https://new.kenyalaw.org/akn/ke/judgment/ketat/2026/212

 REPUBLIC OF KENYA IN THE TRIBUNAL OF KENYA AT NAIROBI COUNTY COURT NAME: TAX APPEALS TRIBUNAL CASE NUMBER: TATC/E820/2025 RIMUN VENTURES LIMITED VS KENYA REVENUE AUTHORITY JUDGMENT # BACKGROUND 1. The Appellant is a private limited company whose Principal activity is civil works and general constructions. 2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of Kenya’s Laws (hereinafter “the Act”). 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 several tax assessments, an incremental income tax principal of Kshs. 376,446 for the year 2023 issued on 24th April 2025, Kshs. 4,584,460.8 for the year 2021 issued on the same date, Kshs. 634,999.36 for December 2024 issued on 16th April 2025, Kshs. 419,051.2 for December 2023 issued on 16th April 2025, and Kshs. 3,565,592 for December 2021 issued on 16th April 2025. 1. Appellant lodged an objection through ITax objection system dated 16th May 2025 and formal objection letters dated 26th May 2025 2. The Respondent issued an Objection Decision dated 10th July 2025 3. Dissatisfied with the Respondent’s tax decision on 10 th July, 2025, the Appellant filed a Notice of appeal dated and filed 29th July 2025. # THE APPEAL 1. The Appellant lodged its Memorandum of appeal filed on 30th July, 2025 raising the following grounds of appeal; 1. THAT the learned assessing officer erred in law and in fact in the confirmation of additional assessment against the objections of appellant while the following facts were clear 2. THAT Additional Assessments of Kshs. 376,446 for Income Tax 2023 and Kshs. 4,584,460.8 for Income Tax 2021 were indeed an error. 3. THAT Additional Assessments of Kshs. 634,999.36 for VAT December 2024, Kshs. 419,051.2 for December 2023 and Kshs. 3,565,592 for December 2021 were indeed an error. 4. THAT the Respondent based his assessments on incomplete information as Income tax returns for year ended 2024 had not yet been filed by the Appellant. 5. The Appellant avers that he filed returns for the previous years and paid taxes. 6. THAT the learned assessing officer erred in law and in fact by not considering information and explanation provided by the Appellant at the review stage. 7. THAT the failure to produce complete documentation in favour of expenses claimed was not intentional and that the Appellant was battling an illness for the better part of the year, a situation that hindered the Appellant from fully concentrating on the review issues. 8. THAT the learned assessing officer erred by failing to put into further consideration documents and explanations provided confirming actual documentation for the said period provided by the Appellant. # THE APPELLANT’S CASE 1. The Appellant case was premised on its Statement of facts dated on 29th July, 2025 and filed on 30th July 2025 together with Appellant’s submissions dated 15th February, 2026 and filed on 17 th February, 2026 and adopted by the Tribunal on 1st April, 2026, the date of the hearing, 2. The Appellant stated that the Respondent issued several tax assessments, including incremental income tax principal of Kshs. 376,446 for the year 2023 issued on 24th April 2025, Kshs. 4,584,460.8 for the year 2021 issued on the same date, Kshs. 634,999.36 for December 2024 issued on 16th April 2025, Kshs. 419,051.2 for December 2023 issued on 16th April 2025, and Kshs. 3,565,592 for December 2021 issued on 16th April 2025. 3. The Appellant stated that being dissatisfied with the said assessments, it lodged an objection through system objection dated 16th May 2025 and formal objection letters dated 26th May 2025. 4. The Appellant stated that upon further engagements, the Respondent issued an Objection Decision dated 10th July 2025 on grounds that there were variances between IT2C sales, withholding VAT sales, and VAT declarations, that claimed expenses were not subjected to withholding income tax under Section 35 of the Income Tax Act, and that there were insufficient supporting documents for expenses claimed in income tax. 5. The Appellant stated that it is in possession of all relevant documents but that they were not presented to the Respondent in good time due to the Director’s prolonged illness. 6. The Appellant stated that the Director’s illness significantly affected the Appellant’s ability to attend to tax matters and respond effectively to the Respondent’s queries. 7. The Appellant stated that it is ready and willing to settle any tax liability that may be determined after reconciliation of the disputed assessments. 8. The Appellant stated that it seeks intervention to facilitate reconciliation and resolution of the tax dispute between the parties. 