https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/318

**REPUBLIC OF KENYA** **IN THE TAX APPEALS TRIBUNAL AT NAIROBI** **APPEAL NO. 1088 OF 2025** **PETER MUNGAI NGUGI .............................................................………….. APPELLANT** **VERSUS** **COMMISSIONER OF LEGAL** **AND BOARD SERVICES DEPARTMENT……………………………………... RESPONDENT** **JUDGMENT** **BACKGROUND** 1. The Appellant is a Kenya citizen who practices medicine within the Republic of Kenya. 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. 1. The Respondent undertook an investigation into the Appellant’s affairs and issued the Appellant with additional income tax assessments for 2019 to 2022, amounting to Kshs 27,711,162. 2. On 5th May 2025, the Appellant filed an objection, and the Respondent issued its Objection Decision confirming the additional tax assessments. **THE APPEAL** 1. In its Memorandum of Appeal dated 1st October 2025, the Appellant raised the following grounds of appeal: - 1. The entire tax assessment for Tax of Kshs. 18,132,268 together with penalties and interest accrued therefrom, demanded by the Respondent, is wrongful, as there were significant errors of omission and commission during the preparation of the annual financial statements and the books of accounts of the taxpayer. 2. That the Appellant employment income was not factored into the filing. 3. That, the Appellant’s contribution to Defined/Pension scheme was not factored; therefore, not deducted accordingly in arriving at the chargeable pay. 4. That, the Appellant’s Pay As You Earn (P.A.Y.E) was not deducted from in order to arrive at the correct tax due/refund due. 5. Personal relief due to the Appellant was omitted during the filing of the annual returns, thereby not reflecting the tax due. 6. Interest expense paid on various loans advanced to the Appellant by various financial institutions was not captured in the Appellant’s income and expenditure statements at the time of preparing the final books of accounts. 7. The Appellant, Mr. Peter Mungai Ngugi, who is the sole custodian of all financial records and reports, could not respond timely to the Respondent because he had been in and out of the country on official duties assigned to him by his employer who is the University of Nairobi. 8. The Appellant is currently in possession of the documents requested by the Respondent and is able and willing to avail them to the Respondent if given a chance to do so. 9. The Appellant paid the full principal tax as at 31st December 2022, as can be shown in his submitted Tax Deduction cards for the periods under review, and thus brings this Appeal having fulfilled his obligation under law. **APPELLANT’S CASE** 1. The Appellant’s case is premised on its: 1. Statement of Facts, dated 1st October 2025, together with the documentation attached thereto. 2. Written submissions dated 13th July 2026. 3. Witness testimony of Peter Mungai, dated 23rd June, and which was adopted as his testimony in chief, whereupon he was not cross-examined. 2. The Appellant stated that the assessment was wrongful as there were significant errors of omission and commission during the preparation of his annual financial statements and books of accounts, *viz:* 1. His employment income was not factored in the filing, 2. His contribution to Defined/Pension scheme was not factored in; therefore, not deducted accordingly in arriving at the chargeable pay. 3. His Pay As You Earn (P.A.Y.E) was not deducted. 4. Personal relief due to him was omitted. 5. Interest expense paid on various loans advanced to the Appellant by various financial institutions was not captured in the Applicant’s income and expenditure statements of the Appellant at the time of preparing the final books of account, as provided under Section 16 of the Income Tax Act. 3. The Appellant admitted that: 1. It lodged the objection without attaching the relevant documents and is thus remorseful. 2. He is the sole custodian of all his financial records and reports, but he could not respond in time to the Respondent’s demands because he has been in and out of the country for official duties assigned to him by his employer, the University of Nairobi. 4. The Appellant averred that it had paid the full principal tax as of 31st December 2022 and that it be allowed to settle any remaining issues through arbitration. 5. That the Respondent never called any witness; hence the document which he filed herein was never produced or introduced to the Tribunal and, any event, the Respondent offered no evidence to rebut the evidence proffered by the Appellant before the Tribunal; hence the Appellant’s case remains unchallenged. A view it supported with the case of **Mursal & Another v Manese (Suing as the legal administrator of Dalphine Kanini manesa) (Civil Appeal E20 of 2021) [2022] KEHC 282 (KLR)**. 6. That it had proved its case as was required of it under Section 56(1) of the TPA to show that this is a matter that can be referred to the Commissioner for reconsideration under Section 29 (c) of the Tax Appeals Tribunal, to enable relevant expenditures to be excluded from the earnings in accordance with the law. A view it supported by the case of **S.M. Mwenesi V Shily Luckhurs & Another (2000) KECA 186 (KLR)**. **Appellant’s Prayers** 1. The Appellant’s prays to the Tribunal for orders that: 2. This Appeal be allowed. 