[2024] KETAT 1072 (KLR)

Mungai v Commissioner of Domestic Taxes (Tax Appeal E500 of 2024) [2024] KETAT 1072 (KLR) (5 July 2024) (Ruling)

Neutral citation: [2024] KETAT 1072 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E500 of 2024

E.N Wafula, Chair, M Makau, EN Njeru, E Ng'ang'a & AK Kiprotich, Members

July 5, 2024

Between

David Muthemba Mungai

Applicant

and

Commissioner of Domestic Taxes

Respondent

Ruling

1. The Appellant moved the Tribunal vide a Notice of Motion application dated 13th May 2024 and filed under Certificate of urgency on 14th May 2024 that is supported by an Affidavit sworn on 13th May 2024 by George M. Njunguna, a tax representative of the Applicant, seeking for the following Orders, that: -a.The Applicant be granted leave to file its Memorandum of Appeal and Statement of Facts out of time.b.The Notice of Appeal, Memorandum of Appeal, and Statement of Facts herein attached be deemed to have been duly filed and served.c.The Respondent be at liberty to file a response if it so wishes.d.The demand for the principal taxes and resultant penalties and interest be stayed pending outcome of this appeal.e.That costs of this application be in the cause.

2. The application is premised on the grounds, that: -i.The Commissioner issued additional Monthly Rental Income (MRI) assessments on 8th March 2021 thereof for the periods December 2018, December 2019, and December 2020. ii.The Appellant objected on 22nd March 2021 to the additional assessments and provided all the required documentation on iTax and to the particular officer of the Respondent handling the matter.iii.The Appellantant did not receive any further communication from the Respondent, to which the Appellant deemed the Objection to have been allowed, however the Appellant received a demand notice on 7th March 2024. iv.Whereas the Appellant did not receive any official and substantive communication from the Respondent, the Appellant was informed that its objection was rejected on 4th February 2022 and confirmed the MRI assessment on iTax.v.The Respondent to date has never provided the Appellant with an Objection decision, rather it issued a confirmation notice on the iTax platform.vi.The late receipt and awareness of this confirmation notice on iTax largely occasioned the Applicant’s inability to file the appeal within time as is required in law.vii.The Appellant became extensively ill during this period and was in and out of hospital receiving treatment and on account of the health condition was uninformed of the confirmation notice.viii.The Appellant was regrettably unaware and uninformed of the next cause of action and most importantly the appeal process at the Tax Appeals Tribunal.ix.The Appellant visited the Respondent’s offices, particularly the Tax Dispute Resolution office to seek guidance and was advised to seek the services of a tax agent which then necessitated this application.x.The Appellant has approached this Honourable Tribunal at the earliest opportune moment and the failure to file the appeal on time was because of justifiable opportunity factors beyond the control of the Appellant.xi.In the interest of justice, the Appellant seeks the indulgence of the Tribunal to be allowed to file an appeal out of time.xii.The application shall not occasion any prejudice to the Respondent.xiii.The Appellant has an arguable appeal with high chances of success as per the Memorandum of Appeal to be adduced.

3. The Respondent upon being served with the instant application filed a Replying Affidavit sworn by Hellen Njoroge, an officer of the Respondent, on the 29th May, 2024 and filed on 30th May, 2024 and which response raised the following grounds, that;i.The Respondent issued an Objection decision on the 4th February 2022 upholding the Monthly Rental Income Tax Assessments for the periods December 2018, December 2019 and December 2020 based on the grounds that the Appellant failed to avail supporting documents.ii.The delay in the making of this application is approximately 27 months, 2 weeks and 5 days and the delay is not only inordinate but is also inexcusable.iii.The Memorandum of Appeal attached does not raise triable issues, that the Appellant must demonstrate that the intended appeal is arguable and has not met this requirement.iv.No credible reason has been advanced by the Appellant to warrant extension of time to file appeal as provided at Section 13 (4) of the Tax Appeals Tribunal Act. Further the reasons advanced by the Appellant have not been supported by any evidence.v.The Appellant misled the Honourable Tribunal by stating that the Respondent did not issue an Objection decision in this matter, the Respondent wrote to the Appellant on several occasions requesting him to avail documents in support of his objection but he failed to do so.vi.The Appellant has not been vigilant and does not warrant the exercise of the Tribunal’s discretion in his favour, the Appellant is guilty of laches.vii.The Appellant is not deserving of the orders sought as the whole period of delay has not been explained.