9. The Appellant submitted that the dispute arises from the Respondent’s decision to issue additional assessments based on alleged variances between sales as per IT2C gross turnover declarations, withholding VAT certificates, and VAT declarations, failure to subject certain expenses to withholding tax as required under Section 35(1) of the Income Tax Act, and lack of supporting documentation for claimed expenses. 1. The Appellant submitted that the Respondent raised additional assessments amounting to KSHS. 9,580,549.36 on 16th and 24th April 2025, following which the Appellant lodged an objection on 16th May 2025 against both VAT and Income Tax assessments. 2. The Appellant submitted that the Respondent, after review, issued an objection decision dated 10th July 2025 on grounds that the Appellant failed to declare exempt sales, did not provide supporting documentation such as ledgers, invoices and proof of payment, and that the assessments were raised in accordance with Section 31 of the Tax Procedures Act, 2015 following preliminary findings dated 24th February 2025 and a notice dated 19th March 2025. 3. The Appellant submitted that the Respondent erred by subjecting a variance of Kshs. 2,619,070 in the year 2023 to VAT at 16%, thereby contravening the provisions of the Second Schedule to the VAT Act, 2013 by taxing exempt supplies. 4. The Appellant submitted that the variance arose from the sale of raw unprocessed milk sold directly to community members at the farm gate, which constitutes exempt supplies. 5. The Appellant submitted that in contracts with the State Department for Housing and Urban Development in 2024, withholding tax at 3% was erroneously calculated on the gross amount instead of the net amount payable. 6. The Appellant submitted that it notified the Respondent of this error through a letter dated 25th April 2025, received on 28th April 2025, but no corrective action was taken and the Respondent proceeded to raise assessments based on the erroneous variance. 7. The Appellant submitted that being dissatisfied with the objection decision, it lodged a Notice of Appeal before the Tribunal on 29th July 2025. 8. The Appellant submitted that the VAT assessment for 2024 amounting to Kshs. 634,999.36 arose from erroneous reflection of income caused by a State Department applying 3% withholding tax on gross contract sums instead of net amounts. 9. The Appellant submitted that as a result, the iTax system reflected inflated income leading to a wrongful presumption of undeclared income and excessive assessment. 10. The Appellant submitted that the issue for determination is whether the Respondent erred in relying on erroneous third-party withholding data which overstated income contrary to principles of fair taxation. 11. The Appellant submitted that it executed contracts with the State Department and payments were subject to withholding tax under Section 35(3)(f) of the Income Tax Act but that the withholding was wrongly applied on gross values including VAT. 12. The Appellant submitted that the withholding tax certificates uploaded on iTax reflected grossed-up figures, thereby misrepresenting actual income received. 13. The Appellant submitted that under Section 3(2)(a)(i) of the Income Tax Act (Cap 470) tax is chargeable only on income accrued or received, and thus the Respondent is bound to assess tax based on actual income rather than overstated figures. 14. The Appellant submitted that reliance on erroneous third-party data is improper as affirmed in **Africa’s Talking Limited v Commissioner of Domestic** # Taxes (TAT Appeal No. E733 of 2023) and Rivastage Company Limited v **Commissioner of Domestic Taxes (TAT Appeal No. E493 of 2023)** where it was held that the Commissioner must verify data against actual transactions. 1. The Appellant submitted that the assessment is excessive and unlawful as it is based on inflated turnover contrary to actual payments supported by documentation and offends Section 56(1) of the Tax Procedures Act regarding burden of proof. 2. The Appellant submitted that it prays for a finding that withholding tax was erroneously computed on gross values and that the income reflected should be adjusted to actual income received. 3. The Appellant submitted that for VAT 2023 amounting to Kshs. 419,051.20, the issue arose from variance between VAT and Income Tax returns where VAT sales were Kshs. 10,701,763 and Income Tax income was Kshs. 13,320,833. 4. The Appellant submitted that the Respondent subjected the variance of Kshs. 2,619,070 to VAT at 16% resulting in an erroneous liability. 5. The Appellant submitted that the variance represented milk sales which are exempt from VAT under Paragraph 1, Part A of the First Schedule to the VAT Act, 2013. 