https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/149

Marmatt General Stores v Commissioner of Legal & Board Services (Tax Appeal E1186 of 2025) [2026] KETAT 149 (KLR) (18 May 2026) (Judgment) Neutral citation: [2026] KETAT 149 (KLR) Republic of Kenya In the Tax Appeal Tribunal Tax Appeal E1186 of 2025 RM Mutuma, Chair, JM Malla, T Vikiru & G Ogaga, Members May 18, 2026 Between Marmatt General Stores Appellant and Commissioner of Legal & Board Services Respondent Judgment Background 1.The Appellant is a partnership duly registered under the laws of Kenya and carrying on business activities within the Republic of Kenya. The Appellant is engaged in general trading and supply of goods and related services in accordance with the provisions of the Partnership Act, 2012. 2.The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of Kenya’s Laws. Under Section 5(1) of the Act, the Kenya Revenue Authority is an agency of the Government for the collection and receipt of all tax revenue. Further, 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 Part 1 and 2 of the First Schedule to the Act for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws. 3.The Respondent conducted a return review on the Appellant covering the period 2021 to 2024 covering all tax obligations. Subsequently, the Respondent issued Income tax and VAT additional assessments dated 27th March 2025 amounting to Kshs 10,589,134.92. 4.The Appellant being dissatisfied with the assessments objected to the same on 24th April 2025. The Respondent issued its Objection decision dated 12th June 2025 confirming the assessments. 5.The Appellant being dissatisfied with the decision, filed Notice of Appeal dated 23rd October 2025 having been granted leave to file its Appeal out of time. The Appeal 6.The Appellant lodged the memorandum of appeal dated 23rd October 2025 having been granted leave to file its Appeal out of time, raising the following grounds of appeal:a.That the Commissioner's disallowance of power and fuel expenses amounting to Kshs 1,042,685.59 for the year 2021 is unjustified, as the expenses totalling Kshs 1,447,200 were wholly and exclusively incurred in the production of income in accordance with Section 15(1) of the Income Tax Act Cap 470 (ITA). The Commissioner’s adjustment lacks evidence of personal or non-business use and therefore overstates the taxable profit and resultant tax liability by Kshs 342,805.20.b.That the income tax assessment for 2022, indicating a principal tax due of Kshs. 3,879,742.65, is based on erroneous assumptions. The alleged undeclared income of Kshs 8,355,900.00 resulted from an accounting omission in the Income Tax Return but was correctly reported in the VAT returns, there by negating the claim of suppression of income.c.That the Respondent erred in failing to correctly reconcile purchases between the VAT and income tax records for the years 2022 and 2023. For 2022, VAT records reflect purchases amounting to Kshs 169,805,291 against Kshs 146,311,055.84 declared in the income tax return, resulting in a variance of Kshs 23,494,235.16. Similarly, for 2023, VAT records reflect purchases of Kshs. 188,794,585 against Kshs 106,850,981 in the income tax return, producing a variance of Kshs 81,943,604. When these variances are accurately reconciled and the correct cost of sales computation applied, the transaction stream reflects actual accounting losses and not profits as erroneously assessed by the Respondent.d.That the imposition of arbitrary mark-ups on purchases by the Commissioner disregards actual financial performance, leading to an inflated taxable income. The correct computation, supported by documentation, reflects a loss position of Kshs 3,000,347.81 for the year 2022.e.That the Commissioner's adjustments for 2023, resulting in a principal tax due of Kshs 3,293,702.49, are equally flawed. The mark-up of Kshs. 10,253,134.70 on alleged undeclared purchases and the error in cost of sales of Kshs 82,464,919 led to an inaccurate profit position. Moreover, a reporting error in May 2023, where standard-rated and zero-rated purchases were declared at the same amount (Kshs 8,087,953.94), distorted the taxable base.f.That the disallowance of Kshs 952,376.11 in power and fuel expenses for 2023 was erroneous, as the actual claim of Kshs 1,473,690 was properly supported and incurred wholly for business operations. This omission further overstated the taxable profit.g.That the VAT assessments for October and November 2024 are inaccurate due to system anomalies arising from the