Mwangi v Commissioner for Domestic Taxes (Tax Appeal E1073 of 2025) [2026] KETAT 293 (KLR) (10 July 2026) (Judgment)

REPUBLIC OF KENYA IN THE TAX APPEALS TRIBUNAL AT NAIROBI TAT APPEAL NO E1073 OF 2025 MICHEAL GITHINJI MWANGI......................................................….... ……APPELLANT -VS- COMMISSIONER FOR DOMESTIC TAXES...............................................RESPONDENT JUDGMENT BACKGROUND 1. The Appellant is a male adult of sound mind and a resident of Nakuru County. 2. The Respondent is the principal officer appointed under Section 13 of the Kenya Revenue Authority Act. The Kenya Revenue Authority is an agency of the Government of Kenya mandated with the duty of collection and receipting of all tax revenue, and the administration and enforcement of all tax laws set out in parts 1 & 2 of the First Schedule to the Act, including assessing, collecting, and accounting for all tax revenues in accordance with those laws. 3. On 18th March, 2024, the Respondent issued the Appellant with default capital gains tax (CGT) of Kshs. 1,185,000.00 Judgment TAT No. E1073 of 2025 – Michael Githinji Mwangi -vs- Commissioner for Domestic Taxes Page 1 of 12 4. On 27th June 2025, the Appellant lodged a late objection against the default CGT assessment, which was admitted. 5. On 25th August 2025, the Respondent issued its Objection Decision partially allowing the Appellant’s objection. 6. Dissatisfied with the Respondent’s Objection Decision, the Appellant lodged this Appeal vide Notice of Appeal dated 3rd September 2025. THE APPEAL 7. In his Memorandum of Appeal dated 17th September 2025, the Appellant raised the following grounds of appeal: - a. The assessing officer erred in law and fact by failing to appreciate that the property Plot No. L.R No. Nyandarua/OL JORO OROK SALIENT/34190 is agricultural land under Section 2 of the Land Control Act (cap. 302) and Paragraph 36(d)(ii) of the First Schedule of the Income Tax Act (cap. 470). b. The assessing officer erred in law and fact in failing to appreciate the provisions of Section 13 of the Income Tax Act (cap. 470), which provides for various tax exemptions. c. The assessing officer erred in law and fact in failing to appreciate the provisions of paragraph 36(d)(ii) of the First Schedule of the Income Tax Act (cap. 470) in exempting the transfer of agricultural property having an area of less than fifty acres where such property is situated outside a municipality from CGT. Judgment TAT No. E1073 of 2025 – Michael Githinji Mwangi -vs- Commissioner for Domestic Taxes Page 2 of 12 d. The assessing officer erred in law and fact by failing to consider the fact that the transfer of LR NO. NYANDARUA/OL JORO OROK SALIENT/34190 is exempt from CGT. e. The assessing officer erred in law and fact in failing to appreciate that no application for, or approval of, change of user in respect of Land parcel LR No. NYANDARUA/OL JORO OROK SALIENT/34190 has ever been sought or granted. f. The assessing officer erred in law and fact by relying on an inflated and/or incorrect sale consideration for LR NO. NYANDARUA/OL JORO OROK SALIENT/34190. g. The Respondent erred in law and fact in failing to consider the valuation report at the point of disposal, done by a registered valuer for LR No. NYANDARUA/OL JORO OROK SALIENT/34190. h. The assessing officer erred in law and fact by failing to consider all the incidental costs incurred in maintaining and developing the property LR NO. NYANDARUA/OL JORO OROK SALIENT/34190. i. The Respondent erred in law and fact by not considering documents and information provided by the Appellant. j. The Respondent erred in law and fact by amending and upholding the default CGT assessment over the transfer of LR NO. NYANDARUA/OL JORO OROK SALIENT/34190. k. The said assessment and objection decision are illegal, excessive, and punitive; if upheld, will occasion serious injustice to the Appellant. Judgment TAT No. E1073 of 2025 – Michael Githinji Mwangi -vs- Commissioner for Domestic Taxes Page 3 of 12 APPELLANT’S CASE 8. The Appellant’s case is based on his Statement of Facts dated 17th September 2025, in which he averred that he entered into a Sale Agreement on 15th November 2022 for the sale of the said parcel of land for a consideration of Kshs. 4,600,000. 9. The Appellant further averred that the property Plot No. LR NO. NYANDARUA/OL JORO OROK SALIENT/34190 is agricultural land under Section 2 of the Land Control Act (cap. 302) and paragraph 36 (d)(ii) of the First Schedule of the Income Tax Act (cap. 470) as per the annexed title deed. 10. The Appellant posited that the said property is exempt from CGT in accordance with Section 13 of the Income Tax Act as read with paragraph 36(d) of the First Schedule of the Act, which exempts the transfer of agricultural property having an area of less than fifty acres where such property is situated outside a municipality from CGT. 11. The Appellant further posited that the assessing officer relied on an inflated and or incorrect sale consideration for LR NO. NYANDURUA/OL JORO OROK SALIENT/34190. 12. The Appellant stated that, as per the valuation report by Zenith Valuers, the forced sale of the land at the point of sale was Kshs. 4,275,000 and the market value was Kshs. 5,700,000. The transfer value relied on by the Commissioner and the assessing officer is inconsistent with the valuation report and is grossly exaggerated. 