6. The Appellant submitted that the issue for determination is whether the Respondent erred by subjecting exempt milk sales to VAT. 7. The Appellant submitted that milk sales are expressly exempt under Paragraph 1 of Part A of the First Schedule to the VAT Act, 2013 and therefore cannot form part of taxable supplies. 8. The Appellant submitted that the Respondent’s assessment contravenes Section 5(1) of the VAT Act which imposes VAT only on taxable supplies and misapplies Section 3(2)(a)(i) of the Income Tax Act by conflating taxable and exempt income. 9. The Appellant submitted that jurisprudence in **Pesapal Limited v Commissioner of Domestic Taxes (High Court of Kenya, 27 August 2025)** supports that exempt supplies must not be subjected to VAT. 10. The Appellant submitted that it prays for a finding that the variance arose from exempt milk sales and that the VAT liability of Kshs. 419,051.20 be withdrawn. 11. The Appellant submitted that for VAT 2021 amounting to Kshs. 3,565,592 the variance between withholding VAT and VAT returns showed under-declaration and the Appellant does not contest the liability and is ready to settle. 12. The Appellant submitted that for Income Tax 2021 and 2023, the issue arises from disallowance of business expenses due to alleged lack of supporting documentation. 13. The Appellant submitted that the Respondent disallowed the expenses on the basis that documents were not provided at the time of review leading to additional assessments. 14. The Appellant submitted that the documents existed but were not submitted in time due to illness which hindered effective engagement with the Respondent. 15. The Appellant submitted that the documents were subsequently availed during the Alternative Dispute Resolution process. 16. The Appellant submitted that the issue for determination is whether the Respondent erred in disallowing expenses despite documents being later provided. 17. The Appellant submitted that under Article 159(2)(d) of the Constitution, justice should be administered without undue regard to procedural technicalities and the Respondent’s position violates this principle. 18. The Appellant submitted that documents provided during ADR must be considered as held in **Vital Capital Fund v Commissioner of Domestic Taxes** # (TAT Appeal No. 532 of 2022) and Almasi Beverages Limited v **Commissioner of Domestic Taxes (TAT Appeal No. 33 of 2018)**. 1. The Appellant submitted that illness constituted reasonable cause under Section 89(7) of the Tax Procedures Act for delay in submission of documents and that the Respondent had a duty to reassess based on complete information. 2. The Appellant submitted that it prays for a finding that the expenses were legitimate and supported by documentation provided during ADR. 3. The Appellant submitted that the Respondent’s refusal to consider the documents contradicts statutory provisions and principles of fair administrative action and resulted in an unjust assessment. 4. The Appellant submitted that overall the Respondent failed to consider information provided and proceeded to raise additional assessments unjustly, and therefore prays that the appeal be allowed and the Appellant be exonerated from the tax liabilities. 5. The Appellant Prayed: 6. That the Appeal be allowed. 7. That the confirmation of the Commissioner be set aside and it be reviewed. # THE RESPONDENT’S CASE 1. In response to the Appeal, the Respondent filed its Statement of facts dated 17th September, 2025 and filed on even date together with written submissions dated 27th March 2026, and filed on even date and adopted on the 1st April 2026, the date of the hearing. 2. The Respondent Stated that the Appellant was selected for review following major compliance gaps including perpetual VAT credit filing from February 2021 to 2024, hanging VAT withholdings, huge expenses claimed in Income Tax returns, and services claimed without withholding tax being charged. 3. The Respondent Stated that the taxpayer was issued with additional notices of assessment on iTax on 16th and 24th April 2025. 4. The Respondent Stated that the Appellant objected to the assessments on 16th May 2025 and 23rd May 2025. 5. The Respondent stated that it engaged the Appellant between 29th May 2025, requesting additional documents and scheduling meetings on 11th June 2025 and 18th June 2025 respectively, but the Appellant failed to avail the requested documents. 6. The Respondent Stated that on 10th July 2025 it issued an objection decision deeming principal tax of Kshs. 9,580,549.36 due for payment. 7. The Respondent stated that being dissatisfied with the objection decision, the Appellant filed the present Appeal. 