Oluoch v Commissioner of Legal Services and Board Coordination

(Appeal 104 of 2022) [2023] KETAT 325 (KLR) (2 June 2023) (Judgment)
Neutral citation: [2023] KETAT 325 (KLR)

REPUBLIC OF KENYA
IN THE TAX APPEAL TRIBUNAL
APPEAL 104 OF 2022
E.N WAFULA, CHAIR, CYNTHIA B. MAYAKA, GRACE
MUKUHA, JEPHTHAH NJAGI & AK KIPROTICH, MEMBERS
JUNE 2, 2023

BETWEEN
LINDAH ADHIAMBO OLUOCH ......................................................... APPELLANT

AND
COMMISSIONER OF LEGAL SERVICES AND BOARD
COORDINATION ............................................................................... RESPONDENT

JUDGMENT

Background
1. The Appellant, Lindah Adhiambo Oluoch, is part of a partnership registered as Motorcar Enterprises.

2. The Respondent is a principal ocer appointed under and in accordance with Section 13 of the Kenya
Revenue Authority (KRA) Act, and the Kenya Revenue Authority is charged with the responsibility
of among others, assessment, collection, accounting and the general administration of tax revenue on
behalf of the Government of Kenya.

3. On 21st September 2021, the Respondent wrote to the Appellant's bankers, Kenya Commercial Bank,
requiring it to immediately pay a sum of KShs. 1,687.467.00.

4. Due to the inability to access funds in her bank account at Kenya Commercial Bank on account of the
agency notice, on 1st October 2021, the Appellant visited the Kericho KRA tax oce, where she was
furnished with 3 tax assessments all dated 31st August 2018.

5. By a letter dated 4th October, 2021 and lodged by email on 5th October, 2021, the Appellant objected
to the assessments and the agency notice and requested the Respondent's ocer responsible for the
Debt Enforcement Section to withdraw the agency notices.

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6. Owing to the failure by the Respondent to withdraw the agency notice dated 21st September, 2021,
the Appellant instituted Misc. Tax Application 97 of 2021; Linda Adhiambo Oluoch vs. Commissioner
of Domestic Taxes. The agency notice was vacated by consent on 22nd October 2021.

7. On 22nd December 2021, the Respondent issued its objection decision wherein the Appellant's
objection was dismissed and taxes demanded in the sum of Kshs. 1,375,821.94.

8. Being dissatised with the objection decision of the Respondent, the Appellant lodged a Notice of
Appeal dated 19th January, 2022 and led on 20th January 2022.

The Appeal
9. The Appeal is premised on the following grounds as stated in the Appellant’s Memorandum of Appeal
dated 1st February, 2022 and led on 2nd February, 2022:-

a. That the Respondent erred in fact and in law by issuing the objection decision dated 22nd
December, 2021 out of time contrary to Section 51(11) of the Tax Procedures Act, 2015.

b. That the Respondent erred in fact and in law by failing to appreciate and consider that it was
unlawful and unreasonable to raise, on the same day, multiple additional assessments over the
same tax period.

c. That the Respondent erred in fact and law by issuing the objection decision that purported to
alter the assessment period from the year 2016 only to 2016, 2017, 2018.

d. That the Respondent erred in fact and in law by failing to appreciate and consider that the
3 additional assessments all dated 31st October 2018 failed to comply with the mandatory
requirements provided in Section 31(8) of the Tax Procedures Act, 2015.

e. That the Respondent erred in fact and in law by failing to appreciate and consider that
the 3 additional assessments all dated 31st October 2018 were defective and fell short of the
requirements of a proper notice in so far as they failed to disclose the nature and implication
and consequences of non-compliance.

f. That the Respondent erred in fact and in law by failing to appreciate and consider that during
the tax period under review, at no time was the Respondent involved in the management of
the partnership known as Motorcar Enterprises, including as a signatory to any transaction or
even bank accounts and that she never derived any nancial benet, including income, from
the aforesaid partnership.

g. That in the alternative, and without prejudice to the foregoing, the Respondent erred in fact
and in law by holding that the Appellant was liable for 50% of the partnership's alleged tax
liability while failing to appreciate that the Appellant's stake in the partnership was 30% hence,
pursuant to Section 12(1) of the Partnerships Act, 2012, and Clause 6 of the Partnership Deed
dated 1st July 2016, any alleged liability in taxes by the Appellant could only be levied at the
rate of 30% of the outstanding taxes, if any.

Appellant’s Case
10. The Appellant’s case is premised on the following documents:

a. The Appellant’s Statement of Facts dated 1st February, 2022 and led on 2nd February, 2022
together with the documents attached thereto and proceedings before the Tribunal.

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 b. The Appellant’s written submissions dated 26th October, 2022 and led on 9th November,
2022.

