Otieno v Kenya Revenue Authority (Tax Appeal E1336 of 2025) [2026] KETAT 229 (KLR) (3 June 2026) (Judgment)

 REPUBLIC OF KENYA IN THE TRIBUNAL OF KENYA AT NAIROBI COUNTY COURT NAME: TAX APPEALS TRIBUNAL CASE NUMBER: TATC/E1336/2025 BONFACE OKOTH OTIENO 1st Appellant - Versus - Kenya Revenue Authority 1st Respondent JUDGMENT # BACKGROUND 1. The Appellant is a Kenyan citizen and a taxpayer. 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 issued Income tax additional assessments on 1st July 2025 for the year 2021. The Appellant objected to the assessment vide a notice of objection dated 30th July 2025. 1. Upon consideration of the documents provided and explanations tendered, the Respondent issued its Objection Decision dated 7th October 2025 which fully rejected the objection thereby confirming tax liability of Kshs 8,787,930. 2. The Appellant being aggrieved by the Respondent's decision filed this Appeal vide Notice of appeal dated and filed on 7th November 2025. # THE APPEAL 1. The Appellant filed the memorandum of Appeal dated and filed 21 st November 2025, raising the following grounds: 1. That the Respondent erred in law and in fact by issuing an Objection Decision that introduced new issues not contained in the Assessment Order KRA202592077588 dated 1st July 2025, and which were never the subject of the Appellant's Notice of Objection dated 30th July 2025. 2. That the Respondent erred in law and in fact by disallowing certain expenses in the Objection Decision, notwithstanding that such expenses were neither previously disallowed nor was any such disallowance communicated in the Assessment Order. 3. That the Respondent erred in law by ventilating new issues at the objection stage thereby exceeding its lawful mandate, violated the principal of natural justice, and deprived the Appellant of the right to a fair hearing. 4. That the Respondent erred in law and in fact by charging the Appellant tax on unknown income which was based on an erroneous Withholding Tax Certificate No.KRAWHTMSNO133625321 mistakenly issued by the County Government of Mombasa. 5. That by charging tax on such unknown income, the Respondent violated Section 3(1) of the Income Tax Act Cap 470(ITA) which requires tax to be charged on actual income earned or accrued by the Appellant. 6. That the Respondent erred in law and in fact by failing to properly evaluate and give due consideration to material evidence tendered by the Appellant, including documentary proof demonstrating that the Disputed Withholding Tax Certificate was erroneously issued. * 1. That it was not open in law for the Respondent to place the burden of proof on the Appellant by requiring him to provide proof of rectification attempts made to the Disputed Withholding Tax Certificate. 2. That the Respondent unlawfully shifted the tax burden to the Appellant by treating erroneous third-party reporting as conclusive evidence of income despite such third party explaining how such Disputed Withholding Tax Certificate was erroneous and even asked for guidance and assistance on how to rectify such obvious error. 3. That the Respondent erred in law and in fact by issuing its Objection Decision out of the statutory required timeframe thus making such Objection Decision void. # THE APPELLANT’S CASE 1. In support of the Appeal, the Appellant filed statement of facts dated and filed 21st November 2025 and supplementary submissions dated and filed on 31st March 2025 wherein it stated that in the year 2021, 2. The Appellant averred that he rendered consultancy and professional services to the County Government of Mombasa. On 18th November 2021, the County Government of Mombasa issued Withholding Tax Certificates to the Appellant, reflecting amounts withheld in respect of payments to the Appellant. In particular, the Withholding Tax Certificates recorded that the County Government had made payments to the Appellant. 3. The Appellant stated that on 28th June 2022, he duly filed his Income Tax Return for the year of income 2021, declaring a gross turnover of Kshs 23,422,500. Subsequently, on 1st July 2025, the Respondent issued to the Appellant the Assessment Order for the period 1st January 2021 to 31 st December 2021, assessing an incremental tax liability of Kshs 7,036,598 together with interest thereon. 