[2024] KETAT 1272 (KLR)

Kumar v Commissioner of Domestic Taxes (Tax Appeal E688 of 2024) [2024] KETAT 1272 (KLR) (23 August 2024) (Ruling)

Neutral citation: [2024] KETAT 1272 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E688 of 2024

E.N Wafula, Chair, Cynthia B. Mayaka, RO Oluoch, T Vikiru & AK Kiprotich, Members

August 23, 2024

Between

Begum Mahendra Kumar

Appellant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Appellant vide a Notice of Motion application dated the 18th day of June, 2024 and filed on the 20th June, 2024 and which was supported by an Affidavit sworn by the Appellant himself, sought for the following Orders:-a.Spentb.That the Honourable Tribunal be pleased to extend the time allowed for the Appellant to file a Notice of Appeal, Memorandum of Appeal, Statement of Facts and all other supporting documents.c.That the Notice of Appeal, Memorandum of Appeal, Statement of Facts dated 18th June, filed herewith be deemed as properly filed and served.d.That costs of this application be provided for.

2. The application is premised on the following grounds:-a.That the Respondent issued the Appellant with Income tax-rent income assessment for the period 1st August, 2018 for Kshs 415,000. 00. b.That the Appellant objected to the said assessment on 3rd March, 2021. c.That the Respondent subsequently issued the Appellant with an objection decision dated 10th November, 2021 invalidating the Appellant’s objection fully.d.That the Respondent issued the Appellant with a confirmation of assessment notice dated 17th November, 2021 confirming its objection decision.e.That the Appellant was indisposed having been diagnosed with anxiety and depression in the year 2021 and has been unwell todate rendering him unable to attend to any business.f.That the Appellant has an arguable Appeal with high probability.g.That the Appellant stands to suffer irreparable loss and damage if the orders sought are not granted as the Respondent may proceed to enforce an erroneous assessment.

3. The Respondent in opposition to the application filed a Replying Affidavit that was sworn by Kiteme Itonge, an officer of the Respondent, on the 4th day of July, 2024 and filed on the even date, in which it stated as follows:-a.That on about August, 2018 the Respondent issued Income Tax-Rent Income assessment for the period 1st August, 2018 through an Assessment Order dated 29th July, 2020. b.That the Appellant objected to the assessment on itax vide an objection application dated 3rd March, 2021. c.That the objection being unsupported the Respondent issued an objection fully on the 10th November, 2021. d.That the Respondent confirmed its assessment vide a confirmation of assessment dated 17th November, 2021. e.That the Appellant if dissatisfied with the Respondent’s decision of 10th November, 2021 ought in pursuant to Section 13(1) of the Tax Appeals Tribunal Act to have preferred an appeal on or before 10th December, 2021. f.That the Appellant did not lodge any appeal to the Respondent’s decision in time and only filed the Notice of Appeal on 18th June, 2024, which was 2 years and 6 months and 8 days after the objection decision was issued.g.That upon expiry of the statutory period of preferring an appeal against the Respondent’s decision, the taxes assessed against the Appellant became due by operation of law and the Respondent was at liberty to enforce payment of the same.h.That the Appellant’s failure to lodge an appeal against the Respondent’s objection decision is not a mere technicality that can be cured under Article 159(2)(d) of the Constitution of Kenya, 2010 but a deliberate omission that runs on the face of clear statutory provisions.i.That the delay is inordinate and the stated ground of sickness has not been demonstrated and sufficiently justified.j.That the application has been brought in bad faith and is an attempt to further delay the collection of taxes due and payable by the Appellant.k.That the application lacks merit and is incompetent.l.That the application is an afterthought that has not been substantiated and the medical chit from Ramani Medical Centre alone is not sufficient to explain the history of treatment over the years from 2021 todate that the Appellant claims he was undergoing treatment.m.That extension of time is not a right of a party but rather an equitable remedy that is only available to a deserving party at the discretion of the Tribunal.n.That statutory timelines give rise to substantive rights and obligations and thus the Respondent will be prejudiced by extension of time, as it will not be in a position to collect taxes, which have crystallized.o.That the spirit of Section 3(4) of the Tax Appeals Tribunal Act was not to give way to abuse of the process but rather allow the interests of justice to prevail and in so doing, there must be balance of justice to the extent that the Section should not be used to the advantage of one party to prejudice the other.

Analysis and Findings 4. The parties in compliance with the directions of the Tribunal to the effect that the application was to be canvassed by way of written submissions duly filed their respective submissions that were adopted by the Tribunal on the 27th June, 2024. The Tribunal has considered and has been appropriately guided by the purport of the submissions and the authorities cited therein in arriving at its findings hereinafter.

5. The Tribunal’s jurisdiction for the enlargement of time in the commencement of an appeal process is found under Section 13(2) of the Tax Appeals Tribunal Act which provides as thus:-“(3)The Tribunal may, upon application in writing, extend the time 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 giving notice of appeal within the specified period.”

6. The Tribunal is enjoined to determine the length and reason for the delay when considering an application for the extension of time to appeal out of time. The power to extend is discretionary and unfettered but the same must be exercised judiciously.

