'
1. The Appellant, the COMMISSIONER OF INVESTIGATIONS & ENFORCEMENT is a principal officer appointed under section 13 of the Kenya Revenue Authority Act. The Kenya Revenue Authority (KRA) 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, for purposes of assessing, collecting and accounting for all tax revenues in accordance with those laws.
2. DR. AL AMIN ADAN the Respondent is an individual taxpayer whose main occupation is working as a medical administrator at the Isiolo County Government.
3. Through a letter dated 19/08/2019, the Appellant issued a notice of intention to verify the Respondent’s tax declarations covering the period -January 2016 to December 2019.Consequently, an assessment amounting to kshs 13, 062,406.00/= was issued to the Appellant through a letter dated 07/12/2020. The assessment covered the period January 2015 to December 2019.
4. On 17/03/2022, the Appellant lodged an objection to the assessment and through a letter dated 11/08/2022, the Respondent requested for further documentation which were eventually furnished on 09/09/2022. The Appellant issued an objection decision on 28/09/2022 whereby it vacated some of the claims and determined that the Respondent owed taxes amounting to kshs 2,33,648.89/=.
5. Aggrieved by that decision, the Appellant appealed to the Tax Appeals Tribunal.
Appeal before the Tax Appeals Tribunal
6. The Respondent (Appellant in the Tribunal) raised the following grounds;
a) The Respondent has not furnished the Appellant with the source of the stated underdeclared income for the years 2015 kshs 1,420,951.00, 2016 kshs 2,000,009.00, 2017 kshs 3,042,147.00, 2018 kshs 5,044,710.00 and 2019 kshs 1,554,589.00.
b) The Appellant has on numerous occasions requested for the evidence that he has any other income other than what has been declared in the Appellant’s annual income tax.
c) The Respondent has not issued evidence of other sources of income by the tax payer.
d) The Respondent erroneously included financial year(s) 2015 ad 2016 in their assessment despite the same being outside the 5-year threshold as provided under section 31 of the Tax Procedures Act, 2015.
e) The Respondent omitted several entries in the banking analysis which resulted in an overstatement of the expected income.
f) The Respondent’s assessment is in contradiction of section 5 of the Income Tax Act as the Respondent issued assessments on amounts received as reimbursement of amounts expended by the taxpayer in service of Government duties out of office.
g) The Respondent’s assessment and subsequent objection decision were issued in breach of the Appellant’s right to legitimate expectation and fair administrative action.
7. The Tribunal found merit in the appeal and gave the following orders;
a) The Appeal be and is hereby allowed.
b) The Respondent’s objection decision dated 28th September 2022 be and is hereby set aside
c) Each party to bear its own costs.
8. Aggrieved by that judgment, the Appellant herein appealed to this court, via a Memorandum of Appeal dated 12/07/2024, and raised the following grounds;
a) That the honorable Tribunal erred in law and fact by holding that the Appellant’s decision was not valid.
b) That the honorable Tribunal erred in law by failing to consider the Appellant’s case on merit.
c) That the honorable Tribunal misdirected itself on both facts and law and thereby arrived at wrong, erroneous and absurd findings/decision.
9. Directions were given that the appeal be canvassed through written submissions and the only submissions on record are for the Appellant. On 19/06/2025, the court proceeded with highlighting of submissions by the Appellant after satisfying itself that the Respondent had been duly served but had not participated in the appeal.
Appellant’s Submissions
10. The Appellant identified the issues for determination to be;
a) Whether the objection decision was issued out of time
b) Whether the assessments were correctly raised
11. As to whether the objection decision was raised out of time, it was submitted that the Finance Act 2022 introduced an amendment to section 51 (11) of the Tax Procedures Act which requires the Appellant to issue an objection decision within sixty (60) days from the date of receipt of a valid objection and receipt of further information after receipt of the objection. Reliance was placed on Samuel Kamau Macharia & Anor -vs- Kenya Commercial Bank Limited & 2 others [2012] eKLR where the Supreme Court of Kenya stated;
“(61) As for non-criminal legislation, the general rule is that all statutes other than those which are merely declaratory or which relate only to matters of procedure or evidence are prima facie prospective, and retrospective effect is not to be given to them unless, by express words or necessary implication, it appears that this was the intention of the legislature.”