4. According to the Appellant, this incremental tax liability was solely based on an allegation that there were underdeclared income by the Appellant amounting to Kshs 27,170,000 which income tax payable on such income amounted to Kshs 7,036,598. The Appellant stated that the basis of such allegation was an erroneous Withholding Tax Certificate No. KRAWHTMSNO133625321 ("Disputed Withholding Tax Certificate") alleging that the County Government of Mombasa paid the Appellant Kshs 27,170,000 for supply of professional services. He noted that the Disputed Withholding Tax Certificate did not have an invoice number and only talked of transaction date and not the payment. 1. The Appellant noted that from the Assessment Order, the only issue was the said disputed Withholding Tax Certificate which formed the basis of the incremental tax liability and not issues with specific unproved expenses. 2. Aggrieved by the Assessment Order, the Appellant lodged a Notice of Objection dated 30th July 2025, challenging the Assessment Order. 3. Tha Appellant pointed out that by an email dated 8 th August 2025, the Respondent purported to notify the Appellant that the Notice of Objection was deemed invalid pursuant to section 51(3) of the Tax Procedures Act, Cap. 469B (TPA), and consequently demanded the production of further documentation to facilitate its review of the assessment among them being bank statements. 4. Additionally, the Appellant stated that the Respondent asked for proof of unspecified expenses an issue that did not arise from, and was never contemplated in the Assessment Order of 1st July 2025. 5. The Appellant stated that a further email dated 13 th August 2025, the Respondent exerted undue pressure on the Appellant to furnish the requested documents and/or information within the stipulated timelines, warning that failure to do so would result in the Notice of Objection being invalidated for allegedly lack of sufficient supporting documentation. 6. The Appellant stated that there being no further relevant documentation to furnish, the Appellant, acting under persistent pressure to comply with the Respondent's repeated unwarranted demands, resubmitted on 13th August 2025 the Bank Statements, and these had already been supplied as part of the original Notice of Objection. He stated that on the same day, the Respondent issued an email to the Appellant indicating that the Notice of Objection had been validated and that it would proceed to review the Notice of objection and communicate its decision within the statutory timelines. 7. The Appellant was perplexed as to why the Respondent chose to validate the Notice of Objection on this occasion, despite the Appellant merely resubmitting the very documents earlier furnished in support of the Notice of Objection. The Appellant stated that he was shocked that the Respondent would validate a Notice of Objection it had rejected merely fourteen (14) days prior, save for the apparent motive of extending the statutory timelines within which to render an Objection Decision. 1. The Appellant stated that 24 th September 2025, the Respondent communicated to the Appellant that the assessment was premised on undeclared income and unsupported expenses, while simultaneously acknowledging receipt of the audited financial statements, withholding tax certificates, and confirmation from the County Government of Mombasa. He pointed out that despite this acknowledgment, the Respondent nonetheless sought additional documents and/or information, thereby expanding the scope of inquiry beyond the Assessment Order. 2. The Appellant stated that those already supplied. therefore,it was inexplicable that the Respondent could validate the Notice of Objection on the basis that insufficient information had been furnished to enable it to render a decision, only to subsequently revert and request additional documents after expressly confirming adequacy of the material before it. 3. According to the Appellant, on 7th October 2025 more than 60 days after the issuance of the valid Notice of Objection, the Respondent issued the impugned Objection decision, alleging a tax liability of Kshs 8,787,930. He averred that this figure did not arise from the Assessment Order of 1st July 2025, nor was it a subject of the Appellant's Notice of Objection dated 30th July 2025. According to the Appellant, the Respondent introduced it for the first time in the Objection Decision, contrary to the statutory framework governing issuance of Objection Decisions. 4. The Appellant asserted that in its Objection Decision, the Respondent improperly introduced a fresh assessment which the Appellant had not addressed in its Notice of Objection, which did not form part of the Assessment Order, and which was not in dispute. Specifically, the Appellant averred that the Respondent, for the first time, purported to confirm another assessment allegedly amounting to Kshs 1,741,332, an issue neither contained in the Assessment Order nor addressed in the Notice of Objection. 