eTIMS transition. The Appellant's actual VAT position shows: in October 2024, sales amounted to Kshs 10,491,040 with an output VAT of Kshs 1,447,040 while purchases totalled Kshs 10,178,888.00 resulting in a VAT payable position of Kshs 43,055.In November 2024, sales amounted to Kshs 12,092,589.00 with output VAT of Kshs 1,667,943.00, and purchases totalled Kshs 11,777,989.00 resulting in a VAT payable position of Kshs. 43,392 which necessitates amendments to reflect actual documentation and transitional system variances.h.That the Respondent further erred by duplicating the principal VAT assessments for October and November 2024, thereby inflating the total VAT due. The said assessments were not supported by actual eTIMS or manual tax invoices, contrary to the requirements of Section 43(1) and 43(2) of the Value Added Tax Act Cap 476(VATA), which mandate that taxable supplies must be substantiated by valid tax invoices. The duplication and lack of invoice evidence render the VAT assessments invalid and excessive. Therefore, the Respondent assertions that [there was] no input claims for November and October is grossly incorrect, as [the claims were] supported by invoices.i.That the Respondent failed to apply established tax principles and accounting standards in evaluating the Appellant's returns, leading to arbitrary disallowances, incorrect mark-up applications, and misinterpretation of transactional data.j.That all the Appellant's financial records including invoices, VAT filings, purchase ledgers, and audited accounts were available and verifiable. The Commissioner's decision to disregard these documents is contrary to the principles of fair administrative action under Article 47 of the Constitution of Kenya, 2010, and Section 4 of the Fair Administrative Action Act.k.That the additional tax assessments are excessive, unsubstantiated, and legally untenable, as they fail to reflect the actual trading results and documentary evidence submitted. The Appellant’s Case 7.The Appellant’s case was also premised on the following documents:a.The Appellant’s Statement of Facts dated 23rd October 2025 and documents attached thereto; andb.Its Written Submissions filed on 11th March 2026. 8.The Appellant stated that the Respondent issued additional income tax and VAT assessments under references KRA202578904078 (Kshs. 489,427.28), KRA202578904128 (Kshs. 4,975,343.52), KRA2025789042 19 (Kshs. 3,991,987.33), KRA202578904557 (Kshs. 1,726,034.40), and KRA202578904727 (Kshs. 1,710,343.18) covering Income Tax years 2021, 2022, 2023 and VAT months October and November 2024. 9.The Appellant pointed out that it lodged objections but on 12th June 2025, the Respondent confirmed the assessments without amendment. 10.The Appellant challenged the assessments as erroneous, arbitrary, and unsupported by verifiable evidence. It stated that for 2021, the Commissioner disallowed legitimate power and fuel expenses amounting to Kshs. 1,042,685.59, despite substantiated expenditure of Kshs. 1,447,200, leading to an overstated tax liability of Kshs 342,805.20. 11.It pointed out that for 2022, the alleged undeclared income of Kshs. 8,355,900.00 arose from an accounting omission already captured in the VAT returns, while a purchase variance of Kshs 23,494,235 between VAT (Kshs, 169,805,291) and Income Tax (Kshs. 146,31 1,055.84) records in 2022 and a purchase variance of Kshs 81,943,604 between VAT (Kshs, 188,794,585) and income Tax (Kshs. 106,850,981) records in 2023. 12.It stated that the imposition of arbitrary mark-ups and the disallowance of Kshs. 1,771,160 in power and fuel expenses further distorted the true position, producing an artificial taxable income instead of a verified loss of Kshs 3,000,347.81. 13.The Appellant noted that for the year 2023, the Commissioner relied on a mark-up of Kshs. 10,253,134.70, a cost of sales error of Kshs. 82,464,919, and duplicate reporting of zero-rated and standard rated purchases, resulting in an inflated profit. 14.Regarding VAT, the Appellant stated that its reconciled figures show a payable position of Kshs 43,055 for October 2024 and Kshs 43,392.69 for November 2024. arising from verified sales and purchase data during the eTIMS transition period. However, the Appellant stated that the Respondent duplicated the principal VAT taxes assessed for these two months and based them on entries not supported by valid eTIMS or manual invoices, contrary to Section 43(1) and 43(2) of the VATA, which require valid tax invoices as proof of taxable supplies. It asserted that this duplication led to inflated and unlawful VAT liabilities. 