https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/148

Allan v Commissioner of Domestic Taxes (Tax Appeal E1192 of 2025) [2026] KETAT 148 (KLR) (18 May 2026) (Judgment) Neutral citation: [2026] KETAT 148 (KLR) Republic of Kenya In the Tax Appeal Tribunal Tax Appeal E1192 of 2025 RM Mutuma, Chair, G Ogaga, T Vikiru & JM Malla, Members May 18, 2026 Between Moses Juma Allan Appellant and Commissioner of Domestic Taxes Respondent Judgment Background 1.The Appellant is an individual resident in Kenya and registered taxpayer. The Appellant’s core business is that of sale of spices. 2.The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, Cap 460 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. For the performance of its function under Subsection (1), the Authority is mandated under Section 5(2) of the Act 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 to assess, collect, and account for all revenues under those laws. 3.The Respondent issued the Appellant with additional Income tax assessments for the years 2017, 2018, 2019 and 2020 on 10th December 2021. 4.The Appellant filed late Objection applications against the assessments on 12th May 2025. 5.The Respondent acknowledged receipt of the late notices of objection in an email to the Appellant on 15th May 2025, where the Respondent requested the Appellant to comply with Sections 51(3) and 51(7) of the Tax Procedures Act. 6.The Respondent emailed the Appellant again on 23rd May 2025 stating that it is yet to receive a response to the earlier email and again requested the Appellant to provide reasons for filing his Objection late. 7.On 24th May 2025, the Respondent issued its decision in a letter dated 23rd May 2025, declining to grant the Appellant an extension of time to file his notice of objection, and confirming the Income tax assessments. 8.The Appellant, being dissatisfied with the decision issued by the Respondent, on 22nd October 2025, filed his Notice of Appeal dated 10th October 2025. The Appeal 9.The Appeal is premised on the Memorandum of Appeal dated 10th October 2025 and filed on 22nd October 2025 which raised the following grounds: -a.That the Objection decision by the Respondent dated 23rd May 2025 is erroneous in law and facts as is based on arbitrary assessments that disregarded the Appellant’s actual business records and resulted in an unrealistic profit margin inconsistent with the normal industry performance which is around 4% - 5% per annum, as provided for in Section 3(2) of the Income Tax Act. That these tax calculations are unreasonable and in bad faith in total disregard of the Income Tax Act and an abuse of statutory powers.b.That the Respondent erred in law and in fact by imposing a tax shortfall penalty without establishing a valid and final tax shortfall, contrary to Section 84(2) and 85 of the Tax Procedures Act.c.That the Objection decision by the Respondent is tainted with illegality as the Commissioner is disallowing expenses wholly and exclusively used in the generation of the business income by the Respondent as provided under Section 15(1) of the Income Tax Act Cap 470.d.That the Respondent erred in law by not exhausting all available mechanisms to try and reach Appellant before issuing the additional tax assessment.e.That the Appellant is aggrieved by the Respondent’s decision not to allow the Objection despite the Appellant stating clearly the grounds of objection as provided for under Section 51(3) (a) of the Tax Procedures Act, 2015.f.That the Respondent failed to consider adequately or at all the grounds of objection filed by the Appellant in the Objection and consequently erroneously disallowed the Appellant’s Objection. Appellant’s Case 10.The Appellant’s case is also premised on the Appellant’s Statement of Facts dated 10th October 2025 and filed on 22nd October 2025, and the documents attached to it. The Appellant did not file Written Submissions and his case proceeded based on the pleadings on record. 11.The Appellant stated that on 10th December 2021, the Respondent issued him with tax assessment notices for Income tax allegedly after conducting an assessment of the Appellant. 12.That on 12th May 2025, the Appellant lodged an Objection to the additional assessments as provided under Section 51 of the Tax Procedures Act, 2015, and on 23rd May 2025, the Respondent made a tax decision not to allow the Objection to the additional assessments. 