[2024] KETAT 159 (KLR)

Live Ad Limited & another v Commissioner of Investigations & Enforcement & another (Tribunal Appeal 1299 of 2022) [2024] KETAT 159 (KLR) (9 February 2024) (Judgment)

Neutral citation: [2024] KETAT 159 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tribunal Appeal 1299 of 2022

Grace Mukuha, Chair, E Komolo, Jephthah Njagi, T Vikiru & G Ogaga, Members

February 9, 2024

Between

Live Ad Limited

1st Appellant

Live Ad Limited

2nd Appellant

and

Commissioner of Investigations & Enforcement

1st Respondent

Commissioner Of Investigations & Enforcement

2nd Respondent

Judgment

Background 1. The Appellant is a private limited company incorporated in Kenya under the Companies Act, Cap 486 of the laws of Kenya. The Company is in the business of outdoor advertising and branding.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 469 of the laws of Kenya (KRA Act). Under Section 5 (1) of the Act, KRA is an agency of the Government for the collection and receipt of all revenue. Under Section 5(2) of the Act with respect to the performance of its functions under subsection (1), the Authority is mandated to administer and enforce all provisions of the written laws as set out in Parts I and II of the First Schedule to the KRA Act.

3. The Respondent issued a notice of the investigations to the Appellant dated 27th May 2020 notifying the Appellant of its intention to investigate the Appellant's tax affairs relating to the period 2015 to 2020.

4. The Appellant through its tax agent issued a letter dated 2nd June 2020 in response to the notice of investigations issued by the Respondent, with copies of taxes paid relating to the period under investigation.

5. The Respondent issued its preliminary investigation findings dated 8th June 2022 addressed to the Appellant indicating that it owed Kshs. 29,667,620. 00 being income tax amounting to Kshs. 12,106,991. 00 for 2016 and 2018 and VAT amounting to Kshs. 17,560,629. 00 for 2016 to 2020.

6. The Appellant communicated its objection through a notice of objection letter dated 7th July 2022 objecting to the Respondent's assessment of income tax relating to the period 2018 to 2020 and VAT for the period 2016 to 2020.

7. The Appellant and the Respondent held a working meeting on 16th August 2022 at the Respondent's premises and the Appellant provided documents to support its position.

8. The Respondent issued its objection decision via a letter dated 16th September 2022, confirming an income tax and VAT assessment of Kshs. 3,914,108. 00 and Kshs. 606. 00, respectively, relating to the period 2018.

9. The Appellant, dissatisfied with the Respondent's decision, filed a Notice of Appeal dated 14th October 2022, initiating this Appeal.

THE APPEAL 10. The Appeal is premised on the Memorandum of Appeal filed on 2nd November 2022 raising the following grounds: -a.The Respondent erred in law and fact by issuing an erroneous assessment of the Appellant's taxable income for the year 2018 without taking into consideration the supporting documents submitted by the Appellant; andb.The Respondent erred in fact by issuing its objection decision based on unfair and unreasonable calculations made using incorrect figures from the Appellant's income tax return.

Appellant’s Case 11. The Appellant’s case is premised on the following documents:-a.Appellant’s Statement of Facts dated and filed on 2nd November 2022 and the documents attached thereto.b.Appellant’s Written Submissions dated 12th June 2023 and filed on 13th June 2023.

12. The Appellant averred that being fully compliant for tax purposes, it addressed a letter dated 2nd June 2020 in response to the Respondent in which it provided copies of the taxes paid relating to the period under investigation.

13. That however, there was no further correspondence from the Respondent until 2022 when one of the Appellant's directors was invited for a meeting to discuss the Respondent's preliminary findings arising from the investigation.

14. That the Appellant accompanied by its tax agent met with the Respondent at its premises on 10th February 2022 to discuss the Respondent's preliminary findings assessing additional taxes amounting Kshs. 50,967,388. 00 arising from a variance between the revenue declared in the income tax returns compared to the VAT returns and variance between income tax revenue compared to the banking reconciliation.

15. The Appellant averred that it responded to the Respondent's preliminary findings on 24th February 2022 providing all reconciliations on VAT revenue compared with revenue declared in the income tax return, including documentary evidence supporting the amounts for reconciliations.

16. That the Appellant made reasonable attempts to meet the Respondent to clarify and address questions arising from the supporting documents provided.

17. That the Appellant communicated with the Respondent via email dated 3rd June 2022 requesting an update on the progress of the case.