11. The Appellant categorically states that during the pendency of the partnership, including the year
2016, at no time was she involved in the management of the partnership, including as a signatory to any
transaction or even bank accounts. That further, she has never derived any nancial benet, including
income, from the aforesaid partnership.

12. That the Appellant's stake in the partnership was 30% and she did not derive any income whatsoever
from this stake during the tax period to which the assessments relate. That the 70% stake was held by
her partner. That if there was any income derived from the partnership, it was wholly, exclusively and
solely enjoyed by her partner.

13. That owing to the dysfunction of the partnership, the Appellant successfully applied to have the
partnership cease business on 16th September 2019.

14. That, vide an agency notice dated 21st September 2021, the Respondent wrote to the Appellant's
bankers Kenya Commercial Bank, requiring it to immediately pay a sum of Kshs. 1,687.467.00.

15. That alarmed by the inability to access funds in her bank account at Kenya Commercial Bank on
account of the agency notice, on Friday 1st October, 2021, she visited the Kericho KRA tax oce,
where she was furnished with 3 tax assessments all dated 31st August 2018. That the particulars of the
assessments are as follows:

i. Assessment no: KRA201813149991 - Kshs. 495,235.98

ii. Assessment no: KRA201813149470 – Kshs. 389,380.68

iii. Assessment no: KRA20l 813146164 – Kshs. 491,205.48

16. That it is unlawful and unreasonable to raise, on the same day, multiple additional assessments over
the same tax period. That the aforesaid 3 additional assessments all dated 31st October 2018 failed to
comply with the mandatory requirements provided in Section 31(8)(f) of the Tax Procedures Act, 2015
for failure to specify the manner of objecting to the assessment.

17. That further, the aforesaid assessments were defective and fell short of the requirements of a proper
notice in so far as they failed to disclose the nature and implication and consequences of non-
compliance. That the Appellant categorically and unequivocally states that she only received the
assessments on 1st October, 2021.

18. That the objection decision dated 22nd December, 2021 was issued 78 days after the objection was
lodged; on 5th October, 2021. That in the case of Vivo Energy Kenya Ltd. vs. Commissioner of Customs
and Border Control, Kenya Revenue Authority & Another [2020] eKLR, the court held that:

“ the provisions of the TPA are clear that where the commissioner fails to make decisions
within 60 days the objection shall be allowed. This means that the objection dated 8th
November 2016 in which the Applicant sought for the revision of the Commissioner’s
decision to demand the excise duty was allowed by operation of law by dint of Section 51(11)
of the TPA. Therefore the Respondent should not have continued to demand payment of
excise duty. All those demands Amount to nothing in law”

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19. The Appellant further relies on the case of Republic vs. Commissioner of Customs Services ExParte
Unilever Kenya Limited (2012) eKLR, where Korir J stated as thus:-

“ "My understanding of the above quoted section is that once a taxpayer lodges an application
for review, the Commissioner of Customs who is the respondent in this case has 30 days
within which to make and communicate a decision to the taxpayer. If the respondent does
not communicate a decision within 30 days, then the respondent "shall be deemed to have
made a decision to allow tire application." The law is so clear that it can only be interpreted
in one way"”

20. The Appellant further pegs its submissions on the decision in Republic vs. Kenya Revenue Authority Ex
Parte M-kopa Kenya Limited (2018) eKLR where it was held that an objection decision made beyond
the 60 day limit is null.

21. That the Respondent’s demand was erroneous as it is based on wrong assumption that the Appellant
shared the income in equal terms with the other partner. Therefore the Respondent's reasoning was
preposterous and outrageous.

22. That in the case of PZ Cussons East Africa Limited vs. Kenya Revenue Authority (2013) eKLR, the
Honourable Judge D.S Majanja held that:

“ I agree with the KRA that the burden would be upon the Company to show that the
amounts taxed was excessive. But to that extent only. It was necessary and indeed in regard
to reasonable administrative action to detail how it came to its decision contained in the
letter of 29th June 2012 so as to enable the company, if it so wished, to mount challenge if
it so wished. The duty to give reasons is now embedded in Article 47(2). I therefore nd
and hold that the failure by KRA to give information as to how it arrived on the amount
was unreasonable.”

23. That KRA’s action of insisting on payment of additional tax assessment in the circumstances in light
of claim that the Appellant’s share of partnership income was 50:50 was unreasonable and unfair and
in breach of the right to fair administrative action under Article 47 of the Constitution.

24. That the Appellant paid the taxes as required of Kshs 120,000.00 under the Partnership Pin Number.

25. That the Appellant attached a statement and bank receipts to its pleadings for payment of tax arrears
installments dated 4th October, 2019 and 14th November, 2019. That the payments were compelled by
advice from the KRA Kisumu Enforcement Oce that the release of the Appellant's Bank Account
was conditional on the Appellant making payments. That the Appellant attached acknowledgement
from the iTax system of the four payments.