8. The Respondent stated that for the year 2023 the Appellant only provided an excel sheet showing milk production in 2024 without primary supporting documents such as invoices, delivery notes, or proof of payments, and that the claim of farming income and failure to declare exempt sales in VAT returns were unjustified. 9. The Respondent stated that the alleged variance for 2023 was attributed to timing differences but no explanation was provided on how the timing differences resulted in the variance. 10. The Respondent stated that for the year 2024 no primary documentation such as invoices, delivery notes, or payment evidence was submitted and no exempt sales were declared in the VAT returns. 11. The Respondent stated that the December 2024 assessment relates to VAT which is filed monthly and that the variance was identified by comparing sales reported in VAT returns to income declared in withholding tax returns, noting that the Appellant had already submitted monthly VAT self-assessments for 2024. 12. The Respondent stated that Section 17(3) of the Value Added Tax Act provides that documentation required includes an original tax invoice or certified copy, a customs entry and receipt for payment of tax, a customs receipt and certificate for auction goods, a credit note, or a debit note as applicable. 13. The Respondent stated that the law provides mandatory requirements for record keeping under Section 17(3) and Section 43 of the Value Added Tax Act and that it did not err in confirming VAT assessments due to lack of supporting documentation. 14. The Respondent stated that the Appellant alleged to have incurred expenses which were disallowed but failed to provide supporting documentation such as invoices, ledgers, or proof of payment. 15. The Respondent stated that it issued a preliminary findings letter dated 24th February 2025 followed by a notice of intention to raise additional assessment dated 19th March 2025 in compliance with Section 31(8) of the Tax Procedures Act. 16. The Respondent stated that it is empowered under Section 31(1)(b) and Section 29 of the Tax Procedures Act to amend assessments based on available information and to the best of its judgment. 17. The Respondent stated that it is further allowed under Section 24(2) of the Tax Procedures Act to assess a taxpayer’s liability using any information available and confirmed that it acted within the law using available data. 1. The Respondent stated that Section 51(3) of the Tax Procedures Act provides conditions for a valid notice of objection including precise grounds, payment of undisputed tax, and submission of all relevant documents. 2. The Respondent stated that the Appellant’s objection was rejected pursuant to Section 51(3) of the Tax Procedures Act due to failure to provide all relevant supporting documents. 3. The Respondent stated that the Appellant admitted in its Memorandum of Appeal to failure to produce documents, thereby supporting the Respondent’s position. 4. The Respondent stated that the Appellant failed to comply with Section 51(3) of the Tax Procedures Act, 2015 leaving no option but to reject the objection. 5. The Respondent stated that there is no evidence that it failed to review documents nor any evidence that the Appellant presented sufficient documentation. 6. The Respondent stated that it is guided by Section 56(1) of the Tax Procedures Act which places the burden of proof on the taxpayer to prove that a tax decision is incorrect. 7. The Respondent stated that it reserves the right to adduce further oral and documentary evidence at the hearing. 8. The Respondent stated that all actions were taken in accordance with Section 51 of the Tax Procedures Act, 2015, Section 17(3) and Section 43 of the Value Added Tax Act, and Sections 24, 29 and 31(1) of the Tax Procedures Act. 9. The Respondent stated that the Appellant was granted an opportunity to respond to audit findings and object to the assessment in line with due process. 10. The Respondent stated 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. 11. The Respondent submitted that the issues for determination are whether the additional assessments issued were justified and whether the objection decision was proper. 12. The Respondent submitted that it is not bound by the tax returns filed by the Appellant and is empowered to assess a taxpayer’s liability using any information available to it, as provided under Section 24(2) of the Tax Procedures Act, 2015. 13. The Respondent submitted that Section 31 of the Tax Procedures Act empowers it to amend or issue additional assessments based on available information and the Commissioner’s best judgment to ensure the correct tax liability is determined. 