18. That the Respondent issued preliminary assessments on the Appellant's iTax ledger on 13th June 2022 including additional assessments being disallowed purchases and double claimed invoices to its initial assessment.

19. That the Appellant responded to the Respondent via a letter dated 16th June 2022 to the additional arrears assessed by the Respondent in the preliminary letter dated 8th June 2022, in compliance with Section 59(b) of the Tax Procedures Act, 2015, providing additional reconciliation documents and all disallowed suppliers invoices for purchases and double claimed invoices in its preliminary findings.

20. That the investigating officer did not provide the Appellant with a pre-assessment notice before confirming the additional assessments.

21. That by the time, the Appellant issued its response to the Respondent's preliminary findings, an additional assessment had already been issued on the Appellant's iTax ledger, therefore denying the Appellant an opportunity to respond and provide evidence in relation to the new areas of assessment.

22. That the Respondent did not consider the evidence provided by the Appellant on 16th June 2022, having issued the preliminary assessments on 13th June 2022, therefore denying the Appellant its right to fair administrative action under Article 47 of the Constitution of Kenya, 2010.

23. That the Appellant based its objection letter dated 7th July 2022 on the fact that it noted inconsistencies on the amount of tax assessed by the Respondent on iTax, when compared to the amount of tax assessed in the Respondent's preliminary findings.

24. That similar inconsistencies were noted when comparing the excel workings provided by the Respondent and the additional assessment issued by the Respondent on 13th June 2022 on iTax.

25. That the process that gave rise to the additional assessment did not consider the documentary evidence provided by the Appellant. That additionally, there were no reasons given by the Respondent's investigating officer on the reasons for disregarding any or part of the supporting documents and reconciling figures provided by the Appellant.

26. That the Appellant demonstrated goodwill by sharing various responses, attending meetings at the Respondent's premises and providing all supporting documents requested by the Respondent within the required timelines imposed by the Respondent to confirm, clarify, support and address variances arising from their analysis.

27. That the Appellant provided the Respondent with all supporting documentation to support its objection to the Respondent's income tax and VAT assessment, including bank statements highlighting specific details, for ease of review by the Respondent.

28. That based on the supporting documents provided by the Appellant, the Respondent vacated its assessment on income tax relating to 2016 and maintained an income tax assessment of Kshs. 3,914,108. 00 being the variance between tax due on taxable income of Kshs. 38,387,336. 00 as revised by the Respondent and the amount of taxes paid by the Appellant for the year 2018 being Kshs. 7,602,093. 00.

29. That the Respondent in its objection decision dated 16th September 2022 assessed total additional taxable income for 2018 as Kshs. 3,786. 00 in relation to Corporate income tax and VAT of Kshs. 606. 00 as a result of the variance arising when the Respondent compared the income tax return with the VAT returns.

30. That the Respondent's assessment was erroneous based on the fact that calculations were made using incorrect figures, which led to excessive variances which the Respondent relied on in its objection decision, without considering the supporting documents provided by the Appellant.

31. That taking the aforementioned into account, it is evident that the assessments issued by the Respondent were done in a flawed manner as it failed to capture crucial supporting documents shared by the Appellant.

32. That further, the Respondent's decision to confirm the assessments in the Appellant's iTax ledgers was erroneous and lacked any factual or legal basis whatsoever.

33. That unless the Tribunal intervenes, the Appellant will continue to suffer irreparable economic loss in the hands of the Respondent.

34. The Appellant submitted that the following are the two issues for determination in this Appeal.a.Whether the Respondent's income tax demand was valid?b.Whether the Respondent’s objection decision was valid?

35. The Appellant submitted that the Respondent's demand for income tax amounting to Kshs. 3,914,108. 00 for the year 2018 did not take into account valid tax credits claimed on iTax under Section 42 that comprised tax overpayments from the previous year carried forward.

36. The Appellant submitted that it informed the Respondent about these credits during the working meetings that it had as it objected to the initial preliminary findings.

37. The Appellant submitted that had this been considered, then the Respondent would have reduced the demand to zero similarly to how it had done for all the other years in contention.

38. The Appellant submitted that the credits were valid and were claimed under Section 42 special credits, given the way the iTax system was configured back then would not allow for the credits to be claimed.

39. That the Respondent required all taxpayers to file their returns on iTax, however, the Respondent had not created a provision where one could claim their tax credits. That consequently, the Respondent advised all taxpayers to claim their credits under Section 42 special credits. That the Appellant, being a diligent and dutiful taxpayer consequently claimed its valid credit under the provision.