13.The Appellant averred that the Respondent erred in law and in fact by imposing a tax shortfall penalty without establishing a valid and final tax shortfall, contrary to Section 84(2) and 85 of Tax Procedures Act. 14.The Appellant contended that his rights to fair administrative action as provided by Article 47 of the Constitution of Kenya were violated by issuing the additional assessments without exhausting all avenues to try a reach the taxpayer and hearing him out before raising the additional assessment. 15.The Appellant argued that the Respondent erroneously with intent to collect undue taxes confirmed Income tax additional assessment even though the Appellant demonstrated clearly in the tax objection the business expenses used to generate income were partially considered to a tune of 40% in arriving at the additional tax assessment issued. 16.The Appellant stated that the Respondent in arriving at the income tax additional assessment only allowed expenses to a tune of 40% and ignored the actual business expenses used to wholly and exclusively generate the income before taxation as provided for in Section 15(1) of the Income Tax Act, Cap 470. 17.The Appellant maintained that he is aggrieved by the Respondent’s decision not to allow the Objection to the additional assessments despite the Appellant stating clearly the grounds of objection as required under Section 51(3)(a) of the Tax Procedures Act, 2015. Appellant’s prayers 18.The Appellant prayed that this Appeal be allowed and the decision dated 23rd May 2025 by the Respondent be vacated. Respondent’s Case 19.The Respondent’s case is premised on the following documents:a.The Respondent’s Statement of Facts dated and filed on 24th November 2025 and the documents attached thereto;b.Its Written Submissions dated and filed on 25th March 2026. 20.The Respondent stated that it subjected the Appellant to a compliance verification exercise which revealed that he had under declared their income tax turnover for the year 2017 and 2020. 21.That the Respondent further noted that while the Appellant filed nil income returns he concurrently reported substantial sales in the VAT returns. 22.The Respondent averred that in the absence of any supporting documentation from the Appellant, the Respondent exercised its discretion to allow a substantial portion of the assessed income as deductible business expenses, and brought to charge the remaining balance by subjecting it to tax. 23.That on 12th October, 2021 the Respondent issued the Appellant with assessments, and the Appellant made an application for late objection to the said assessment on 12th May 2025. 24.The Respondent stated that vide email dated 15th May 2025 it informed the Appellant that of the inordinate delay in lodging the objection, and that the Appellant did not respond to the emails. 25.That on 23rd May 2025 the Respondent sent another reminder to the Appellant to provide reasons for the delay, and the Appellant did not respond. 26.The Respondent issued a decision dated 23rd May 2025 rejecting the application for late objection and proceeded to confirm the assessment. 27.That dissatisfied with the decision, the Appellant filed a Notice of Appeal and Memorandum of Appeal dated 10th October 2025 received on 22nd October 2025, and served on the Respondent on 24th September 2025. 28.The Respondent asserted that the Appellant failed to support their application for late objection as per Section 51(7) of the Tax Procedures Act. That the Respondent issued a decision dated 23rd May 2025. 29.The Respondent averred that all actions were taken in accordance with the provisions of the Tax Procedures Act, 2015, the Income Tax Act, VAT Act, and related regulations. That the Appellant was granted an opportunity to respond and object to the assessment in line with due process. 30.The Respondent stated that the assessments were issued based on available information and during assessment, the information available. That the Respondent, in accordance with Section 24(2) of the Tax Procedures Act, 2015, has the mandate to carry assessment and is not bound by the information given. 31.The Respondent relied on the provisions of Section 56 of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act, which establish that the responsibility to prove compliance with tax obligations rests solely with the Appellant in all circumstances. 32.The Respondent submitted that this position has been upheld in Tumaini Distributors Company Limited v Commissioner of Domestic Taxes (Tax Appeal 141 of 2017) [2019] KETAT 10 (KLR), where the Tribunal, drawing on PZ Cussons East Africa Limited v Kenya Revenue Authority [2013] eKLR, emphasized that the responsibility lies with the taxpayer to demonstrate that an assessment is either excessive or incorrect. 