12. It was submitted that upon receipt of the last document on 09/09/2022, the Appellant issued its decision on 28/09/2022 within the timelines as provided by law. It was contended that this was not an issue in the initial Memorandum of Appeal and the tax payer sought for leave to add additional documents and amend his memorandum of facts where this ground was raised as an afterthought and with no good faith.
13. It was submitted that the law applicable as at the date of issuing the objection decision is the law that required the Appellant to issue the objection decision within sixty (60) days of receipt of notice of objection and/or further information. Consequently, it was contended that the sixty (60) days within which the decision ought to have been issued started running on 09/09/2022 when the Appellant received the further information from the Respondent. It was submitted that the Appellant had until 07/11/2022 to issue the objection decision.
14. As to whether the assessments were correctly raised, it was submitted that the failure to object as required means that the taxes as demanded cannot be amended. Reliance was placed on Mohamed Ali t/a Top Model Apparels & 44 others -vs- Kenya Revenue Authority [2020] eKLR where the court (Korir J) found that;
“48. Section 31(4) of the TPA provides the circumstances under which the Commissioner may amend a taxpayer’s tax assessment as follows……
55. A perusal of the pleadings disclose that the Respondent called in the petitioners and confronted them with the allegations that they were involved in a tax evasion scheme. Mr. Mohammed Hussein Ali in the affidavit sworn on 15th October, 2018 in support of the amended petition does indeed confirm that he was summoned several times by the Respondent’s officers and confronted with allegations of tax evasion and given the opportunity to provide documents to prove otherwise. Although the director of the 1st to 17th petitioners view the summonses as harassment and intimidation, the evidence gleaned from the pleadings show that the petitioners were accorded an opportunity to dispute the allegations of tax fraud.”
15. It was submitted that the Appellant bent over backwards to accommodate and reach the tax payer who remained difficult and unresponsive through the process. That, the tax payer was so reluctant to provide all documents and also sought to introduce further documents at the Appeal stage when amending its pleadings. Reliance was placed on Oliver Merrick Fowler & another -vs- Kenya Revenue Authority [2022] eKLR where the court stated;
“…The very use of the word ‘judgement’ makes it clear that the commissioners are required to exercise their power in such a way that they make a value judgement on the material which is before them… What the words ‘best of their judgement’ envisage, in my view is that the commissioners will fairly consider all material placed before them, and on that material come to decision which is one which is reasonable and not arbitrary as to the amount of tax which is due.”
16. It was submitted that the Appellant is mandated to use the available information and its best judgment to issue an additional assessment where income has been under declared or taxes not withheld or paid to ensure that the correct amount of tax has been paid. That, the Appellant reviewed the information available and disallowed the Respondents invalid objection and issued an additional assessment which was objected to.
17. It was submitted that the Tribunal erred by failing to consider that the last document in this case was received on 09/09/2022 hence the objection decision was within timelines. That this Appeal should therefore be allowed and the matter be referred back to the Tax Appeals Tribunal for hearing and determination on merit.
Duty of Court
18. Section 56(2) of the Tax Procedures Act provides that an appeal to the High Court from the decision of the Tax Appeals Tribunal or to the Court of Appeal is on a question of law only. In John Munuve Mati -vs- Returning Officer Mwingi North Constituency & 2 others [2018] eKLR, the Court of Appeal summarized what amounts to “matters of law” as follows;
“The interpretation or construction of the Constitution, statute or regulations made thereunder or their application to the sets of facts established by the trial Court. As far as facts are concerned, our engagement with them is limited to background and context and to satisfy ourselves, when the issue is raised, whether the conclusions of the trial judge are based on the evidence on record or whether they are so perverse that no reasonable tribunal would have arrived at them. We cannot be drawn into considerations of the credibility of witnesses or which witnesses are more believable than others; by law that is the province of the trial court.”
19. Having looked at the grounds of appeal, statement of facts, submissions and entire record, it is my considered view that the only issue for determination is: whether the objection decision was made out of time.
Analysis & Determination
Whether the objection decision was made out of time
20. The Objection is dated 17/03/2022 and admittedly received by the Appellant on 29/03/2022.
21. The applicable law at the material time was section 51(11) of the Tax Procedures Act (TPA) as amended by the Finance Act No. 23 of 2019 which came into operation on 07/11/2019. The amendment provided that;
“32. Section 51 of the Tax Procedures Act, 2015 is amended by deleting sub section (11) and substituting therefor the following new sub section;
(11) The Commissioner shall make the objection decision within sixty days from the date of receipt of;
a) The notice of objection, or
b) Any further information the Commissioner may require from the tax payer.