40. That the Respondent did not in any way restrain the Appellant from claiming its credits under Section 42. That consequently, the Appellant concluded that the credits had been deemed by the Respondent to be validly claimed.

41. That a legitimate expectation was created by the Respondent's inaction, that the credits had been recognised as valid, a principal recognised by the courts in the Civil Appeal No. 24 of 2018; Kenya Revenue Authority & 2 others vs Darasa Investments Limited [2018] eKLR, the Court held that:-“legitimate expectation refers to the principle of good administration or administrative fairness. If a public authority leads a person or public body to expect that the public authority will, in the future, continue to act in a way it has regularly acted in the past, then, the public authority should not without any overriding reason in the public interest, renege from that representation and unilaterally cancel the expectation of the person”.

42. That the Respondent's action of issuing out its objection decision and deeming Kshs. 3,914,108. 00 as due and payable yet it refers to Section 42 credits flies in the face of the legitimate expectation created by the Respondent that the credits were valid.

43. The Appellant further relied on the case of PricewaterhouseCoopers limited vs Commissioner for Legal Services & Board Coordination TAT No. 576 of 2021 where the Tribunal stated:-“It is clear to the Tribunal, after reviewing the copy provided of the Appellant’s return on the iTax that, at the time of filing, the iTax system was seemingly not configured to accommodate the manual certificates that had been accrued by the Appellant. In this regard, a field was not provided on iTax to enable the Appellant claim its certificates”.

44. That the Tribunal consequently ordered that:-“The Respondent process and reinstate the Appellant’s CIT credits within ninety (90), days from the date of delivery of this judgment with a view of enabling the Appellant to utilize the credits appropriately.”

45. That the judgement of the Tribunal reinforced the position that valid credits claimed under Section 42 ought to be recognised as it was the failure of the Respondent not to provide an alternative on where to claim the credits.

146. The Appellant submitted that there would be no dispute if the Respondent was to recognise the credits in line with the Tribunal's decision.

47. The Appellant further submitted that the Respondent did not expressly state the reason as to why it came up with the amount in dispute contrary to the provisions of Section 51(10) of the Tax Procedures Act which requires that:-“An objection decision shall include a statement of findings on the material facts and the reasons for the decision.”

48. The Appellant submitted that it is not in dispute that the Respondent issued out an objection decision dated 16th September 2022, and in that letter gave reasons only for taxes which it allowed but curiously failed to give a clear reason as to how it arrived at Kshs. 3,914,108. 00 as tax due and payable.

49. The Appellant submitted that it is only after doing its own reconciliation that it came to the conclusion that the amount related to a credit claimed under Section 42.

50. That the Respondent's actions are contrary to the Tax Procedures Act and the Constitution of Kenya, 2010, under Article 47 in respect of fair administrative action.

51. That the Fair Administrative Actions Act also provides that any Government body should give clear reasons as to why it made a particular decision.

52. That the Respondent's action of not giving a clear discernible reason as to what the income tax amount deemed as due and payable was from and arrived at, is in contravention of the law and violate the Appellant's rights.

53. The Appellant relied on the decision in Republic vs. Commissioner of Domestic Taxes Large Taxpayers' Office ex-parte Barclays Bank of Kenya Limited (2012) eKLR where the court stated that:“Section 35(1) of the ITA identifies specific types of payments that attract tax, the Respondent is obligated by law to state with clarity its claim and state how the transaction frills within the terms of the statute. The Respondent cannot exercise its duty like a trawler in the deep sea expecting all the fish by casting its net wide. "

54. That the courts have pronounced themselves that the Respondent should state the requisite law to support its claim and how the transaction falls within the statute.

Appellant’s Prayers 55. The Appellant made the following prayers to the Tribunal: -a.That the Respondent's objection decision dated 16th September 2022 amounting to Kshs. 3,914,714. 00 be set aside.b.That the Appeal be allowed with costs to the Appellant.c.Any other orders that the Tribunal may deem fit.

Respondent’s Case 56. The Respondent’s case is premised on the following documents filed with the Tribunal:-a.The Respondent’s Statement of Facts dated 2nd December 2022 together with the documents attached thereto.b.The Respondent’s Written Submissions dated 14th July 2023 and filed on 18th July 2023.

56. In reply to the Appeal, the Respondent averred that it conducted its investigations based on suspicions that the Appellant overclaimed purchases in its tax returns and used double claimed invoices in the VAT returns.

