.

23. The Tribunal therefore did not delve into the other issues that fell for its determination as they had been rendered moot.

Disposition 24. Based on the foregoing, the Tribunal finds that the application lacks merit and accordingly proceeds to make the following Orders:i.The application be and is hereby dismissedii.No orders as to costs.

DATED AND DELIVERED AT NAIROBI THIS 29TH DAY OF JUNE, 2023ERIC N. WAFULACHAIRMAN……………………………CYNTHIA B. MAYAKAMEMBER……………………………RODNEY O. OLUOCHMEMBER……………………………ELISHAH N. NJERUMEMBER……………………………ABRAHAM K. KIPROTICHMEMBER……………………………