1. The Respondent submitted that in issuing the assessments, it relied on its best judgment in accordance with Section 31 of the Tax Procedures Act, a position affirmed in the case of **Commissioner of Domestic Taxes v Altech Stream (EA)** # Limited [2021] eKLR. 1. The Respondent submitted that the Appellant failed to explain or reconcile the discrepancies identified, which necessitated the issuance of additional assessments. 2. The Respondent submitted that for the year 2023, the Appellant only provided an excel sheet indicating milk production for 2024 without primary supporting documents such as invoices, delivery notes, or proof of payment, and further failed to declare exempt sales in the VAT returns. 3. The Respondent submitted that although the Appellant alleged that the variance arose from timing differences, no explanation was provided to demonstrate how such timing differences resulted in the discrepancies. 4. The Respondent submitted that for the year 2024, the Appellant similarly failed to provide primary documentation such as invoices, delivery notes, or payment evidence, and did not declare exempt sales in its VAT returns. 5. The Respondent submitted that the December 2024 assessment relates to VAT, which is filed monthly, and that the variance was identified by comparing sales declared in VAT returns against income declared in withholding tax returns. 6. The Respondent submitted that Section 17(2) of the VAT Act provides that input tax is only allowable where the taxpayer holds the requisite documentation or where the supplier has declared the sales. 7. The Respondent submitted that the proper interpretation of Section 17(2) is that compliance with either condition is sufficient, as indicated by the use of the conjunction “or.” 8. The Respondent submitted that the Appellant’s objection was rejected because it failed to provide adequate documentation to support its grounds of objection. 9. The Respondent submitted that the burden of proof lies with the taxpayer, as affirmed in **Mulherin v Commissioner of Taxation [2013] FCAFC 115**, where it was held that the taxpayer must prove that an assessment is excessive. 10. The Respondent submitted that the Tribunal in **Intime Stone Age Limited v Commissioner of Domestic Taxes (Appeal 714 of 2022) [2024] KETAT 44** **(KLR)** emphasized the necessity for taxpayers to provide specific and relevant documentation in support of their objections. 1. The Respondent submitted that it had requested the Appellant to provide specific documents for review but the Appellant failed to avail them. 2. The Respondent submitted that due to the Appellant’s failure to provide documentation, it was justified in concluding that the objection lacked merit, as # supported by Osho Drapers Limited v Commissioner of Domestic Taxes **[2022] eKLR**, which affirms the Commissioner’s power to request additional information. 1. The Respondent submitted that the Appellant has a statutory duty to maintain records for at least five years in accordance with Section 23 of the Tax Procedures Act. 2. The Respondent submitted that Sections 23 and 59 of the Tax Procedures Act impose an obligation on the taxpayer to keep and produce records when required by the Commissioner. 3. The Respondent submitted that under Section 51(3) of the Tax Procedures Act, an objection is only valid if all relevant supporting documents are submitted. 4. The Respondent submitted that the Tribunal in **Boleyn International Limited v Commissioner of Investigations & Enforcement (TAT No. 55 of 2019)** held that failure to provide documents renders an objection invalid. 5. The Respondent submitted that in **Rongai Tiles and Sanitary Ware Limited v Commissioner of Domestic Taxes (TAT No. 163 of 2017)**, the Tribunal affirmed that compliance with Section 51(3) is mandatory for a valid objection. 1. The Respondent submitted that it made several follow-up communications requesting documentation from the Appellant, but the Appellant failed to comply. 2. The Respondent submitted that Section 56(1) of the Tax Procedures Act places the burden of proof on the taxpayer to demonstrate that a tax decision is incorrect. 3. The Respondent submitted that Section 30 of the Tax Appeals Tribunal Act similarly places the burden on the Appellant to prove that an assessment is excessive or that the tax decision should not have been made. 4. The Respondent submitted that the Appellant has failed to discharge this burden of proof due to failure to provide supporting documentation. 5. The Respondent submitted that the Appellant cannot allege that the Respondent disregarded documents when none were provided during the objection process. 