58. That the investigations also indicated that the Appellant had failed to declare and remit to the Respondent the correct taxes on the income earned from the business activities of the Appellant.

59. That the investigation covered the period between 2015 to 2020 covering Corporation income Tax and VAT.

60. That in arriving at the tax obligations of the Appellant, the Respondent analysed the bank deposits, compared the VAT and Income Tax declarations and also compared the purchases claimed in the VAT returns and the sales declared by the Appellant's suppliers.

61. In response to ground one of the Appeal, the Respondent confirmed that based on the supporting documents provided by the Appellant at the time of its objection, it reviewed the taxpayer's tax liabilities and made the necessary adjustments.

62. That the Respondent's final decision as evidenced by its objection decision resulted in the adjustment of taxes from Kshs. 29,667,620. 00 to Kshs. 3,914,714. 00. That the taxpayer's assertion that the Respondent issued an erroneous assessment and did not consider its supporting documents was therefore false.

63. The Respondent averred that it is the duty of the Appellant to prove the existence of the alleged credits and to prove that the Respondent's assessment is erroneous as provided for under Section 56(1) of the Tax Procedures Act which states that:-“In any proceedings under this part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.”

64. The Respondent submitted that its calculations were proper and based on the taxpayer's own records that is, bank statements, and filed returns as per its IT2C and VAT3 returns.

65. That the Respondent further allowed the Appellant's explanation that there was a timing difference in accounting, where a quarterly invoice was usually issued at the end of the financial year and that the Appellant declared VAT of that supply in June.

66. That for income tax purposes, the Appellant apportioned the income for three months before declaring in the next financial period. That this according to the Appellant explained why the income declared in the VAT returns was higher than that declared in the income tax returns.

67. That the Respondent also allowed and adjusted for income in respect of disposal of fixed assets in which the Appellant provided a schedule and the invoices for the sale of the fixed assets.

68. The Respondent submitted that in order to arrive at the computation of taxes due, the Respondent analysed all the information provided by the Appellant in its objection, and allowed previously disallowed purchases that were proved by the Appellant.

69. That the Respondent further reconciled double claimed invoices provided by the Appellant and adjusted its assessments accordingly to take into account the invoices accounted for by the Appellant.

70. That the alleged credits claimed by the Appellant in its written submissions were not proven and therefore could not be ascertained by the Respondent.

71. The Respondent submitted that all tax refunds payable to a taxpayer must first be verified and must be proven before they can be refunded by the Respondent.

72. The Respondent submitted that it analysed in a detailed manner, all the grounds of objection presented by the Appellant. That if sufficient grounds had been provided addressing the alleged tax credits, the Respondent would have taken them into consideration and adjusted its assessments accordingly to take them into account.

73. The Respondent submitted that it is the duty of the Appellant to prove the existence of the alleged credits and to prove that the Respondent’s assessment is erroneous as provided for under Section 56 (1) of the Tax Procedures Act.

74. That in the absence of sufficient information from a taxpayer to warrant adjustment of an assessment, the Commissioner is allowed to employ his “best judgement” to arrive at the assessed amount.

75. The Respondent relied on the court’s finding where an appeal to the First-Tier Tribunal Tax Chamber (Saima Khalid vs The Commissioner For Her Majesty’s Revenue & Customs –Appeal No. TC/2017/02292), the Tribunal observed as follows concerning the application of ‘best judgment’; -“29. The requirements for a decision to be to the best of HMRC’s judgment were set out in the High Court case of Van Boeckel v C & E Commissioners where Woolf J, as he then was, said:“ …the very use of the word ‘judgment’ makes it clear that the commissioners are required to exercise their powers in such a way that they make a value judgment on the material which is before them …Secondly, clearly there must be some material before the commissioners on which they can base their judgment. If there is no material at all it would be impossible to form a judgment as to what tax is due.Thirdly, it should be recognized, particularly bearing in mind the primary obligation of the taxpayer, to which I have made reference, of the taxpayer to make a return himself, that the commissioners should not be required to do the work of the taxpayer in order to form a conclusion as to the amount of tax which, to the best of their judgment, is due. In the very nature of things frequently the relevant information will be readily available to the taxpayer, but it will be very difficult for the commissioners to obtain the information without carrying out exhaustive investigations. What the words ‘best of their judgment’ envisage, in my view, is that the commissioners will fairly consider all material placed before them and, on that material, come to a decision which is one which is reasonable and not arbitrary as to the amount of tax which is due. As long as there is some material on which the commissioners can reasonably act, then they are not required to carry out investigations which may or may not result in further material being placed before them.”