5. The Appellant contended that the Respondent alleged that the Appellant had overstated expenses under salaries and wages, rent, advertisement, and motor hire. However, the Appellant maintained that none of these items formed part of the Assessment Order, and their sudden introduction in the Objection Decision came as a complete surprise to the Appellant. 1. Further, the Appellant contended that having lodged the Notice of Objection on 30th July 2025, and the Respondent having issued the Objection Decision on 7th October 2025, the Respondent acted beyond the statutory sixty (60) day period prescribed by law, rendering the Objection Decision invalid. 1. In summary, the Appellant submitted that the Objection Decision dated 7th October 2025 is invalid in law; and that the Respondent cannot impose tax on unknown income to a taxpayer. 2. The Appellant cited the cases of ***Kamindi Selfridges Supermarket Limited v Commissioner for Investigations and Enforcement (Appeal 52 of 2017) [2020] KETAT 73 (KLR)****;* ***Bank of Africa Kenya Limited v Commissioner of Domestic Taxes, TAT No. 319 of 2018 [2020] eKLR; Commissioner of Domestic Taxes v Bank of Africa Limited (Civil Appeal E127 of 2020) [2023] KEHC 1036 (KLR)****; and* ***Republic v Chairman Public Procurement Administrative Review Board & another Ex- Parte Zapkass Consulting and Training Limited & another [2014] eKLR*** to submit that the Respondent cannot introduce new issues in objection decision or issues not in assessment orders. 3. The Appellant submitted that the Objection decision was statutorily time barred having been issued beyond sixty days. The Appellant relied on the cases of ***Rongai Tiles & Sanitary Wares Limited v Commissioner of Domestic Taxes (Tax Appeal E011 of 2020) [2023] KEHC 18546 (KLR); Eastleigh Mall Limited v Commissioner of Investigations & Enforcement (Income Tax Appeal E068 of 2020) [2023] KEHC 20000 (KLR);*** *and* ***Commissioner of Domestic Taxes v Koceyo (Income Tax Appeal E084 of 2024) [2025] KEHC 7636 (KLR)*** to submit that the Respondent has a duty to issue objection decision within the required timelines. # Appellant’s Prayers 1. The Appellant prayed as follows: 2. The assessment orders and the resultant Objection dated 7 th October 2025 be set aside; 3. The Honourable Tribunal be pleased to issue any further reliefs as may be just and expedient in the circumstances. 4. The Costs of this Appeal be provided for. # THE RESPONDENT’S CASE 1. In response to the Appeal, the Respondent relied on its Statement of Facts dated and filed on 20th February 2026 and filed on 21 st February 2026 together with submissions dateded 27th March 2025 and filed on 30th March 2025 2. The Respondent stated that it considered all the available information and representations lodged by the Appellant and its findings were limited to the information available during the review and verification. It stated that pursuant to Sections 24(2), 29, and 31(1)(b) of the TPA, the Commissioner is legally mandated to assess or amend an assessment based on the information available and, where necessary, to the best of his judgment. It stated that the exercise of best judgment is expressly contemplated by statute where a taxpayer fails to provide complete or reliable records. 3. It averred that the Appellant did not avail any documentary evidence in support of the grounds of objection, contrary to the mandatory provisions of Section 51(3) of the TPA, which obligate a taxpayer to submit all relevant documents substantiating the objection at the time of lodging the same. 4. The Respondent averred that on the issue of withholding certificate (KRAWHTMSNO133625321) of a payment of Kshs 27,170,000 from Mombasa County was validly issued and had been used by the Appellant in claiming withholding credits in his tax return. 5. It stated that despite several requests via emails on 8/8/2025, 29/9/2025 and 3/10/2025, the Appellant did not avail sales invoices, contracts or sales ledgers to support the declared income. 6. It stated that despite the clear statutory duty imposed by law, the Appellant failed to maintain and/or produce adequate supporting documentation as required. It averred that the absence of complete, accurate, and verifiable records materially impeded the Respondent's ability to independently ascertain and confirm the accuracy of the declarations. 