33.That likewise, in Primarosa Flowers Limited v Commissioner of Domestic Taxes [2019] eKLR, the Court determined that the taxpayer is required to present positive evidence to show that the assessment is excessive. 34.In the current matter, the Appellant did not provide any supporting documentation, failed to explain the unreasonable delay in filing the objection, and did not counter the basis of the Respondent’s assessments. 35.The Respondent submitted that the applicable law on late objection application is found in Section 51 (6) and (7) of the Tax Procedures Act, which speak to extension of time to file late objection as follows: -“(6)A taxpayer may apply in writing to the Commissioner for an extension of time to lodge a notice of objection.(7)The Commissioner shall consider and allow an application under subsection (6) if -(a)the taxpayer was prevented from lodging the notice of objection within the period specified in subsection (2) because of absence from Kenya, sickness, or other reasonable cause; and(b)the taxpayer did not unreasonably delay in lodging the notice of objection.” 36.That the above law places the obligation to make an application for late objection and provide reasons thereto on the Appellant. The Respondent asserted that despite the reminders, the Appellant did not provide any evidence to support his application for late objection, especially coming over 1189 days from the date the assessment order was issued. 37.The Respondent referred to decision of this Tribunal in Chromawave Enterprises Limited v Commissioner of Domestic Taxes [2024] KETAT 28 (KLR) where the Tribunal found: -“In the instant case, the Appellant did not provide any evidence, either during the objection review process or before this Tribunal, to satisfy the requirement for late objection as per Section 51(7) of the Tax Procedures Act. As a matter of fact, the Appellant did not provide any document to support its grounds for late objection, and in this regard, the Tribunal cannot confirm the veracity of this averment.” 38.The Respondent contended that based on the above, the Appellant failed to discharge his burden of proof and therefore it proceeded to confirm the assessments. 39.The Respondent averred that the Appellant has also not sufficiently discharged its burden of proof that would have triggered the Respondent to allow his late objection application as required by 56(1) of the Tax Procedures Act and Section 30 of the Tax Appeals Tribunal Act. 40.The Respondent referred to Section 13(1) of the Tax Appeals Tribunal Act which provides that: -“A notice of appeal to the Tribunal shall –(a)be in writing or through electronic means;(b)be submitted to the Tribunal within thirty days upon receipt of the decision the Commissioner.” 41.The Respondent submitted that the Appellant has filed the appeal out of time. That the Notice of Appeal was filed on 10th October 2025 which is five (5) months since the decision was made on 23rd May 2025. 42.The Respondent averred that the Appellant did not seek leave before filling the appeal before the Tribunal and therefore there is no valid appeal before the Tribunal. It relied on Section 13(3) of the Tax Appeals Tribunal Act that states: -“The Tribunal may, upon application in writing or through electronic means, extend the time for filing the notice of appeal and for submitting the documents referred to in subsection (2).” 43.The Respondent submitted that the Appeal is therefore incompetent and bad in law for failure to comply with the mandatory statutory timelines and provisions. 44.The Respondent maintained that the tax assessment issued was properly founded in fact and law, and that the Objection decision was fair, reasonable, and made in accordance with statutory provisions. That the Appellant has not fulfilled the burden of proof, leaving his claims unsupported and unsubstantiated, thus rendering the Appeal devoid of merit. Respondent’s prayers 45.The Respondent prayed that the Tribunal: -a.Dismisses the Appeal in its entirety;b.Uphold the tax assessment as confirmed by the late objection rejection decision; andc.Orders the Appellant to pay the costs of the Appeal. Issue for Determination 46.The Tribunal has considered the pleadings and submissions made by the Parties, and considers the issue for determination as follows:Whether there is a valid Appeal on record. Analysis and Findings 47.Having identified the issue for determination, the Tribunal proceeds to analyse the same as hereunder. 