15.The Appellant maintained that all supporting documentation, including VAT returns, expense schedules. purchase and sales ledgers, bank statements, and audited financial statements were availed for verification but the Respondent's disregarded the evidence leading to arbitrary disallowances and inflated assessments, contrary to Article 47 of the Constitution of Kenya (2010) and Section 4 of the Fair Administrative Action Act, which require fairness and due consideration of evidence in tax administration. 16.On disallowed Power and Fuel Expenses (2021 and 2023), the Appellant submitted that Power and fuel invoices for 2021 show consistent usage aligned with business activities and that disallowance inflates taxable profit by Kshs. 342,805.20. 17.On undeclared Income (2022), the Appellant submitted that whereas the Commissioner claimed undeclared income of Kshs. 8,355,900 in 2022, the reconciliation shows this amount was reported in VAT returns and that omission in income tax Return was accounting error, not suppression. 18.With regard to failure to reconcile purchases between VAT and income tax records (2022 and 2023), the Appellant submitted that arbitrary mark-ups applied by the Commissioner inflated taxable income yet the correct computation reflects losses. 19.In relation to errors in 2023 Assessments and Reporting Mistakes, the Appellant submitted that there were misclassifications hence the errors. It submitted that purchase invoices, supplier statements, and VAT returns show the correct taxable base. 20.Regarding VAT Assessment Errors (October and November 2024), the Appellant submitted that system anomalies from eTIMS transition caused incorrect figures. 21.It relied on the following case laws:i.KRA v Tropic Traders Ltd [2019] KLR Income Tax Act (Cap 470);ii.KRA v Prestige Auto Ltd [2020] KLR; andiii.KRA v National Traders Ltd [2021] KLR The Appellant’s Prayers 22.Based on the foregoing, the Appellant prayed for the following reliefs:i.That the assessments be vacated in full;ii.That the Commissioner should grant the Appellant a Tax Compliance Certificate during the appeal process;iii.That the Honourable Tribunal be pleased to issue an order directing the immediate lifting of all agency notices issued in connection with the disputed assessment, including but not limited to the agency notices dated 1st October, 2025 to Kenya Commercial Bank and Co-operative Bank of Kenya and those issued on accounts of the Partners while this matter remains unresolved;iv.That the Honourable Tribunal be pleased to allow the parties to pursue Alternative Dispute Resolution (ADR) mechanism in order to expedite the resolution of the case and address the discrepancies in the assessment; andv.That the Honourable Tribunal be pleased to award the Appellant, the costs of the appeal. The Respondent’s Case 23.In opposition to the appeal, the Respondent filed a Statement of Facts dated 24th November 2025 and filed on the same date, and its Written Submissions dated 24th March 2026 and filed on 26th March 2026. 24.The Respondent contended that the basis of Corporation tax assessment was based on variances in sales declared between VAT and Income tax returns, over claimed power and fuel expense resulting from comparison between expenses in the Income tax returns and other rated purchases as per the VAT returns together with marking up of undeclared purchases in the Income tax returns. It stated that the variances were taxed under Corporation tax as undeclared sales. 25.On the other hand, the Respondent stated that the basis for VAT assessments was due to the fact that the Appellant had filed nil VAT returns for the months of September, October and November 2024 but no explanation was given. 26.It stated that between January and August 2024, the VAT returns showed total general rated sales of Kshs 78,456,109.09 translating to an average of Ksh.9,807,013.64 in general rated sales per month. 27.The Respondent disallowed expenses claimed by the Appellant on the basis that there we no supporting documents and that purchases were unsupported. 28.According to the Respondent, the Appellant objected to the assessments without grounds and as required under Section 51(3) of the Tax Procedures Act and provided bank statements and audited financial statements to support the application. 