Partie’s Submissions 4. The Appellant in his written submissions raised three issues for determination, namely;i.Whether there is an arguable appeal with chances of success;ii.Whether the application herein will cause any prejudice to the Respondent; and,iii.Whether there was inordinate delay and just cause demonstrated for the delay. 5. The Appellant submitted that the principles for determining whether a court should allow extension of time were set out in the case Ison Technologies Kenya Limited vs. Commissioner of Domestic Taxes (Miscellaneous Application No. 117 of 2021).

6. The Appellant further also cited the case of Wasike vs. Swala 1984 KLR 591.

7. The Appellant submitted that the Commissioner arbitrarily issued an estimated assessment in contravention of provisions of the Tax Procedures Act and based on unexplained and unwarranted information.

8. The Appellant submitted that the assessments were highly erroneous and the Appellant had already filed his rental income based on the actual rent received.

9. The Appellant argued that the Respondent would not suffer any prejudice if the application is allowed. Additionally, the assessment being estimated and demanded is unsubstantiated and therefore the balance of prejudice shifts to the Appellant.

10. The Appellant submitted that it filed the application within the month when he became aware of the confirmation notices and upon the demand notice being issued.

11. The Appellant cited the cases of Nicholas Kiptoo Arap Korir Salat vs. 7 others [2014] eKLR and Kamlesh Mansukhalal Damki Patni vs. Director of Public Prosecution & 3 Others [2015] eKLR.

12. The Appellant relied on Articles 48 and 50 (1) of the Constitution of Kenya relating to Constitutional guarantees to access to justice and right to have any dispute resolved by the application of law decided in a fair and public hearing before the court.

13. The Respondent submitted that the Objection decision was lawfully and regularly issued pursuant to Section 51 (11) of the Tax Procedures Act.

14. The Respondent argued that the Appellant has in no way or fashion advanced sufficient or reasonable grounds for delay on his part in filing either the Notice of Appeal or the substantive appeal within statutory timelines.

15. The Respondent submitted that the delay of over 27 months is inordinate and that there was no satisfactory explanation for the delay in the making of this application.

16. The Respondent averred that despite the Appellant claiming to have been extensively sick as one of his reasons for delay, the Appellant did not attach any evidence of this to his application, the reasons provided by the Appellant do not therefore meet the requirements as provided for under Section 13 (4) of the Tax Appeals Tribunal Act.

17. The Respondent cited the cases of Chairman, Kenya National Union of Teachers & Another vs. Henry Inyangala & 2 Others [2018] eKLR; Utalii Transport Company Limited & 3 Others vs. NIC Bank Limited & Another [2014] eKLR; Nicholas Kiptoo Arap Korir Salat vs. Independent Electoral and Baoundaries Commission & Others [2014] eKLR and Misc. App No. 177 of 2022 Katahira & Engineers International vs. Commissioner of Domestic Taxes.

18. The Respondent argued that, contrary to the Appellant’s assertion, a substantive Objection decision was indeed issued and communicated to the Appellant. Further, the claim that the Appellant was unaware of the confirmation notices is untenable as it remains the responsibility of the taxpayer to regularly check its iTax portal for any updates.

19. The Respondent stated that the Appellant’s Appeal does not raise any triable issues or present an arguable case.

20. The Respondent submitted that the inordinate delay has not been justified to the satisfaction of the Tribunal to warrant exercise of the Tribunal’s discretion in favour of the Appellant.

21. The Respondent submitted that the Appellant has been indolent in the making of this application, the principles of natural justice recognize that equity aids the vigilant and not the indolent.

Analysis and Findings 22. The Appellant in the instant application seeks for an order for the extension of time for filing of the appeal out of time, which application the Tribunal shall consider.

23. It was the Appellant submissions that the delay was not inordinate premised on the reasonable grounds that the Respondent did not communicate the progress and its decision on the Appellant’s Objection, that the Appellant learned of the same following the receipt of the demand notice dated 7th March 2024. Further, the Respondent did not issue any substantive Objection decision on iTax as alleged.