Failure to which the objection shall be deemed to be allowed.”
22. The determination of this appeal depends on the interpretation of the above provision. Interpretation of tax statutes must be done strictly leaving no room for intendment, implication or presumption . See Stanbic Bank Kenya Limited -vs- Kenya Revenue Authority (2009) eKLR. Similarly, in Commissioner of Investigations and Enforcement -vs- Libya Oil Kenya Ltd (Income Tax Appeal E104 of 2021) [2024] KEHC 3624 (KLR) (Commercial and Tax) (15 April 2024), the court (Mong’are J) stated that; “It is trite that Tax Statutes are to be strictly interpreted and there is no room for imputing that which has not been legislated into statute by Parliament.”
23. In this matter , the Objection decision indicates that the Appellant received the objection on 29/03/2022 and received additional support documents on 09/09/2022. The Appellant’s statement of facts indicates that the Appellant sought further information from the tax payer via a letter dated 11/08/2022. A strict application of section 51(11) (b) of the TPA (supra) means that the Commissioner received the further information, which he required from the taxpayer, on 09/09/2022 and as such, the sixty-day period started running from that date. It therefore means that the Commissioner had up to on or before 09/11/2022 to issue the objection decision. Consequently, the objection decision of 28/09/2022 was issued within time and the honorable Tribunal erred by holding otherwise.
24. It is noteworthy that Honorable Tribunal quoted the proper applicable law at paragraph 35 of the judgment but it did not interrogate sub section 51(11)(b) which applies to this case.
25. The Honorable Tribunal did not delve into the substance of the Respondent’s appeal after making a finding that the objection decision was issued out of time.
26. In the interests of justice, I remit the appeal back to the Tribunal for hearing and determination of the appeal on its merits.
27. Orders accordingly
Dated signed and delivered via CTS this 25th October 2025
Mumbua T Matheka
Judge
'
1. The Appellant, the COMMISSIONER OF INVESTIGATIONS & ENFORCEMENT is a principal officer appointed under section 13 of the Kenya Revenue Authority Act. The Kenya Revenue Authority (KRA) 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, for purposes of assessing, collecting and accounting for all tax revenues in accordance with those laws.
2. DR. AL AMIN ADAN the Respondent is an individual taxpayer whose main occupation is working as a medical administrator at the Isiolo County Government.
3. Through a letter dated 19/08/2019, the Appellant issued a notice of intention to verify the Respondent’s tax declarations covering the period -January 2016 to December 2019.Consequently, an assessment amounting to kshs 13, 062,406.00/= was issued to the Appellant through a letter dated 07/12/2020. The assessment covered the period January 2015 to December 2019.
4. On 17/03/2022, the Appellant lodged an objection to the assessment and through a letter dated 11/08/2022, the Respondent requested for further documentation which were eventually furnished on 09/09/2022. The Appellant issued an objection decision on 28/09/2022 whereby it vacated some of the claims and determined that the Respondent owed taxes amounting to kshs 2,33,648.89/=.
5. Aggrieved by that decision, the Appellant appealed to the Tax Appeals Tribunal.
Appeal before the Tax Appeals Tribunal
6. The Respondent (Appellant in the Tribunal) raised the following grounds;
a) The Respondent has not furnished the Appellant with the source of the stated underdeclared income for the years 2015 kshs 1,420,951.00, 2016 kshs 2,000,009.00, 2017 kshs 3,042,147.00, 2018 kshs 5,044,710.00 and 2019 kshs 1,554,589.00.
b) The Appellant has on numerous occasions requested for the evidence that he has any other income other than what has been declared in the Appellant’s annual income tax.
c) The Respondent has not issued evidence of other sources of income by the tax payer.
d) The Respondent erroneously included financial year(s) 2015 ad 2016 in their assessment despite the same being outside the 5-year threshold as provided under section 31 of the Tax Procedures Act, 2015.
e) The Respondent omitted several entries in the banking analysis which resulted in an overstatement of the expected income.
f) The Respondent’s assessment is in contradiction of section 5 of the Income Tax Act as the Respondent issued assessments on amounts received as reimbursement of amounts expended by the taxpayer in service of Government duties out of office.
g) The Respondent’s assessment and subsequent objection decision were issued in breach of the Appellant’s right to legitimate expectation and fair administrative action.