29.The Respondent contended that it rightly considered the Appellants objection and disallowed the same on the basis that;a.The Appellant did not provide the following requested records:i.Copy of purchase invoice;ii.Sales Schedules;iii.Expenses and Purchases Ledgers and evidence of payments;iv.Debtors and Creditors Schedules, Loan Statements and Agreements;v.Purchases Schedules;vi.Purchase Invoices for fuel expense claimed.b.The Appellant failed to provide either grounds to the objection or proposed amendments as required by Section 51 of the TPA despite email notification dated 12th May and a reminder on 22nd May 2025.c.The Appellant failed to reconcile the variances depicted in their VAT, Income Tax returns and their annual financial statements.d.The Appellant failed to provide invoices to support the expenses claimed under power and fuel.e.The Appellant failed to discharge the burden of proof that the tax decision is incorrect as per Section 56 of the TPA. 30.The Respondent asserted that it rightly confirmed the assessments due to the fact that the Appellant failed to provide supporting documents to substantiate the objection. 31.In response to grounds 1 and 6 of the Appellant’s Memorandum of Appeal and Statement of Facts, the Respondent averred that the Appellant failed to substantiate that power and fuel expenses were wholly and exclusively incurred in the production of the income as required under Section 15 of TPA. 32.In response to grounds 2, 3, 4, 5, 7, 8, 9, 10, 11, 12 and 13 of the Appellant’s Memorandum of Appeal and Statement of Facts, the Respondent averred that the assessments were properly raised upon the Appellants and that the same was as a result of variances between the Appellant’s Income tax returns and VAT returns. 33.In response to grounds 14 to 20 of the Appellant’s Memorandum of Appeal and Statement of Facts the Respondent averred that the Appellant failed to discharge its burden of proof as required under Section 56(1) of the TPA and that the Appellant failed to validate its objection as required under Section 51(3) of the TPA despite reminders by the Respondent to validate the same. 34.The Respondent in its written submissions submitted that the assessments upon the Appellant were properly raised. 35.The Respondent submitted that there was no valid notice of objection on the basis that the Appellant’s objection did not meet the requirements of Section 51(3) of the TPA in that the objection did not have grounds of objection and that the Appellant did not provide documents to support the objection. 36.The Respondent relied on the case of Republic v Commissioner for Domestic Taxes & 2 others Ex Parte Samuel Kimondo Theuri [2016] KEHC 7624 (KLR) where the High Court held that:“In the absence of a valid objection having been lodged, the sum demanded in the assessment became payable under section 88(1)(a) of the Act.” 37.It also cited in the case of Ngurumani Traders Limited v Commissioner of Investigation and Enforcement [2019] KETAT 21 (KLR) where this Tribunal held that the Appellant’s failure to lodge a proper objection meant that the Respondent was at liberty to confirm the assessment. 38.Finally, the Respondent submitted that the Appellant failed to discharge burden of proof on the basis that the Appellant failed to produce documentary evidence to disprove the Respondent’s assessments. The Respondent cited the case of Tumaini Distributors Company (K) Limited v Commissioner of Domestic Taxes (2020) eKLR; and Kenya Revenue Authority v Maluki Kitili Mwendwa [2021] eKLR to support the position that the taxpayer has the burden to prove that a tax decision is wrong. Respondent’s Prayers 39.The Respondent prayed as follows:a.The Appeal be dismissed with costs to the Respondent; andb.The Objection decision dated 12th June 2025 be upheld. Issue for Determination 40.The Tribunal has considered the pleadings and submissions made by the Parties, and considers the issue for determination as follows:Whether the Respondent erred in confirming the assessments. Analysis and Findings 41.Having identified the issue for determination, the Tribunal proceeds to analyse the same as hereunder. 42.The Appellant’s case was that the Respondent disallowed legitimate power and fuel expenses despite substantiated expenditure. It also asserted that it provided documents for verification including VAT returns, expense schedules, purchase and sales ledgers, bank statements, and audited financial statements but the Respondent did not consider them. 43.On the contrary, the Respondent’s case was that the Appellant failed to support grounds of objection and documents to support the objection despite being reminded to do so. It asserted that the Appellant only provided bank statements and financial statements but failed to adduce other documents that the Respondent had requested for. It asserted that the documents that the Appellant adduced were not sufficient to vary the assessment. 