48.The Tribunal considered the following two limbs affecting the validity of this Appeal and consequently, the Tribunal’s jurisdiction to determine the Appeal on its merits:a.Whether the Appeal is against an appealable decisionb.Whether the Appeal was filed out of time without leave of the Tribunal a) Whether the Appeal is against an appealable decision 49.The Tribunal examined the decision contained in the letter dated 23rd May 2025 and notes that the Respondent in the said letter rejected to grant leave to the Appellant to lodge a notice of objection out of time. The Respondent rejected the application under Section 51(7) of the Tax Procedures Act (TPA) on the basis that the Appellant failed to state grounds in support of the application. 50.The TPA mandates a taxpayer who disputes a tax decision to file notice of objection within 30 days. In particular, Section 51(2) of the TPA provides as follows:“(2)A taxpayer who disputes a tax decision may lodge a notice of objection to the decision, in writing, with the Commissioner within thirty days of being notified of the decision.” 51.When a taxpayer delays to file a notice of objection, the law allows the taxpayer to lodge an application with the Respondent seeking leave to file a notice of objection out of time. In this regard, Section 51(6) of TPA provides as follows: -“A taxpayer may apply in writing to the Commissioner for an extension of time to lodge a notice of objection.” 52.In the application dated 12th May 2025, the Appellant utilised the mechanism under Section 51(6) of the TPA, however, the Respondent declined to allow the application under Section 51(7) of the TPA which provides as follows: -“(7)The Commissioner may allow an application for the extension of time to file a notice of objection if—(a)the taxpayer was prevented from lodging the notice of objection within the period specified in subsection (2) because of an absence from Kenya, sickness or other reasonable cause; and(b)the taxpayer did not unreasonably delay in lodging the notice of objection.” 53.The Tribunal notes that Section 51(7) of the TPA grants the Respondent the discretion to allow or not to allow an application for extension of time to file an objection, however, the discretion should be exercised fairly. In the event that the Respondent rejects the application, the legal consequence is that the taxpayer is regarded as not having filed a notice of objection at all and the taxpayer is barred from invoking the jurisdiction of this Tribunal under the Tax Appeals Tribunal (TAT) Act. 54.In this regard, Section 51(1) to the TPA provides as follows: -“A taxpayer who wishes to dispute a tax decision shall first lodge an objection against that tax decision under this section before proceeding under any other written law.’’ 55.Pursuant to Section 51(1) of the TPA, the Appellant cannot invoke the jurisdiction of this Tribunal under the TAT Act which then means that the Tribunal lacks jurisdiction to entertain the Appeal. 56.The High Court has held that the Tribunal lacks jurisdiction to decide on matters arising from the provisions of Section 51(7) of the TPA. The High Court in the case of Commissioner of Investigations & Enforcement v Vyas t/a Rocon Enterprises (Income Tax Appeal E144 of 2021) [2022] KEHC 16027 (KLR) observed that the Tribunal does not have jurisdiction to entertain decisions under Section 51(7) of the TPA for the reason that the decision is not an appealable decision. The High Court held: -“15.The letter of January 13, 2020 declined the application for a late objection by the respondent under section 51(7) of the TPA. He did not make or communicate his decision in relation to any assessment under section 52 of the Act. 16.The same having not been an objection decision, it could only be challenged by way of judicial review and not appeal to the tribunal. Definitely the tribunal had no jurisdiction to entertain the appeal before it.” 57.The Tribunal notes that the Respondent’s refusal to admit an objection filed out of time is an administrative exercise of discretion under Section 51(7) of the TPA. The Tribunal notes that discretional administrative decisions by the Respondent do not amount to appealable decisions however if the Appellant is aggrieved by such decision, they are entitled to challenge the alleged impropriety or unfairness of the decision through judicial review. 