3. The decision of the Respondent dated 2nd July 2025 be set aside, considering the grounds laid out herein. 4. The assessments dated 26th January 2024 be set aside and or annulled. 5. The Tribunal to allow the Appellant to continue pursuing Alternative Dispute Resolution in order to arbitrate on the matter to its logical conclusion. 6. The costs of the Appeal be granted to the Appellant. **THE RESPONDENT’S CASE** 1. The Respondent’s case is premised on its Statement of Facts dated 24th October 2025 and written submissions dated 14th July 2026. 2. The Respondent stated that it allowed the Appellant an extension of time to lodge its objection and also advised it to validate its objection by submitting all relevant supporting documents and books of account. 3. That the Appellant failed to submit the required documents within the extended period allowed, and it issued its objection decision rejecting the said objection for having been invalidly lodged due to the failure to provide the documents necessary to support the objection under Section 51(3) (c) of the TPA. 4. The Respondent identifies the following issues for determination by this Honorable Tribunal: * 1. Whether the Objection Decision dated 2nd July 2025 was issued in accordance with the law. 2. Whether the Appellant discharged the burden of proof to challenge the additional assessments. 3. Whether the Appellant is entitled to the reliefs sought in the Memorandum of Appeal. 5. On Issue One, the Respondent stated that, despite being granted an extension of time until 16th May 2025 to validate his objection, the Appellant failed to provide any supporting evidence and thus acted within his mandate to treat the objection as invalidly lodged. 6. On Issue Two, it was its view that the Appellant had failed to discharge its burden of proof under **S**ection 56(1) of the Tax Procedures Act by failing to submit financial statements, books of account, or tax deduction cards during the objection stage and to provide a factual basis to displace the Respondent's assessments. 7. On Issue Three, the Respondent maintained that the Appellant is not entitled to the setting aside of the assessments because its claims regarding employment income, pension contributions, and PAYE are unsubstantiated due to his own failure to provide documentation when requested. 8. That furthermore, the Appellant's plea regarding professional duties and travel does not grant him immunity from statutory timelines. And that in any event he had been so accommodated when it was granted time to lodge its objection late. 9. The Respondent denied the claim of full tax fulfillment on the grounds that the Appellant failed to provide tax deduction cards and reconciliations. **Respondent’s Prayers** 1. The Respondent prayed for orders that the Appeal be dismissed with costs. **ISSUES FOR DETERMINATION** 1. The Tribunal having considered the parties' pleadings, submissions, and documents filed before it is of the view that the issues that fall for its determination is: 2. *Whether the Respondent’s statement for Facts should be struck out.* 3. *Whether the Respondent’s Objection Decision dated 2nd July 2025 was justified and lawful.* **ANALYSIS AND DETERMINATION** 1. ***Whether the Respondent’s Statement of Facts should be struck out*** 2. The Appellant raised the issue of the validity of the Respondent’s Statement of Facts. It is instructive to note that the Respondent was granted leave to file its Statement of Facts within the statutory timeline on 9th October 2025. The said statement of Facts was filed on 7th July 2026, about 8 months later. 3. The law requires that the said Statement ought to have been filed within 30 days of receipt of the Appellants’ appeal. Section 15(1) of the TPA is explicit, thus: *“(1) The Commissioner shall, within thirty days after being served with a copy of an appeal to the Tribunal, submit to the Tribunal enough copies as may be advised by the Tribunal, of—* *(a) a statement of facts including the reasons for the tax decision; and* *(b) any other document which may be necessary for review of the decision by the Tribunal.”* 1. Section 15(4) of the TPA further provides as follows on what the Respondent is required to do in cases where it has found itself in a situation where it is compelled to file its Statement of Facts late: *“(4) The Tribunal may, upon application in writing by the Commissioner, extend the time for submitting and serving the statement of facts and the documents referred to in this section, where it is proved to the satisfaction of the Tribunal, that the delay is not inordinate or other reasonable cause that may have prevented the Commissioner from submitting and serving the statement of facts and the documents within the specified period.”* 1. The law as it is required the Respondent to seek leave if it was found in a situation where it had to file its Statement of Facts late. Whereas the CTS platform is an open forum, parties must follow the law when they file anything on the said platform. It is the only way the document filed on CTS can gain legitimacy. A document filed in contravention of the law lacks legitimacy or any legal force. 