44.The Appellant was assessed on Income tax and VAT. The assessments upon the Appellant on Corporation tax were based on variance in sales declared between VAT and Income tax, over claimed power and fuel expense resulting from comparison between expenses in the Income tax returns and other rated purchases as per the VAT returns together with marking up of undeclared purchases in the Income Tax returns. As for VAT assessment, the Tribunal notes that the assessments were based on among other reasons that the Appellant had filed nil VAT returns for the months of September, October and November 2024 but did not provide any explanation. The Tribunal further notes that the assessments were not on record therefore, the Tribunal did not have the benefit to examine them. 45.The Tribunal observes that the starting point in an appeal against a tax assessment is the rebuttable legal presumption that the Respondent’s decision is correct and conclusive. In this regard, Section 50(1)(a) of the TPA provides as thus:‘‘ 50.Conclusiveness of tax decisions(1)Except in proceedings under this Part—(a)the production of a notice of an assessment or a document under the hand of the Commissioner shall be conclusive evidence of the making of the assessment and that the amount and particulars of the assessment are correct.’’ 46.The Tribunal further observes that the Appellant has a duty in law to adduce relevant documentary evidence to rebut the presumption that the Respondent’s decision is correct. In adducing relevant documents, the Appellant would be discharging the burden of proof that is provided for under section 56 (1) of the TPA which provides that: ‘In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.’’ Suffice to point out that the burden of proof commences at the objection stage all the way to the appellate stage. 47.It is expected that once the Taxpayer files the Appeal to this Tribunal, the Taxpayer would demonstrate the Respondent’s decision was incorrect. The Tribunal reiterates that the burden to adduce documentary evidence is continuous until the matter is heard and determined with finality. The Tribunal’s position is informed by the provisions of Section 30 of the Tax Appeals Tribunal Act Cap. 469A (hereinafter referred to as TATA) which postulates that:“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; or(b)In any other case, that the tax decision should not have been made or should have been made differently.” 48.Indeed, the High Court in the case of Commissioner of Domestic Taxes v Block International Limited [2024] KEHC 8889 (KLR) had the following to say about the burden of proof:‘‘To his end, I agree with the appellant that pursuant to the provisions of Section 30 of the Tax Appeals Tribunal Act and Section 56(1) of the Tax Procedures Act, the respondent bears the burden of proving that a tax assessment and/or decision is incorrect.’’ 49.The Tribunal has pointed out above that some of the assessments in issue related to VAT. VATA mandates taxpayers to keep records to facilitate ease of making of decisions. In particular, Section 43(1) of the VATA provides as follows:“ 43.Keeping of records(1)A person shall, for the purposes of this Act, keep in the course of his business, a full and true written record, whether in electronic form or otherwise, in English or Kiswahili of every transaction he makes and the record shall be kept for a period of five years from the date of the last entry made therein.” 50.Section 43(2) of the VATA provides a list or records to be kept by the taxpayer. It provides that:“ (2)The records to be kept under subsection (1) shall include—(a)copies of all tax invoices and simplified tax invoices issued in serial number order;(b)copies of all credit and debit notes issued, in chronological order;(c)purchase invoices, copies of customs entries, receipts for the payment of customs duty or tax, and credit and debit notes received, to be filed chronologically either by date of receipt or under each supplier’s name;(d)details of the amounts of tax charged on each supply made or received and in relation to all services to which section 10 applies, sufficient written evidence to identify the supplier and the recipient, and to show the nature and quantity of services supplied, the time of supply, the place of supply, the consideration for the supply, and the extent to which the supply has been used by the recipient for a particular purpose;(e)tax account showing the totals of the output tax and the input tax in each period and a net total of the tax payable or the excess tax carried forward, as the case may be, at the end of each period;(f)copies of stock records kept periodically as the Commissioner may determine;(g)details of each supply of goods and services from the business premises, unless such details are available at the time of supply on invoices issued at, or before, that time; and(h)such other accounts or records as may be specified, in writing, by the Commissioner.” 