58.Consequently, the Tribunal finds that the late objection rejection decision that the Appellant appealed against is not an appealable decision, therefore there is no valid Appeal on record. b) Whether the Appeal was Filed out of time Without Leave of the Tribunal 59.The Tribunal further notes that the present Appeal is an appeal against a decision received by the Appellant on 24th May 2025. The Appellant appealed to the Tribunal the decision in a Notice of Appeal and a Memorandum of Appeal both dated 10th October 2025 and filed on 22nd October 2025. 60.The Respondent averred that the Appellant did not seek leave before filing the appeal before the Tribunal and therefore there is no valid appeal before the Tribunal. The Respondent submitted that the Appeal is therefore incompetent and bad in law for failure to comply with the mandatory statutory timelines and provisions. 61.The Tribunal notes that the procedure for appeal provided in Section 13(1)(b) of the TAT Act requires that an Appellant submit a notice of appeal to the Tribunal within thirty (30) days upon receipt of the decision of the Commissioner, and within fourteen (14) days from the date of filing the notice of appeal, submit a memorandum of appeal, statement of facts, the appealable decision and such other documents as may be necessary to enable the Tribunal to make a decision on the appeal. 62.The Appellant filed his Notice of Appeal, Memorandum of Appeal and Statement of Facts more than 4 months after it received the Respondent’s decision. 63.Section 13(3) of the TAT Act provides the remedy to any party who wishes to lodge an Appeal out of time, being that any such intended Appellant may apply to the Tribunal in writing, seeking an extension of time and leave to file an Appeal out of time. The provision reads: -“(3)The Tribunal may, upon application in writing, extend the time for filing the notice of appeal and for submitting the documents referred to in subsection (2).” 64.Section 13(4) of the TAT Act provides the legal test for grant of an application to file an appeal out of time. The Tribunal may grant extension of time to file an appeal due to an applicant’s absence from Kenya, sickness or other reasonable cause. 65.The Tribunal is enjoined to determine the length and reason for the delay when considering an application for the extension of time to file an appeal out of time. The power to extend time is discretionary and unfettered but the same must be exercised judiciously and it is not a right to be automatically granted to the applicant. 66.The Tribunal notes that the Appellant did not make any application to the Tribunal for extension of time to file his notice of appeal or the substantive appeal documents out of time. 67.The Tribunal is guided by the case of Boss Freight Terminal Ltd Vs Commissioner of Domestic Taxes(2017) eKLR, where the Court of Appeal reiterated the sentiments in Patrick Kiruja Kithinji Vs Victor Mugira Marete (2015) eKLR on time as a jurisdictional issue as follows: -“… in our view whether or not an appeal is filed on time goes to the jurisdiction of this Court. It is trite law that this Court has jurisdiction to entertain appeals filed within requisite time and or appeals filed out of time with leave of the Court. To hold otherwise would upset the established clear principles of institution of appeal of this Court.” 68.The question therefore, is whether the Tribunal has jurisdiction to entertain this Appeal. The Tribunal is guided by the case of Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd [1989] KLR, where Nyarangi JA held, inter alia as follows: -“… Jurisdiction is everything. Without it, a court has no power to make one more step. Where a court has no jurisdiction, there would be no basis for a continuation of the proceedings pending other evidence. A court of law downs its tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction.” 69.The Tribunal, consequently, finds that in the absence of the Tribunal granting leave to the Appellant to file his Appeal out of time, there is no valid Appeal before the Tribunal, and the Tribunal therefore lacks jurisdiction to determine this matter on its merits. Final Decision 70.The upshot of the above analysis is that the Tribunal finds that the Appeal is incompetent and accordingly proceeds to issue the following orders:a.The Appeal be and is hereby struck out.b.Each party to bear its own costs. 71.It is so ordered. DATED AND DELIVERED AT NAIROBI THIS 18TH DAY OF MAY 2026.……………………………ROBERT M. MUTUMACHAIRMAN……………………………… ……GLORIA A. OGAGAMEMBER………………………………DR. TIMOTHY B. VIKIRUMEMBER………………………………JIMMY M. MALLAMEMBER