7. That Consequently, and as expressly permitted under the TPA, the Respondent was constrained to determine the Appellant's tax liability on the basis of the limited information available. It asserted that any resulting assessment was therefore a direct consequence of the Appellant's own failure to comply with statutory record-keeping requirements. 8. The Respondent argued that its determination was further informed by a review of the Appellant's declared income, which revealed significant and unexplained variances in the income figures reported. It asserted that such inconsistencies reasonably triggered the need for adjustment and justified the issuance of additional assessments. 1. In response to the assertion that the Commissioner ignored the Appellant's claim that previously filed accounts were incorrect, the Respondent argued that this was misplaced and legally untenable. The Respondent averred that statutory returns and financial statements filed by a taxpayer are presumed to be accurate unless convincingly disproved by cogent, verifiable evidence. 2. According to the Respondent, the Appellant failed to discharge burden of proof. It stated that the belated attempt to disown its own records, without providing audited corrections or reconciliations acceptable under the law, cannot bind the Commissioner nor invalidate an assessment lawfully raised on the basis of self-declared information. 3. According to the Respondent, the additional assessment was issued strictly in accordance with the law, grounded in express statutory authority, and after due consideration of the material facts available. The Respondent asserted that it acted within its mandate and adhered to procedural and substantive legal requirements. 4. Further, it stated that Section 56(1) of the TPA unequivocally places the burden of proof upon the taxpayer to demonstrate that a tax decision is incorrect. It contended that the Appellant failed to discharge this statutory burden by producing cogent, contemporaneous, and verifiable evidence sufficient to rebut the Respondent's assessment. It therefore maintained that the assessment is lawful, justified, and ought to be upheld. 5. The Respondent submitted that it relied on its best judgement based on information available to it in compliance with Section 31 of the TPA while raising the assessments. It cited the case of ***Commissioner of Domestic Taxes v Altech Stream (EA) Limited [2021] eKLR*** where it was stated that Section31(1) of the TPA allows the Commissioner to make an assessment based on such information as may be available and to the best of its judgement. 6. The Respondent submitted that the Appellant’s Objection was rejected on the basis that the Appellant did not provide proper documents in support of the grounds raised in the objection raised. It relied on the case of ***Mulherin v Commissioner of Taxation [2013l FCAFC115*** where the Federal Court of Australia held that in tax disputes, the taxpayer must satisfy the burden of proof to successfully challenge income tax assessments. 1. The Respondent also relied on the cases of ***Intime Stone Age Limited v Commissioner of Domestic Taxes (Appeal 714 of 2022) [2024] KETAT 44 (KLR) (26 January 2024) (Judgment); Osho Drapers Limited v Commissioner of Domestic Taxes [2022] eKLR; Boleyn International Limited v Commissioner of Investigations & Enforcement (Tax Appeal Tribunal No.55 of 2019); and Rongai Tiles and Sanitary Ware Limited v Commissioner of Domestic Taxes (Tax Appeals Tribunal No 163 of 2017*** to submit that the taxpayer has to adduce documents to support its case but the Appellant failed to do so. # Respondent’s Prayers 1. The Respondent Prayed: a The Tribunal to uphold the Respondent’s Objection Decision and b. Dismiss the Appeal with costs. # ISSUES FOR DETERMINATION 1. The Tribunal puts forth the following issues for determination: # Whether the Objection decision was issued contrary to Section 51(11) of the TPA; 1. **Whether the Respondent was justified in confirming the assessment.** **ANALYSIS AND FINDINGS** 1. Having identified the issues for determination, the Tribunal proceeds to analyse the same as hereunder; # Whether the Objection decision was issued contrary to Section 51(11) of the TPA 1. The Appellant argued that the Objection decision was time barred and that it was issued contrary to Section 51(11) of the TPA. The Tribunal notes that the Respondent did not to respond to this issue. 