51.Section 43(3) of the VATA is also instructive. It provides that:-“(3)Every person required under subsection (1) to keep records shall, at all reasonable times, avail the records to an authorised officer for inspection and shall give the officer every facility necessary to inspect the records.” 52.In the case of Saniken (K) Limited v Commissioner of Investigations and Enforcement [2023] KEHC 23536 (KLR) the Court held as follows at paragraph 18 of the judgment:‘‘I am also alive to the fact that section 59 of the TPA and section 43 of the VAT Act impose an obligation for tax payers to keep their records for a period of up to five (5) years and produce them when required by the tax authorities. I do not find anything unreasonable about the request for further evidence under the circumstances.’’ 53.Further, Section 17 of VATA allows deduction of input tax against output tax. The taxpayer has a duty to provide documents in support of the claim on input tax. Without evidence, the claim cannot succeed. Some of the documents that the taxpayer may rely upon are listed under section 17(3) of VATA as follows:“ (3)The documentation for the purposes of subsection (2) shall be—(a)an original tax invoice issued for the supply or a certified copy;(b)a customs entry duly certified by the proper officer and a receipt for the payment of tax;(c)a customs receipt and a certificate signed by the proper officer stating the amount of tax paid, in the case of goods purchased from a customs auction; and(d)a credit note in the case of input tax deducted under section 16(2);(e)a debit note in the case of input tax deducted under section 16(5); or(f)in the case of a participant in the Open Tender System for the importation of petroleum products that have been cleared through a non-bonded facility, the custom entry showing the name and PIN of the winner of the tender and the name of the other oil marketing company participating in the tender…” 54.The Tribunal further notes that apart from VAT, the Appellant was assessed on income tax and in particular, the Appellant asserted that the Respondent failed to consider the expenses incurred. 55.Section 54A (1) of the ITA mandates the taxpayer to keep records. The said section provides that:“ 54A.Keeping of records of receipts, expenses, etc.(1)A person carrying on a business shall keep records of all receipts and expenses, goods purchased and sold and accounts, books, deeds, contracts and vouchers which in the opinion of the Commissioner, are adequate for the purpose of computing tax.” 56.The Appellant stated that it incurred expenses that the Respondent failed to consider. Section 15 of the ITA allows for deduction of expenses incurred. To be precise, Section 15(1) thereof provides as follows in part:“ 15.Deductions allowed(1)For the purpose of ascertaining the total income of any person for a year of income there shall, subject to section 16 of this Act, be deducted all expenditure incurred in such year of income which is expenditure wholly and exclusively incurred by him in the production of that income…” 57.The Tribunal observes that Section 15(1) of the ITA mandates the taxpayer to first, prove that it incurred an expenditure, and second, the expenditure was incurred wholly and exclusively in the production of that income. This means that the taxpayer has to adduce positive documents to support its claim on expenses. 58.Having set out the relevant legal provisions above, the Tribunal is of the view that the core question is whether the Appellant has demonstrated that it duly complied with the statutory requirements for lodging a valid objection, and that the Respondent nevertheless erred in disallowing the said notice of objection. 