13. The Appellant further stated that the Respondent failed to consider all the incidental costs incurred in maintaining and developing the property, including all the improvements done and valued at Kshs. 4,700,000 as per the valuation report. Judgment TAT No. E1073 of 2025 – Michael Githinji Mwangi -vs- Commissioner for Domestic Taxes Page 4 of 12 Appellant’s Prayers 14. The Appellant prayed to the Tribunal for the following orders: - a) The Appeal be allowed with costs to the Appellant. b) The Respondent’s Objection Decision dated 26th May 2025 be set aside. c) Any other orders that the Tribunal may deem fit. RESPONDENT’S CASE 15. The Respondent filed its Statement of Facts dated 3rd November 2025 and Written Submissions dated 19th May 2026 in opposition to the Appeal. 16. In response to grounds 1 to 5 of the Memorandum of Appeal, the Respondent averred that those grounds were not part of the Appellant’s grounds of objection during the objection stage and that the same is contrary to Section 56(3) of the Tax Procedures Act. 17. The Respondent further averred that no evidence was provided by the Appellant in support of the averment that the property is agricultural land situated outside a municipality, gazetted township or an urban area. 18. The Respondent further averred that, in response to ground 5, the Appellant had made payments to Nyandarua County Council for change of use, as correctly captured under the Appellant’s attachments MGW12. 19. The Respondent contended that the same contradicts the Appellant’s contention that no application or approval of change of Judgment TAT No. E1073 of 2025 – Michael Githinji Mwangi -vs- Commissioner for Domestic Taxes Page 5 of 12 user in respect to land LR No. NYANDARUA/OL JORO OROK SALIENT/34190 has ever been sought by them. 20. In response to ground 6 of Appeal, the Respondent averred that the Appellant failed to support the transfer value amount of Kshs. 4,500,000 indicated in their objection grounds. 21. The Respondent further averred that a copy of the letter from the advocate regarding the transfer indicated that an amount of Kshs. 2,000,000 was to be transferred by way of RTGS to the Appellant’s accounts within 14 days. 22. The Respondent further stated that these amounts were not traced to the Appellant’s extracts of bank statements, which had a single transfer of Kshs. 4,5000,000. It was unclear whether the said amount of Kshs. 2,000,000 was part of the Kshs. 4,500,0000 received from the property buyer on 12th June 2023. 23. The Respondent averred that, based on this lack of clarity from the Appellant, it relied on the market value as determined by the government valuer, as per the amounts from stamp duty data. 24. In response to ground 7 of Appeal, the Respondent averred that it properly reviewed the Appellant’s valuation report dated 5th April 2023. The valuation report did not align with the Appellant’s declared sale price and neither did the Appellant rely on any values indicated in the said valuation report. 25. The Respondent averred that where the transfer value is in doubt, the market value may be determined by an independent valuer as the case where the Respondent relied on stamp duty data. Judgment TAT No. E1073 of 2025 – Michael Githinji Mwangi -vs- Commissioner for Domestic Taxes Page 6 of 12 26. In response to ground 8 of the Appeal, the Respondent averred that the Appellant’s clearance certificate fees, subdivision fees and construction plan fees listed in the schedule of payments for construction from Nyandarua County Council dated 31st July 2024 were not supported by evidence of payment. 27. The Respondent averred that the Appellant’s purchase agreement did not clarify whether the land rates were included in the acquisition costs. The Appellant submitted a bill of quantities to support the construction costs, but these were only estimates. Since the estimates did not reflect the actual expenses, they could not be used to compute the adjusted costs for the property transfer. 28. In response to ground 9 of the Appeal, the Respondent averred that the supporting documents presented by the Appellant were considered before the Respondent issued its Objection Decision. 29. The Respondent further averred that the findings were detailed clearly highlighting the statement of findings on material fact as well as the reasons for the decision deduced from the records provided by the Appellant. 30. In response to ground 10 of the Appeal, the Respondent asserted that it acted within statutory authority under Sections 29 and 51 of the Tax Procedures Act. The assessment was raised based on available third-party data on stamp duty paid. At the objection review stage, the Appellant’s application was reviewed and an impartial decision issued, as per the evidence adduced by the Appellant and the prevailing legal framework. Judgment TAT No. E1073 of 2025 – Michael Githinji Mwangi -vs- Commissioner for Domestic Taxes Page 7 of 12 31. In response to ground 11 of the Appeal, the Respondent contended that the assessments were raised due to non-declaration of the CGT by the Appellant on the sale of the property and a review of the documents available to it. 32. The Respondent further averred that the Appellant’s objection was properly considered, including the submitted documents, and partially allowed to the extent supported, and that the Objection Decision was thus based on law and evidence. 