76. That the Commissioner’s assessment (default assessment) only comes in when the taxpayer has failed to discharge his duty. As a matter of fact, the wording of Section 29 of the Tax Procedures Act could not have been any clearer:“Where a taxpayer has failed to submit a tax return for a reporting period in accordance with the provisions of a tax law, the Commissioner may, based on such information as may be available and to the best of his or her judgment, make an assessment (referred to as a “default assessment”)…”

77. That the obligation of the taxpayer to make the return himself is not excused on the basis that the Commissioner has powers to make a default assessment. What this means is that the taxpayer assumes the consequences of not having made the return himself.

78. That this position is reiterated in Section 30 of the Tax Appeals Tribunal Act which is even made clearer:“In a proceeding before the Tribunal, the appellant has the burden of proving—a.Where an appeal relates to an assessment, that the assessment is excessive; orb.In any other case, that the tax decision should not have been made or should have been made differently.”

79. The Respondent submitted that the Appellant failed to prove the incorrectness of the Respondent’s objection decision and therefore failed to dispense with its burden of proof as per Section 56 of the Tax procedures Act.

Respondent’s Prayers 80. The Respondent prayed that the Tribunal finds:a.That the objection decision dated 16th September 2022 is valid.b.That the Appeal herein lacks merit and be dismissed with costs to the Respondent.

Issue For Determination 81. The Tribunal has considered the facts of the matter and the submissions made by the parties and identified the following to be the issue for determination in this matter:-Whether the Respondent was justified in issuing its objection decision confirming the assessment.

Analysis And Findings 82. Having identified the issue that fell for its determination, the Tribunal proceeds to analyze it as hereunder.

83. The genesis of this Appeal is the investigation carried out by the Respondent in respect to the Appellants tax affairs for the period 2016 to 2020.

84. The Respondent gave its findings of the investigations vide a letter dated 8th June 2022. The Appellant objected to the findings vide a letter dated 7th July 2022.

85. The Respondent and the Appellant met on 16th August 2022 and agreed on almost all the issues except the income tax for the year 2018 and VAT for the same year.

86. The Respondent vide a letter dated 16th September 2022 confirmed an income tax assessment of Kshs. 3,914,108. 00 for year 2018 and VAT of Kshs. 606. 00 for the same period.

87. Aggrieved by the decision of the Respondent the Appellant filed this Appeal on the following grounds:-a.The Respondent erred in law and fact by issuing an erroneous assessment of the Appellant's taxable income for the year 2018 without taking into consideration the supporting documents submitted by the Appellant; andb.The Respondent erred in fact by issuing its Objection Decision based on unfair and unreasonable calculations made using incorrect figures from the Appellant's income tax return.

88. In its Statement of Facts, the Appellant averred how the information it provided to the Respondent was not considered in making the objection decision.

89. In its submissions, the Appellant changed its narrative to the fact that the Respondent's demand for income tax amounting to Kshs. 3,914,108. 00 for the year 2018 did not take into account valid tax credits claimed on iTax under Section 42 that comprised tax overpayments from the previous year carried forward.

90. The Appellant submitted that it had already informed the Respondent about these credits during the working meetings that it had as it objected to the initial preliminary findings.

91. The Appellant submitted that had these credits been considered, then the Respondent would have reduced the demand to zero similarly to how it had done for all the other years in contention.

92. The Appellant submitted that the credits were valid and were claimed under Section 42 special credits, given that the way the iTax system was configured back then would not allow for the credits to be claimed.

93. On the other hand, the Respondent confirmed that based on the supporting documents provided by the Appellant at the time of its objection, it reviewed the taxpayer's tax liabilities and made the necessary adjustments.

94. The Respondent submitted that its review resulted in the adjustment of taxes from Kshs. 29,667,620. 00 to Kshs. 3,914,714. 00. The Respondent submitted that the taxpayer's assertion that the Respondent issued an erroneous assessment and did not consider its supporting documents was therefore false as evidenced by the adjustments made in the tax demanded.

95. The Respondent submitted that it was the duty of the Appellant to prove the existence of the alleged credits and to prove that the Respondent's assessment is erroneous as provided under Section 56 (1) of the Tax Procedures Act.

96. The Respondent further submitted that its calculations were proper and based on the taxpayer's own records that is, bank statements, and filed returns as per its IT2C and VAT3 returns.