2. Based on the above analysis, it is the decision of the Tribunal that the Respondent’s statements of facts are not properly on record and must accordingly be struck out. 3. The Respondent is thus left only with its submissions on record. But too bad for it because submissions are a marketing tool and are not pleadings. They cannot be used to introduce new facts, claims, or issues that were not formally raised and pleaded in the Statement of Facts or the core pleadings. 4. On this, the Tribunal is guided by the decision of the High Court in ***Republic v Chairman Public Procurement Administrative Review Board & another ex parte Zapkass Consulting and Training Limited & another [2014] eKLR*** in which the court held that: **“**The Applicant, the Respondents and the Interested Party all introduced new issues in their submissions. Submissions are not pleadings. There is no evidence by way of affidavits to support the submissions. New issues raised by way of submissions are best ignored.” (Emphasis Added) 1. The Court of Appeal also stated as follows in **Daniel Toroitich Arap Moi vs. Mwangi Stephen Muriithi & Another [2014] eKLR** ***“Submissions cannot take the place of evidence”.*** 1. It is thus apparent that s**ubmissions simply help parties to concretise their case to explain their pleadings better. Submissions are not evidence on which a case is decided. Submission only finds their basis from the pleadings; they cannot stand on their own or be used to introduce new grounds of appeal or defence which were bereft in the initial pleadings.** 2. Accordingly, the Respondent’s eloquent submissions may not amount to much in this appeal. 3. Based on the above analysis, the Respondent’s Statement of Facts dated 24th October 2025 be and is hereby struck off from the record. 4. ***Whether the Respondent’s Objection Decision dated 2nd July 2025 was justified and or lawful.*** 5. The striking out of the Respondent’s pleadings does not, however, lead to an automatic favour that the appeal succeeds. Not at all. The law requires the Appellant to discharge its burden of proof in tax matters for it to succeed. 6. On this issue of whether the assessment was justified and or lawful, the Tribunal has cited the objection decision, which was provided by the Appellant and which was explicit that the Appellant had not provided the documents which were requested; and, as such, the Respondent was forced to reject the objection. 7. Nevertheless, he has raised some pertinent issues that; 8. He had paid a portion of the tax in issue. This is unrebutted and yet not reflected in the Objcetion decision. 9. His employment income was not factored in the filing, 1. His contribution to Defined/Pension scheme was not factored, therefore not deducted accordingly in arriving at the chargeable pay. 2. His Pay As You Earn (P.A.Y.E) was not deducted. 3. Personal relief due to him was omitted. 4. Interest expense paid on various loans advanced to the Appellant by various financial institutions was not captured in the Applicant’s income and expenditure statements of the Appellant at the time of preparing the final books of accounts. 10. It is difficult for the Tribunal to determine the legitimacy of these assertions, considering that the Respondent does not have anything on record to rebut or explain itself regarding the issues raised herein. 11. Moreover, aside from his assertions, which remain unrebutted, the Appellant has not provided evidence to support these assertions, and it is difficult to verify their veracity. 12. Bearing in mind that a taxpayer ought to be made to pay tax for what is due and that the Commissioner should also be allowed to collect what is due from the taxpayer, it is the finding of the Tribunal that this is an appropriate case where it can invoke and exercise its powers under Section 29(3) (c)(ii) of the TPA, which provide thus: 13. *The Tribunal shall make a decision in writing or through electronic means—* *(c) setting aside the decision under review and either—* * + 1. *….* 2. *referring the matter to the Commissioner for reconsideration in accordance with any directions or recommendations of the Tribunal.* **DISPOSITION** 1. The upshot of the foregoing analysis is that the Tribunal finds and that holds that the appeal succeeds, and it shall proceed to make the following Orders: - 2. The Appeal be and is hereby allowed. 3. The Appellant is directed to serve the Respondent with all its documents supporting the grounds raised in it's objection within 14 days from the date of this judgment. 4. The matter is referred back to the Respondent to issue a fresh Objection Decision while considering and taking into consideration all the documents provided by the Appellant in (b) above. 5. The Respondent shall issue its objection decision within the statutory timelines upon receipt of the said documents, or upon the lapse of the period granted by the Tribunal for the Appellant to provide the relevant documents under order (b) above, whichever comes first. 6. Parties are at liberty to apply. 7. Each Party is to bear its own costs. 1. It is so ordered. **DATED and DELIVERED at NAIROBI this ………7th ...……. Day of……August...… 2026** **..........................……………………….** **DR. RODNEY ODHIAMBO OLUOCH** **CHAIRPERSON** **.…..….……………………. ..….……………………….** **CYNTHIA B. MAYAKA DR. ERICK KOMOLO** **MEMBER MEMBER** **………………………………** **ABDULLAHI DIRIYE** **MEMBER**