59.In the Objection decision, the Respondent stated that the Appellant failed to provide documents such as purchase invoices, sales schedules, expense and purchase ledgers and evidence of payment, debtors and creditors schedules, purchase schedules, purchase invoices for the fuel expenses claimed among other documents. therefore, the Appellant had a duty to demonstrate that it provided these documents. 60.The Appellant asserted that it provided documents for verification including VAT returns, expense schedules. purchase and sales ledgers, bank statements, and audited financial statements but the Respondent did not consider them. 61.The Tribunal considered the documents that the Appellant filed in support of this appeal. The Appellant filed the following documents:i.Agency notice dated 1st October 2025;ii.Notice of objection dated 24th April 2024;iii.Objection Application Acknowledgement Receipts dated 24th April 2025;iv.Objection decision dated 12th June 2025;v.Annual reports and financial statements;vi.Workings Summaryvii.VAT 3 Computation-Annual; andviii.Bank statements from KCB.ix.Purchases invoices for November 2024. 62.Having reviewed the foregoing documents, the Tribunal notes that for the majority of the disputed items, including power and fuel expenses for 2021 and 2023, purchase variances for 2022 and 2023, and alleged undeclared income, the Appellant failed to file source documents such as invoices, receipts, delivery notes to support its claim. The Tribunal notes that the Appellant did not file primary/source documents such as purchase invoices for the fuel expenses claimed and receipts. The Appellant filed mainly secondary documents. Secondary documents are informed by primary documents which were not filed. Whereas the Appellant filed bank statement, the Appellant did not walk the Tribunal through it. 63.Based on the documents that the Appellant filed, The Tribunal observes that it would be difficult to ascertain whether the expenditure incurred on power and fuel was wholly and exclusively incurred in the production of the income as contemplated under Section 15(1) of the ITA. Also, some of the primary documents under Section 17 of the VATA were not on record. Further, the Appellant did not provide the relevant documents listed under Section 43 of the VATA to significantly support its case. 64.It is one thing to produce workings as the Appellant did, and its is another thing to support those workings. The Tribunal is interest not only in the final numbers, but the foundational documents that support those numbers. 65.Whereas the Appellant asserted that the Commissioner disallowed legitimate power and fuel expenses, the Appellant did not provide documents to support the expenses. 66.The Tribunal further notes that the Appellant filed 922-page bank statements in support of the Appeal. However, the Appellant did not take time to point out which entries in the bank statements that support its case. The Appellant did not create a nexus between the figures it gave in the statement of facts to what is in the bank statement. It did not walk the Tribunal through the bank statements. It was the Appellant’s duty to use the bank statement to prove its case. It is not enough to file documents and state nothing about them. 67.In Ingala Building & Construction Limited v Commissioner of Domestic Taxes [2024] KEHC 7675 (KLR), the Court stated that the Taxpayer has to prove through documents filed that the Respondent’s assessment was incorrect. The Court observed as follows:‘‘I agree with the tribunal’s finding that although the appellant provided the relevant records as requested, it was incumbent upon it to prove through those documents that the respondent’s assessment was incorrect.’’ 68.In this regard, whereas the Appellant filed bank statements it did not make good use of them. The Tribunal also notes that whereas the Appellant asserted that it filed documents and that the Respondent ignored them, the Appellant did not file primary documents to support the Appeal. 69.It is not sufficient for taxpayer to plead that it furnished the Respondent with documents in support of the objection but fails to file those documents to support the appeal. Section 13 (2) (d) of the TATA mandates the taxpayer to provide documents to enable this Tribunal to make an informed decision. It provides that:“ (2)The appellant shall, within fourteen days from the date of filing the notice of appeal, submit enough copies, as may be advised by the Tribunal, of—(d)such other documents as may be necessary to enable the Tribunal to make a decision on the appeal.” 