1. The Respondent submitted that it therefore prays that the appeal be dismissed in its entirety, that the tax assessments as confirmed in the objection decision be upheld, and that the Appellant be ordered to pay the costs of the appeal. 2. The Respondent Prayed that the Tribunal 3. Dismisses the appeal in its entirety, 4. Upholds the tax assessment as confirmed, and 5. Orders the Appellant to pay the costs of the appeal. # ISSUE FOR DETERMINATION 1. The Tribunal having carefully evaluated parties’ pleadings it is of the respectful view that the issue that call for its determination is as hereunder: # Whether the Appellant discharged its burden of proving that the Objection **decision dated 10th July 2025 was incorrect** **ANALYSIS AND FINDINGS** 1. Having identified the issue for determination the Tribunal proceeds to analyse the same as hereunder; # Whether the Appellant discharged its burden of proving that the Objection decision dated 10th July 2025 was incorrect 1. The Tribunal has reviewed the context of the dispute that arose from a tax compliance review undertaken by the Respondent which culminated in the issuance of additional assessments on 16th and 24th April 2025 after identifying discrepancies in the Appellant’s VAT and Income Tax declarations, including variances between declared sales, withholding tax data, and unsupported expense claims. 2. The Respondent had earlier issued a preliminary findings letter on 24th February 2025 and a notice of intention to raise additional assessments on 19th March 2025. Aggrieved by the assessments, the Appellant lodged an objection on 16th May 2025, which was supplemented by further correspondence on 23rd and 26th May 2025. Between 29th May 2025 and 18th June 2025, the Respondent engaged the Appellant and requested supporting documentation to substantiate its position; however, the Appellant failed to avail the requisite documents within the stipulated time. 1. Consequently, the Respondent issued an Objection decision on 10th July 2025 confirming the assessments on grounds of insufficient documentation and unresolved discrepancies. Dissatisfied with the Objection decision, the Appellant lodged a Notice of Appeal on 29th July 2025, contending that the assessments were excessive, based on erroneous data including misapplied withholding tax and VAT treatment of exempt supplies, and that supporting documents were neither available nor later provided. 2. The Respondent, on the other hand, maintains that the assessments were properly raised in accordance with the law and based on the best judgment principle, and that the Appellant failed to discharge the burden of proof by not providing adequate documentation at the objection stage. Against this factual and procedural background, the Tribunal is called upon to determine whether the Appellant discharged the burden of proving that the Objection Decision dated 10th July 2025 was incorrect. 3. The Tribunal has carefully evaluated the pleadings, documentation and submissions placed before it by the parties and notes that the dispute herein revolves around additional VAT and Income Tax assessments raised against the Appellant following a review undertaken by the Respondent. 4. The Respondent’s position was that the Appellant failed to reconcile variances between VAT declarations, withholding VAT data and Income Tax returns, and further failed to provide supporting documentation for the expenses claimed in its Income Tax returns. 5. The Appellant on the other hand maintained that the variances arose from exempt farming income, timing differences and errors in withholding tax computations by third parties, while the disallowed expenses were genuine business expenses whose supporting documentation was allegedly not availed in time owing to illness. 6. The Tribunal observes that the burden placed upon a taxpayer challenging an assessment or Objection decision is not a light or speculative burden. The taxpayer is required to place before the Tribunal cogent, verifiable and contemporaneous documentary evidence demonstrating with precision that the impugned assessment is excessive, erroneous or unlawful. Mere allegations, generalized explanations, assertions, or unsubstantiated claims are insufficient to displace an assessment lawfully issued by the Commissioner. 7. **Section 56(1) of the Tax Procedures Act, 2015** provides that: “In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.” Further, **Section 30 of the Tax Appeals Tribunal Act, 2013** provides that: “In a proceeding before the Tribunal, the appellant has the burden of proving—(a) where an appeal relates to an assessment, that the assessment is excessive; or(b) in any other case, that the tax decision should not have been made or should have been made differently.” 