7. The Tribunal found merit in the appeal and gave the following orders;
a) The Appeal be and is hereby allowed.
b) The Respondent’s objection decision dated 28th September 2022 be and is hereby set aside
c) Each party to bear its own costs.
8. Aggrieved by that judgment, the Appellant herein appealed to this court, via a Memorandum of Appeal dated 12/07/2024, and raised the following grounds;
a) That the honorable Tribunal erred in law and fact by holding that the Appellant’s decision was not valid.
b) That the honorable Tribunal erred in law by failing to consider the Appellant’s case on merit.
c) That the honorable Tribunal misdirected itself on both facts and law and thereby arrived at wrong, erroneous and absurd findings/decision.
9. Directions were given that the appeal be canvassed through written submissions and the only submissions on record are for the Appellant. On 19/06/2025, the court proceeded with highlighting of submissions by the Appellant after satisfying itself that the Respondent had been duly served but had not participated in the appeal.
Appellant’s Submissions
10. The Appellant identified the issues for determination to be;
a) Whether the objection decision was issued out of time
b) Whether the assessments were correctly raised
11. As to whether the objection decision was raised out of time, it was submitted that the Finance Act 2022 introduced an amendment to section 51 (11) of the Tax Procedures Act which requires the Appellant to issue an objection decision within sixty (60) days from the date of receipt of a valid objection and receipt of further information after receipt of the objection. Reliance was placed on Samuel Kamau Macharia & Anor -vs- Kenya Commercial Bank Limited & 2 others [2012] eKLR where the Supreme Court of Kenya stated;
“(61) As for non-criminal legislation, the general rule is that all statutes other than those which are merely declaratory or which relate only to matters of procedure or evidence are prima facie prospective, and retrospective effect is not to be given to them unless, by express words or necessary implication, it appears that this was the intention of the legislature.”
12. It was submitted that upon receipt of the last document on 09/09/2022, the Appellant issued its decision on 28/09/2022 within the timelines as provided by law. It was contended that this was not an issue in the initial Memorandum of Appeal and the tax payer sought for leave to add additional documents and amend his memorandum of facts where this ground was raised as an afterthought and with no good faith.
13. It was submitted that the law applicable as at the date of issuing the objection decision is the law that required the Appellant to issue the objection decision within sixty (60) days of receipt of notice of objection and/or further information. Consequently, it was contended that the sixty (60) days within which the decision ought to have been issued started running on 09/09/2022 when the Appellant received the further information from the Respondent. It was submitted that the Appellant had until 07/11/2022 to issue the objection decision.
14. As to whether the assessments were correctly raised, it was submitted that the failure to object as required means that the taxes as demanded cannot be amended. Reliance was placed on Mohamed Ali t/a Top Model Apparels & 44 others -vs- Kenya Revenue Authority [2020] eKLR where the court (Korir J) found that;
“48. Section 31(4) of the TPA provides the circumstances under which the Commissioner may amend a taxpayer’s tax assessment as follows……
55. A perusal of the pleadings disclose that the Respondent called in the petitioners and confronted them with the allegations that they were involved in a tax evasion scheme. Mr. Mohammed Hussein Ali in the affidavit sworn on 15th October, 2018 in support of the amended petition does indeed confirm that he was summoned several times by the Respondent’s officers and confronted with allegations of tax evasion and given the opportunity to provide documents to prove otherwise. Although the director of the 1st to 17th petitioners view the summonses as harassment and intimidation, the evidence gleaned from the pleadings show that the petitioners were accorded an opportunity to dispute the allegations of tax fraud.”
15. It was submitted that the Appellant bent over backwards to accommodate and reach the tax payer who remained difficult and unresponsive through the process. That, the tax payer was so reluctant to provide all documents and also sought to introduce further documents at the Appeal stage when amending its pleadings. Reliance was placed on Oliver Merrick Fowler & another -vs- Kenya Revenue Authority [2022] eKLR where the court stated;
“…The very use of the word ‘judgement’ makes it clear that the commissioners are required to exercise their power in such a way that they make a value judgement on the material which is before them… What the words ‘best of their judgement’ envisage, in my view is that the commissioners will fairly consider all material placed before them, and on that material come to decision which is one which is reasonable and not arbitrary as to the amount of tax which is due.”