97. The Tribunal notes that the Appellant had in its Memorandum of Appeal indicated that the objection decision was wrong as it did not consider the information provided by the Appellant and that it was based on incorrect calculations. In its submissions, the Respondent then argued that the credits from the previous year were what caused the inconsistencies.

98. In analyzing this matter, the Tribunal reiterates its holding in Ushindi Exporters Limited V Commissioner of Investigation and Enforcement (Tax Appeals Tribunal No. 7 of 2015) in regard to the issue of burden of proof where the Tribunal held that:“The burden of proving that the tax assessment is excessive or should have been made differently never shifts to the Respondent and is placed squarely on the Appellant as Section 30 (a) and (b) of the Tax Appeals Tribunal Act states:a.Where an appeal related to an assessment, that the assessment is excessive; orb.In any other case, that the tax decision should not have been made or should have been made differently.By purporting to shift the burden of proving that the tax assessment against it was incorrect or should have been made differently, the Appellant failed in discharging the burden, placed upon it by law.”

99. The Tribunal is also guided by the holding of the Court of Appeal in CMC Aviation Ltd v Kenya Airways Ltd (Cruisair Ltd) [1978] eKLR where the Court faulted the reliance on averments as evidence in arriving at a decision. It stated as follows:-“The pleadings contain the averments of the three parties concerned. Until they are proved, or disproved, or there is admission of them or any of them by the parties, they are not evidence and no decision could be founded upon them. Proof is the foundation of evidence. As stated in the definition of “evidence” in section 3 of the Evidence Act, evidence denotes the means by which an alleged matter of fact, the truth of which is submitted to investigation, is proved or disproved. Averments are matters 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 following definition of “evidence” in Cassell’s English Dictionary, p 394:Anything that makes clear or obvious; ground for knowledge, indication or testimony; that which makes truth evident, or renders evident to the mind that it is truth.The pleadings in a suit are not normally evidence. They may become evidence if they are expressly or impliedly admitted as then the admission itself is evidence. Evidence is usually given on oath. Averments are not made on oath. Averments depend upon evidence for proof of their contents.”

100. In the first ground of Appeal, the Appellant averred that the Respondent did not take into consideration the documents it provided in making the objection decision. The Respondent demonstrated that it did and pointed out to the fact that the original assessment was reduced from Kshs. 29,667,620. 00 indicated in the letter on investigation findings dated 8th June, 2022 to Kshs.3,914,714. 00 as stated in the letter of objection decision dated 16th September 2022. The Tribunal agrees with the Respondent that the documents provided by the Appellant were considered in making the objection decision.

101. In the second ground of Appeal, the Appellant averred that the “objection decision was based on unfair and unreasonable calculations made using incorrect figures.”

102. The Tribunal notes that it was the Appellant’s responsibility to proof that the calculations were wrong and that the figures were incorrect as required by Section 30 of the TAT Act. The Tribunal also notes that the Appellant did not provide evidence on this averment and was therefore not able to discharge its burden of proof.

103. In its submissions, the Appellant stated that the Respondent’s demand for tax“for year 2018 did not take into account valid tax credits claimed on iTax under section 42 that comprised tax overpayments from previous year carried forward.”

104. The Appellant stated in its submissions that:-“it had already informed the Respondent about these credits during the working meetings,”

105. The Tribunal notes that this issue was only raised in the submissions and not in the Memorandum of Appeal or Statement of Facts. It was the duty of the Appellant to prove to the Tribunal the existence of the alleged credits. No evidence on these credits was tendered before the Tribunal as required by Section 56(1) of the TPA.

106. After careful consideration of the documents submitted by the parties, the Tribunal finds that the Respondent was justified in issuing its objection decision confirming the assessment because the Appellant has not discharged the burden of proof that the Respondent’s tax demand amounting to Kshs. 3,914,108. 00 for year 2018 was not valid.

Final Decision 107. The upshot of the foregoing is that the Tribunal holds that the Appeal is without merit and therefore fails. Consequently, the Tribunal makes the following Orders: -a.The Appeal be and is hereby dismissed.b.Each party to bear its own costs.

108. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 9TH DAY OF FEBRUARY, 2024. GRACE MUKUHA - CHAIRPERSONDR ERICK KOMOLO - MEMBERJEPHTHAH NJAGI - MEMBERTIMOTHY VIKIRU - MEMBERGLORIA A. OGAGA - MEMBER