1. The import of the foregoing provisions is that once the Commissioner issues an assessment or objection decision, the same is presumed valid unless and until the taxpayer demonstrates otherwise through credible evidence. The Tribunal therefore reiterates that the legal burden never shifts from the taxpayer. 2. The Tribunal is guided by the holding in ***Mulherin v Commissioner of Taxation [2013] FCAFC 115*** where the Court stated that: “The taxpayer bears the burden of proving not merely that the assessment is wrong, but also what the correct assessment ought to have been.” 1. The Tribunal is further persuaded by the holding in ***Commissioner of Domestic Taxes v Altech Stream (EA) Limited [2021] eKLR****,* where the Court affirmed the Commissioner’s authority to issue assessments based on best judgment where adequate records are not provided, and observed that: “The Commissioner is entitled to rely on available information where a taxpayer fails to provide sufficient records and explanations.” 1. In the instant Appeal, the Appellant contended that the variances in VAT arose from exempt milk sales and timing differences. However, despite making such assertions, the Appellant admittedly failed to provide primary source documents to substantiate the alleged exempt supplies. 2. The Respondent consistently maintained that the Appellant only furnished excel sheets allegedly showing milk production without invoices, delivery notes, customer records, proof of payments, stock movement records or any verifiable documentary trail demonstrating actual exempt sales. 3. The Tribunal notes that exempt sales cannot merely be alleged. They must be demonstrated through documentary evidence capable of verification. A taxpayer alleging that certain supplies are exempt bears the evidentiary obligation of specifically identifying those supplies and producing supporting records linking the alleged exempt income to the returns filed. 4. Indeed, the Appellant itself acknowledged in its Memorandum of Appeal that there was failure to produce complete documentation due to illness. While the Tribunal sympathizes with the circumstances alluded to by the Appellant, illness alone cannot extinguish statutory obligations imposed upon taxpayers to maintain and produce records. The Tribunal notes that tax compliance obligations attach to the corporate entity and not solely to one individual director. 1. **Section 23(1) of the Tax Procedures Act, 2015** provides that: “A person shall maintain any document required under a tax law, in either paper or electronic form, for a period of five years after the end of the reporting period to which it relates.” Further, **Section 59(1) of the Tax Procedures Act, 2015** empowers the Commissioner to require production of records for purposes of verifying tax liability. 1. The Tribunal therefore finds that the Appellant was under a statutory duty to maintain and avail proper documentation once called upon by the Respondent during the review and objection process. 2. The Tribunal further notes that the Respondent specifically requested documents through engagements conducted on 29th May 2025 and meetings scheduled on 11th June 2025 and 18th June 2025, yet the Appellant failed to avail the requisite records. The Appellant did not place before the Tribunal evidence demonstrating that the alleged documents were in fact submitted to the Respondent during the objection stage and ignored. 3. The Tribunal is persuaded by the holding in ***Intime Stone Age Limited v Commissioner of Domestic Taxes (Appeal 714 of 2022) [2024] KETAT 44 (KLR)****,* where the Tribunal emphasized that: “The burden of proof is only discharged where the taxpayer provides specific, verifiable and relevant documentation supporting the transactions in dispute.” 1. Similarly, in ***Boleyn International Limited v Commissioner of Investigations & Enforcement (TAT No. 55 of 2019)****,* the Tribunal held that: “Failure to provide supporting documents renders an objection invalid for purposes of Section 51(3) of the Tax Procedures Act.” 1. The Tribunal further associates itself with the holding in ***Rongai Tiles and Sanitary Ware Limited v Commissioner of Domestic Taxes (TAT No. 163 of 2017)****,* where it was observed that: “Compliance with Section 51(3) of the Tax Procedures Act is mandatory and not optional.” 1. The Tribunal notes that the Appellant’s challenge to the assessments was largely founded upon generalized assertions that the assessments were erroneous, that some income was exempt, that there were timing differences, and that expenses were genuine. However, such assertions were not matched with corresponding documentary evidence sufficient to rebut the Respondent’s findings. 