16. It was submitted that the Appellant is mandated to use the available information and its best judgment to issue an additional assessment where income has been under declared or taxes not withheld or paid to ensure that the correct amount of tax has been paid. That, the Appellant reviewed the information available and disallowed the Respondents invalid objection and issued an additional assessment which was objected to.
17. It was submitted that the Tribunal erred by failing to consider that the last document in this case was received on 09/09/2022 hence the objection decision was within timelines. That this Appeal should therefore be allowed and the matter be referred back to the Tax Appeals Tribunal for hearing and determination on merit.
Duty of Court
18. Section 56(2) of the Tax Procedures Act provides that an appeal to the High Court from the decision of the Tax Appeals Tribunal or to the Court of Appeal is on a question of law only. In John Munuve Mati -vs- Returning Officer Mwingi North Constituency & 2 others [2018] eKLR, the Court of Appeal summarized what amounts to “matters of law” as follows;
“The interpretation or construction of the Constitution, statute or regulations made thereunder or their application to the sets of facts established by the trial Court. As far as facts are concerned, our engagement with them is limited to background and context and to satisfy ourselves, when the issue is raised, whether the conclusions of the trial judge are based on the evidence on record or whether they are so perverse that no reasonable tribunal would have arrived at them. We cannot be drawn into considerations of the credibility of witnesses or which witnesses are more believable than others; by law that is the province of the trial court.”
19. Having looked at the grounds of appeal, statement of facts, submissions and entire record, it is my considered view that the only issue for determination is: whether the objection decision was made out of time.
Analysis & Determination
Whether the objection decision was made out of time
20. The Objection is dated 17/03/2022 and admittedly received by the Appellant on 29/03/2022.
21. The applicable law at the material time was section 51(11) of the Tax Procedures Act (TPA) as amended by the Finance Act No. 23 of 2019 which came into operation on 07/11/2019. The amendment provided that;
“32. Section 51 of the Tax Procedures Act, 2015 is amended by deleting sub section (11) and substituting therefor the following new sub section;
(11) The Commissioner shall make the objection decision within sixty days from the date of receipt of;
a) The notice of objection, or
b) Any further information the Commissioner may require from the tax payer.
Failure to which the objection shall be deemed to be allowed.”
22. The determination of this appeal depends on the interpretation of the above provision. Interpretation of tax statutes must be done strictly leaving no room for intendment, implication or presumption . See Stanbic Bank Kenya Limited -vs- Kenya Revenue Authority (2009) eKLR. Similarly, in Commissioner of Investigations and Enforcement -vs- Libya Oil Kenya Ltd (Income Tax Appeal E104 of 2021) [2024] KEHC 3624 (KLR) (Commercial and Tax) (15 April 2024), the court (Mong’are J) stated that; “It is trite that Tax Statutes are to be strictly interpreted and there is no room for imputing that which has not been legislated into statute by Parliament.”
23. In this matter , the Objection decision indicates that the Appellant received the objection on 29/03/2022 and received additional support documents on 09/09/2022. The Appellant’s statement of facts indicates that the Appellant sought further information from the tax payer via a letter dated 11/08/2022. A strict application of section 51(11) (b) of the TPA (supra) means that the Commissioner received the further information, which he required from the taxpayer, on 09/09/2022 and as such, the sixty-day period started running from that date. It therefore means that the Commissioner had up to on or before 09/11/2022 to issue the objection decision. Consequently, the objection decision of 28/09/2022 was issued within time and the honorable Tribunal erred by holding otherwise.
24. It is noteworthy that Honorable Tribunal quoted the proper applicable law at paragraph 35 of the judgment but it did not interrogate sub section 51(11)(b) which applies to this case.
25. The Honorable Tribunal did not delve into the substance of the Respondent’s appeal after making a finding that the objection decision was issued out of time.
26. In the interests of justice, I remit the appeal back to the Tribunal for hearing and determination of the appeal on its merits.
27. Orders accordingly
Dated signed and delivered via CTS this 25th October 2025
Mumbua T Matheka
Judge
'