24. Additionally, the Appellant submitted that he had been indisposed and was extensively ill during the period as to prevent him from lodging his Appeal within the prescribed period.

25. In opposing the application, the Respondent submitted that it issued its decision on the Applicant’s iTax portal on 4th February 2022 and the Applicant ought to have been regularly viewing his portal.

26. The Respondent further submitted that the delay of over 27 months is not only inordinate, but no explanations or evidence has been placed before the Tribunal in support of the grounds outlined by the Appellant.

27. Section 13 (3) of the Tax Appeals Tribunal Act provides as follows with regard to grant of leave for extension of time to lodge an appeal late:-“(3)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).”

28. The reasons and/or grounds upon which a party seeking for extension of time to file an appeal out of time can rely on are contained within the provisions of Section 13 (4) of the Tax Appeals Tribunal Act, which provide as thus:-“An extension under subsection (3) may be granted owing to absence from Kenya, or sickness, or other reasonable cause that may have prevented the applicant from filing the notice of appeal or submitting the documents within the specified period.”

29. Similarly, Rule 10 (3) of the Tax Appeals Tribunal (Procedure) Rules, 2015, in relation to grounds upon which a party can rely on in the making of an application for extension of time, provides as follows:-“The Tribunal may grant the extension of time if it is satisfied that the applicant was unable to submit the documents in time for the following reasons-(a)absence from Kenya;(b)sickness; or(c)any other reasonable cause.”

30. It therefore follows that the Appellant ought to demonstrate such grounds upon which his application is anchored within the provisions of Section 13 (4) of the Tax Appeals Tribunal Act as read together with Rule 10 of the Tax Appeals Tribunal (Procedure) Rules, 2015.

31. The Tribunal has perused the Appellant’s grounds as outlined in the application and whereas, the grounds fall within the confines of Section 13 (4) of the Tax Appeals Tribunal Act as read together with Rule 10 of the Tax Appeals Tribunal (Procedure) Rules, the Appellant has failed to present the evidence in support of the grounds before the Tribunal for its consideration.

32. The Tribunal is guided by the latin maxim “incumbit probation qui dicit non qui negat”, when translated means that he who alleges must prove.

33. Further, Section 107 (1) as read together with Section 109 of the Evidence Act, makes provisions as relate to proof of alleged facts. The Section 107 (1) provides as thus:-“(1)Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist.”

34. Section 109 of the Evidence Act, provides as follows:-“The burden of proof as to any particular fact lies on the person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.”

35. The duty of demonstrating, by way of evidence that the Respondent did not issue the decision to the Appellant’s Objection and that the Appellant was indisposed during the period, all of which prevented the Appellant from lodging the appeal within the prescribed period was upon the Appellant, who has failed to support the deponed facts with evidence for the Tribunal’s consideration.

36. It is to be noted that in deeming the delay as inordinate or reasonable, the Tribunal does not only consider the length of the period, but in exercise of its discretion considers the reasons occasioning such a delay. The Tribunal is guided by the High Court case of Leo Sila Mutiso vs. Rose Hellen Wangari Mwangi, Civil Application Nai 251 of 1997 in which the learned trial Judge held that:“It is now settled that the decision whether to extend the time for appealing is essentially discretionary. It is also well stated that in general the matters which this court takes into account in deciding whether to grant an extension of time are, first the length of the delay, secondly the reasons for the delay, thirdly (possibly) the chances of the appeal succeeding if the application is granted and fourthly the degree of prejudice to the respondent if the application is granted.” (Emphasis added)

37. The Tribunal therefore finds that the grounds advanced by the for delay were unsupported by evidence and therefore the delay is deemed inordinate and without any explanations.

Disposition 38. Based on the foregoing analysis, the Tribunal finds that the application lacks merit and accordingly proceeds to make the following Orders: -a.The Application be and is hereby dismissed.b.No orders as to costs.

39. It is so ordered.

DATED AND DELIVERED AT NAIROBI THIS 5TH DAY JULY, 2024. ERIC NYONGESA WAFULA - CHAIRMANMUTISO MAKAU - MEMBERELISHAH N. NJERU - MEMBEREUNICE N. NG’ANG’A - MEMBERABRAHAM K. KIPROTICH - MEMBER