70.The Appellant submitted that income tax assessment for 2022 indicating a principal tax due of Kshs. 3,879,742.65 was based on erroneous assumptions on the basis that the alleged undeclared income of Kshs 8,355,900.00 resulted from an accounting omission in the Income Tax Return but was correctly reported in the VAT returns, thereby negating the claim of suppression of income. The Tribunal notes that Income tax and VAT are governed by different statutory regimes. The mere fact that sales were reported for VAT purposes does not automatically correct an income tax omission. 71.Section 31(2) of TPA provides a mechanism for a taxpayer to apply to amend a self-assessment withing the prescribed period and provides as follows:“ (2)A taxpayer who has made a self-assessment may apply to the Commissioner, within the period specified in subsection (4)(b)(i), to make an amendment to the taxpayer's self-assessment.” 72.The Appellant did not pursue that remedy. Instead, it waited for an additional assessment and then sought to explain the variance. The Tribunal observes that once the Respondent has lawfully raised an assessment, the Appellant cannot overturn it simply by offering an explanation particularly when there are no records to support the explanation and no prior application to correct the return. 73.In light of the foregoing, The Tribunal finds that the Respondent did not err in confirming the assessment on the accounting omission in the income tax return for the year 2022. 74.Regarding the purchase variance between VAT and Income tax records and the Respondent’s applied markup to the undeclared purchases to estimate undeclared sales, the Appellant averred that the Respondent erred in failing to correctly reconcile purchases between the VAT and Income tax records for the year 2022 and 2023 resulting in variances of Kshs 23,494,235 for 2022 and Kshs 81,943,604. 75.The Tribunal observes that this method of assessment is permitted under Section 31(1) of the TPA, which allows the Commissioner to make an assessment based on available information. The Appellant failed to provide purchase invoices or reconciled ledgers to demonstrate that the variance was merely a reporting error rather than suppressed income. Its reliance on workings and summaries without primary source documents is insufficient as earlier noted. 76.In light of the foregoing, the Tribunal finds that the Respondent did not err in confirming the assessment on marked up underdeclared purchases for the year 2022 and 2023. 77.Regarding the VAT assessments for October and November 2024, upon reviewing the documents adduced to this Tribunal, the Tribunal notes that the Appellant has provided purchases invoices for November 2024 relating to the NIL returns filed for November 2024 which were not availed to the Respondent during the objection stage. These documents were adduced without leave of the Tribunal. 78.It is a well-established principle of procedural law that a party cannot introduce new evidence or documents without leave of the court or Tribunal. Where a party seeks to adduce additional, an application for leave must be made and the party must show good cause why the documents were not provided earlier and why they are relevant to the determination of the appeal. 79.Section 56(3) of the Tax Procedures Act provides as follows:“ 56.General provisions relating to objections and appeals(3)In an appeal by a taxpayer to the Tribunal, High Court or Court of Appeal in relation to an appealable decision, the taxpayer shall rely only on the grounds stated in the objection to which the decision relates unless the Tribunal or Court allows the person to add new grounds.” 80.The Tribunal notes that the Appellant did not file any application seeking leave to adduce the new evidence and consequently, the Tribunal finds that the invoices for November 2024 filed by the Appellant without leave of the Tribunal are inadmissible and shall not be considered in determining this Appeal. 81.Accordingly, the Tribunal finds and holds that the Respondent did not err in confirming the assessments. Final Determination 82.The upshot of the foregoing is that the Tribunal finds that the Appeal is not merited. The Tribunal accordingly proceeds to issue the following Orders:a.The Appeal be and is hereby dismissed.b.The Respondent’s Objection decision dated 12th June 2025 be and is hereby upheld.c.Each party to bear its own costs. 83.It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 18TH DAY OF MAY 2026.………………………………ROBERT M. MUTUMACHAIRMAN………………………………JIMMY M. MALLAMEMBER………………………………DR. TIMOTHYMEMBER………………………………B. VIKIRUMEMBER………………………………GLORIA A. OGAGAMEMBER