1. For instance, regarding the alleged timing differences for the year 2021, the Appellant failed to demonstrate how the timing differences arose, the accounting entries affected, the relevant tax periods involved, or the reconciliation between the VAT returns and withholding VAT declarations. No schedules, reconciliations, invoices or transactional records were availed to substantiate the explanation. 2. Similarly, regarding the alleged erroneous withholding tax computation by the State Department in 2024, the Appellant did not produce sufficient documentary evidence demonstrating the exact contract values, VAT-exclusive sums, corrected withholding positions, reconciled income figures, or confirmation from the withholding agent rectifying the alleged error. 3. The Tribunal observes that where a taxpayer alleges that third-party data is erroneous, the taxpayer bears the obligation of placing before the Tribunal comprehensive reconciliations and documentary proof disproving the data relied upon by the Commissioner. Mere allegations that the withholding agent erred are insufficient. 4. With respect to the Income Tax assessments, the Appellant argued that the expenses were wholly and exclusively incurred in the production of income within the meaning of Section 15 of the Income Tax Act. However, no invoices, ledgers, payment vouchers, supplier statements, contracts or proof of payment were placed before the Tribunal to substantiate the expenses allegedly incurred. 5. The Tribunal notes that deductibility of expenses is a question of proof and not mere assertion. A taxpayer seeking deduction of expenses must demonstrate both the occurrence of the expense and its nexus to income generation. 6. The Tribunal is persuaded by the decision in ***Osho Drapers Limited v Commissioner of Domestic Taxes [2022] eKLR****,* where the Court affirmed the Commissioner’s power to demand supporting documentation and upheld assessments where taxpayers failed to substantiate claims through proper records. 7. The Tribunal further notes that although the Appellant alleged that documents were later availed during ADR, no evidence was placed before the Tribunal showing the actual documents allegedly submitted, the dates of submission, acknowledgment by the Respondent, or the extent to which the documents addressed the specific discrepancies identified during the review. 8. The Tribunal reiterates that the threshold required under **Section 56(1) of the Tax Procedures Act** and **Section 30 of the Tax Appeals Tribunal Act** requires more than raising doubt against the assessment. The taxpayer must positively and affirmatively prove the assessment to be incorrect through documentary evidence and detailed reconciliations. 1. The Tribunal therefore finds that the Appellant failed to discharge the burden placed upon it for numerous reasons including but not limited to: 2. Failure to provide invoices, delivery notes and proof of payments supporting the alleged exempt milk sales. 3. Failure to declare exempt sales in the VAT returns despite alleging existence of exempt supplies. 4. Failure to provide documentary reconciliation demonstrating the alleged timing differences for the year 2021. 5. Failure to provide sufficient documentation substantiating the alleged withholding tax computation error by the State Department in 2024. 6. Failure to produce supporting documentation such as ledgers, invoices, and payment vouchers save for bank statements for the expenses claimed in income tax returns. 7. Failure to demonstrate that the alleged documents were submitted to the Respondent during the objection stage and improperly disregarded. 8. Admission by the Appellant itself that complete documentation had not been produced. 9. Failure to rebut the Respondent’s findings with precise, verifiable and contemporaneous records. 10. In the circumstances, the Tribunal is satisfied that the Appellant did not meet the evidentiary threshold required under the law and therefore it failed to proof that the objection decision was incorrect. # FINAL DECISION 1. The upshot to the foregoing is that the Tribunal finds and holds that the Appeal fails and makes the following Orders: 1. The Appeal be and is hereby dismissed. 2. The Objection Decision dated 10th July 2025 be and is hereby upheld 3. Each party to bear its own cost. 2. It is so Ordered. # DATED and DELIVERED at NAIROBI on this 19TH DAY of MAY 2026. SIGNED BY/FOR: HON. ROBERT MUGAMBI MUTUMA (CHAIRPERSON) HON. EUNICE NJERI NGANGA HON. BONIFACE KIBIY TERER HON. BILLY GRAHAM OKUMU MIJUNGU **★ TH E JUDICIAR Y O F KENY A ★** **HON. ROBERT MUGAMBI MUTUMA (CHAIRPERSON) HON. EUNICE NJERI NGANGA HON. BONIFACE KIBIY TERER HON. BILLY GRAHAM OKUMU MIJUNGU** Tax Appeals Tribunal Tribunal Date: 2026-05-21 17:55:09