7. In determining whether to extend time, the Tribunal is guided by the court in Joseph Ondiek Tumbo v Sony Sugar Co Ltd [2014] eKLR, where the learned Judge quoted Sir Thomas Bingham M R in Costellow V Somerset County Council (1993)1 All ER 952 where he stated that:-“The first principle is that the rules of court and the associated rules of practice, devised in the public interest to promote expeditious dispatch of litigation, must be observed. The prescribed time limits are not targets to be aimed at or expressions of pious hope but requirements to be met. The second principle is that a plaintiff should not in the ordinary way be denied an adjudication of his claim on its merits because of a procedural default, unless the default causes prejudice to his opponent for which an award of costs cannot compensate…. Further, an extension of time is an indulgence from the court by a party in default. He is not entitled to an extension. He has no reasonable or legitimate expectation of receiving one. His only reasonable or legitimate expectation is that the discretion relevant to his application to extend time will be exercised judicially in accordance with established principles of what is fair and reasonable. In those circumstances, it is incumbent on the applicant for an extension of time to provide the court with a full, honest and acceptable explanation of the reasons for the delay. He cannot reasonably expect the discretion to be exercised in his favour, as a defaulter, unless he provides an explanation for the default.”

8. On the criteria of the issues to be considered when granting an extension to file an appeal out of time, the Tribunal referred to the case of Wasike V Swala [1984] KLR 591 where the Court laid a hierarchy of 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 Wasike V Swala [1984] KLR 591, Joseph Ondiek Tumbo v Sony Sugar Co Ltd [2014] eKLR and Section 13 of the Tax Appeals Tribunal Act, 2013 used the following criteria to consider the application.a.Whether the appeal is merited.b.Whether there is a reasonable cause for the delay.c.Whether there will be prejudice suffered by the Respondent if the extension is granted.

a. Whether the Appeal is merited? 10. The Tribunal examined whether the actions complained of by the Applicant were merited and whether there was an arguable appeal before the Tribunal or the appeal was frivolous to the extent that it would only result in a waste of the Tribunal’s time.

11. An appeal being merited does not mean that it should necessarily succeed but rather it is arguable. The Tribunal was guided by the findings of the court in Kenya Commercial Bank Limited Vs Nicholas Ombija (2009) eKLR where it was held that:-“an arguable appeal is not one which must necessarily succeed, but one which ought to be argued fully before the court.”

12. The Appellant simultaneously with the filing of this application filed a Memorandum of Appeal and the Statement of Facts which challenged the Respondent’s objection decision dated 10th November, 2021.

13. A perusal of both the Memorandum of Appeal and Statement of Facts disclose some material legal and factual issues that call for an appropriate determination of the Appeal on its proper merits. To that extent the Appellant is deserving of an opportunity to canvass its Appeal before the Tribunal.

b. Whether there is a reasonable cause for the delay? 14. In considering what constitutes as a reasonable reason for the delay, the court in Balwant Singh v Jagdish Singh & 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”.

15. The Appellant contended that the reason it was delayed from lodging an appeal on time was due to long illness of anxiety and depression that has been attested to by the medical chit from the medical facility that the Appellant was severally attended to and managed.

16. The Tribunal finds the explanation and reasons raised by the Appellant as the medical chit indicates that the Appellant medical state has improved and that could explain his subsequent taking action without prompting through any enforcement processes to recover taxes that had since crystallized for recovery.

c. Whether there will be prejudice suffered by the Respondent if the extension is granted. 17. The Respondent did not demonstrate to the Tribunal how it would suffer prejudice if the extension of time is granted.

18. The Appellant's only hope for justice lies in an appeal to the Tribunal. Thus, the Appellant argued that it would suffer prejudice if it is not granted leave to file its appeal considering that the amount of money claimed is of a significant amount which would lead to failure by the Appellant to pay wages, taxes, and conduct business normally.

19. The Tribunal is thus compelled to agree with the Appellant in its argument that the Respondent would otherwise still collect the taxes together with penalties and interest should the Appellant be found to be at fault. The Tribunal, therefore, finds that the Respondent will not suffer prejudice if the extension is granted.

20. The Appellant has in the circumstances met the statutory and judicially established threshold for the grant of application for the enlargement of time to file an appeal.

Disposition 33. On the basis of the foregoing analysis the application is merited and the Tribunal accordingly proceeds to make the following Orders:-a.The application be and is hereby allowed.b.The Appellant be and is hereby granted leave to file an appeal out of time.c.The Notice of Appeal and the Appeal documents filed on the 20th June, 2024 be and are hereby deemed as duly filed and served.d.The Respondent to file and serve its Statement of Facts within Thirty (30) days of the date of delivery of this Ruling.e.No orders as to costs.

DATED AND DELIVERED AT NAIROBI THIS 23RD DAY OF AUGUST, 2024ERIC NYONGESA WAFULA - CHAIRMANCYNTHIA B. MAYAKA - MEMBERDR. RODNEY O. OLUOCH - MEMBERDR. TIMOTHY B. VIKIRU - MEMBERABRAHAM K. KIPROTICH - MEMBER