33. The Respondent averred that the Appellant’s appeal is invalid as it offends Section 52(2) of the Tax Procedures Act, as the Appellant failed to pay the tax not in dispute or entered into an arrangement with the Respondent to pay the tax not in dispute at the time of lodging the notice, and noting that, in his objection, the Appellant had agreed to pay taxes owed. The Appellant is yet to pay Kshs. 225,000, being taxes owed, which the Appellant had indicated in their objection that they are willing to pay. 34. In conclusion, the Respondent averred that the Appeal offends Section 56(3) of the TPA as the Appellant seeks to rely on grounds which were not brought to the Respondent’s attention during the objection. Section 56(1) of the TPA places the burden on the Appellant to demonstrate the incorrectness of a tax deduction, to establish that the assessment is excessive, or to otherwise show that the tax decision should not have been made or should have been made differently. The Appellant did not discharge his burden of proof to show that the assessments were wrong or incorrect; as such, the assessments remain due. Judgment TAT No. E1073 of 2025 – Michael Githinji Mwangi -vs- Commissioner for Domestic Taxes Page 8 of 12 35. In its Written Submissions dated 19th May, 2026, the Respondent largely reiterated the above assertions. Respondent’s Prayers 36. The Respondent prayed to the Tribunal for the following orders: - a) The Appeal be dismissed with costs. b) The Respondent’s Objection Decision dated 25th August, 2025 be upheld. c) Costs be awarded to the Respondent. ISSUES FOR DETERMINATION 37. The Tribunal having considered the parties' pleadings, submissions, and documents filed before it is of the view that the following issues fall for its determination: - i. Whether the Appeal is valid. ii. Whether the Respondent’s Objection Decision dated 25th August 2025 is justified. ANALYSIS AND DETERMINATION (i) Whether the Appeal is valid 38. As a preliminary matter, the Respondent raised the issue of validity of the instant Appeal. The Respondent submitted that, as presently filed, the Appeal offends Section 52(2) of the Tax Procedures Act, as the Appellant failed to pay the tax not in dispute, or entered into an arrangement with the Respondent to pay the tax not in dispute at the time of lodging the Notice of Appeal. Judgment TAT No. E1073 of 2025 – Michael Githinji Mwangi -vs- Commissioner for Domestic Taxes Page 9 of 12 39. The Respondent further submitted that the Appellant, in his objection, had agreed to pay taxes owed. However, the Appellant is yet to pay Kshs. 225,000, being taxes owed, which the Appellant had indicated in its objection that they are willing to pay. The averment is unrebutted. 40. Section 52 of the Tax Procedures Act provides as follows: - 52 (1) A person who is dissatisfied with an appealable decision may appeal the decision to the Tribunal in accordance with the provisions of the Tax Appeals Tribunal Act (Cap. 469A). (2) A notice of appeal to the Tribunal relating to an assessment shall be valid if the taxpayer has paid the tax not in dispute or entered into an arrangement with the Commissioner to pay the tax not in dispute under the assessment at the time of lodging the notice. (emphasis added) 41. The Tribunal has reviewed the Appellant’s objection application filed on 27th June 2025, in which the Appellant expressly admitted owing Kshs. 225,000 in due taxes, and confirmed readiness and willingness to pay. There is no evidence on record that the Appellant has either paid the amounts of the taxes admitted as owed or entered into an arrangement/payment plan between him and the Respondent as provided for under Section 52(2) of the Tax Procedures Act. 42. The import of Section 52 (2) of the Tax Procedure Act is that, for an appeal to be validly lodged, the Appellant must pay all taxes or enter into any arrangement with the Respondent to pay undisputed taxes. The Appellant herein has failed to demonstrate that he has Judgment TAT No. E1073 of 2025 – Michael Githinji Mwangi -vs- Commissioner for Domestic Taxes Page 10 of 12 complied with this provision. The Tribunal therefore finds that the appeal herein is invalidly lodged and is thus incompetent. 43. The Tribunal reiterates its decision in Scofax Merchants -vs- Commissioner of Domestic Tax [2024] KETAT 743 (KLR) where it held that as follows: - “Section 52 (2) of the Tax Procedure Act (supra) requires that for an Appeal to be validly lodged, the Appellant must pay all taxes not in dispute. The Appellant herein has failed to demonstrate that it has complied with this provision. The Tribunal therefore finds that the Appeal herein is invalidly lodged, thereby incompetent.” 44. Having determined that the Appeal is invalid, the Tribunal finds no reason to delve into other matters for determination as the same have been rendered moot. DISPOSITION 45. The upshot of the foregoing analysis is that the Tribunal find and holds that the Appeal is incompetent and proceeds to issue the following orders: - a. The Appeal is hereby struck out. b. No order as to costs. 46. It is so ordered. DATED and DELIVERED at NAIROBI this…………10th ……..…..day of…..… July………..…2026 Judgment TAT No. E1073 of 2025 – Michael Githinji Mwangi -vs- Commissioner for Domestic Taxes Page 11 of 12 ..........................………………………. DR. RODNEY ODHIAMBO OLUOCH CHAIRPERSON .…..….……………………. ..…. ………………………. ABDULLAHI M. DIRIYE DR. ERICK MEMBER MEMBER KOMOLO Judgment TAT No. E1073 of 2025 – Michael Githinji Mwangi -vs- Commissioner for Domestic Taxes Page 12 of 12