1. The Respondent issued assessment order dated 1 st July 2025, the Appellant lodged its Notice of objection dated 30th July 2025 and subsequently, the Respondent issued its Objection decision dated 7th October 2025. 2. The Respondent claimed that the Appellant filed an invalid Notice of appeal and that the Appellant failed to provide documents to support the objection despite email reminders of 8th August 2025, 29th September 2025, and 3rd October 2025. 3. Section 51(4) of the TPA mandates the Respondent to notify the taxpayer within fourteen days when the objection is not validly lodged. It provides as follows: *(4) Where the Commissioner has determined that a notice of objection lodged by a taxpayer has not been validly lodged, the Commissioner shall within a period of fourteen days notify the taxpayer in writing that the objection has not been validly lodged and request the taxpayer to submit the information specified in the notice within seven days after the date of the notice.* 1. The Respondent issued a notice under section 51(4) of the TPA vide the email of 8th August 2025, but the Respondent demanded the Appellant to provide the documents by 12th August 2025. This timeframe was unlawful because under Section 51(4) of the TPA, the taxpayer has 7 days after the date of the notice to provide the documents. 2. Section 51(4A) of the TPA requires the Respondent to issue its objection decision within sixty days. It provides thus: *(4A) Despite subsection (3), where a taxpayer fails to provide the information required under subsection (4) or fails to provide the information within the specified period, the Commissioner may make an objection decision* ***within sixty days after the date on which the notice of objection was lodged****.* 1. Section 51(11) of the TPA also mandates the Respondent to issue its objection decision within sixty days. It provides as follows: *(11) The Commissioner shall make the objection decision within sixty days from the date of receipt of a valid notice of objection failure to which the objection shall be deemed to be allowed.* 1. In **Eastleigh Mall Limited v Commissioner of Investigations & Enforcement [2023] KEHC 20000 (KLR)**, the High Court had the following to say about timelines for issuing objection decision. *‘‘…the provisions of Section 51(11) of the Tax Procedures Act are mandatory. They are not cosmetic. Parliament in its wisdom knew that in matters tax, time is very crucial as those in commerce need to make informed decisions. If the Commissioner is allowed to exercise his discretion and stay ad-infinitum before issuing an objection decision, the tax payer would be unable to make crucial decisions and plan his/her business properly. The timelines set are mandatory and not a procedural technicality.’’* 1. The provisions of Section 51(11) of the TPA mandating the Respondent to issue Objection decision within sixty days are cast in stone until the day parliament decides otherwise. The timeline thereunder must be complied with. The section does not give the Respondent freedom to issue objection decision beyond 60th day. The Respondent knew this fact and that is why it did not attempt to defend against this issue. 2. The Tribunal has pointed out above that the Respondent issued assessment order dated 1st July 2025. The Appellant lodged notice of objection dated 30th July 2025. Subsequently, the Respondent issued objection decision dated 7th October 2025. These turns of events clearly show that the Respondent issued the objection decision beyond statutory 60th day. 3. Based on the foregoing, the Objection decision dated 7 th October 2025 was issued in breach of Section 51(4A) and Section 51(11) of the TPA. Consequently, the Appellant’s Notice of objection dated 30th July 2025 was deemed as allowed by operation of law. 4. Considering the foregoing, the analysis of the remaining issue is hereby rendered moot. # FINAL DECISION 1. The upshot to the foregoing is that the Appeal has merit. Consequently, the Tribunal makes the following orders: - 2. The Appeal be and is hereby allowed; 3. The assessment together with the resultant Objection Decision dated 7th October 2025 be and are hereby set aside; 4. Each party to bear its own cost. 5. It is so ordered. # DATED AND DELIVERED AT NAIROBI THIS 3RD DAY OF JUNE 2026 SIGNED BY/FOR: **★ TH E JUDICIAR Y O F KENY A ★** **HON. ROBERT MUGAMBI MUTUMA (CHAIRPERSON) HON. EUNICE NJERI NGANGA HON. BONIFACE KIBIY TERER DOMINIC KIPKEMOI RONO HON. BILLY GRAHAM OKUMU MIJUNGU** Tax Appeals Tribunal Tribunal Date: 2026-06-03 14:48:38