26. That the Appellant further relied on the following cases:

a. Kenya Revenue Authority vs. Man Diesel & Amp; Turbo Se [2021] eKLR.

b. Soi Ceramics Limited vs. Commissioner of Domestic Taxes TAT No. 465 of 2021.

c. Minazini Enterprises Ltd vs. The Commissioner of Domestic Taxes, Tax Appeal No. 56 of 2016.

d. Republic vs. Kenya Revenue Authority (KRA) & 4 Others; New Flamingo Hardware & Paints
Limited & 22 Others (Ex Parte) (2020) eKLR.

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Appellant’s Prayers
27. The Appellant made the following prayers:

i. This Honourable Tribunal be pleased to allow the Appellant's Appeal in its entirety.

ii. The objection decision dated 22nd December 2021 demanding taxes in the total sum of Kshs.
1,375,821.94 issued by the Respondent be set aside.

iii. The Appellant's objection dated 4th October, 2021 be allowed.

iv. This Honourable Tribunal be pleased to Order the Respondent to pay the costs of this Appeal,
and

v. This Honourable Tribunal be pleased to issue any other Order favourable to the Appellant as
it may nd just and expedient to issue.

The Respondent’s Case

28. The Respondent’s case is premised on the hereunder led documents and proceedings before the
Tribunal: -

i. The Respondent’s Statement of Facts dated and led on 5th August, 2022 together with the
documents attached thereto.

ii. The Respondent’s written submissions dated and led on 2nd November, 2022 together with
the legal authorities led therewith.

29. That the Appellant in her annual income tax returns, failed to declare her share of income derived from
operation of Motorcar Enterprises. That data from Customs and Border Control Department clearly
indicate Customs entries made by Motorcar Enterprises for importation of second-hand cars between
27th September, 2016 and 1st September, 2018. That the Appellant made no declaration of her share
of income from sale of the imported cars in her annual income tax returns.

30. That in response to the allegations that the Respondent's objection decision dated 22nd December,
2021 was invalid, the Respondent avers that the Appellant had continued to provide documentation
and communicated with the Respondent up to 2nd November, 2021.

31. That the Respondent issued income tax assessments on 31st August, 2018 on the undeclared income
and the same automatically communicated to the taxpayer's iTax registered e-mail address.

32. That the Respondent was guided by the information provided by the Appellant in arriving at the
assessment. That Section 24(2) of the Tax Procedures Act provides that, “The Commissioner shall not
be bound by a tax return or information provided by, or on behalf of, a taxpayer and the Commissioner
may assess a taxpayer's tax liability using any information available to the Commissioner”.

33. That the Appellant led a late objection on 4th October, 2021 stating majorly that she did not derive
any income from the partnership. That the Appellant did not provide any evidence of dissolution of
the partnership in any of the forms provided under Section 35 of the Partnership Act.

34. The Respondent avers that Section 7(1) of the Partnership Act, 2012 provides that: “Each partner in a
partnership shall have responsibility for the business of the partnership.”

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35. The Respondent further avers that the law is very clear on the burden of proof and the Appellant has
not produced any evidence to support the averments contained in her Statement of Facts. Further, that
the law is very clear and Section 56(1) of the Tax Procedures Act, 2015 provides that;

“ The burden shall be on the taxpayer to prove that a tax decision is incorrect.”

36. That the Appellant's grounds for Appeal are not sucient to form the facts of the case, the Appellant
did not provide any evidence contrary to the basis of the Respondent's assessment.

37. The Respondent avers that it is imperative to highlight the provisions of Section 51 of the Tax
Procedures Act which stipulates that:

“ A notice of objection shall be treated as validly lodged by a taxpayer under subsection (2) if

a. the notice of objection states precisely the grounds of objection, the

amendments required to be made to correct the decision, and the reasons for
the amendments;

b. in relation to an objection to an assessment, the taxpayer has paid the entire

amount of tax due under the assessment that is not in dispute or has applied
for an extension of time to pay the tax not in dispute under section 33(1); and

c. all the relevant documents relating to the objection have been submitted.”

38. That Section 51(11) of the TPA provides that 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.

39. That it is evident from the email correspondences between the Appellant and Respondent that the
last communication on 2nd November 2021 from the Respondent requested for documentation that
would validate the notice of objection by the Appellant including but not limited to certied copies
of accounts covering the period under review and evidence of either resignation, minutes of when the
Appellant left the Partnership.

40. That the Respondent relies on Republic vs. Kenya Revenue Authority Ex-Parte M-Kopa Kenya
Limited [2018) eKLR where the Tribunal held that once the Appellant had lodged an objection as
contemplated under Section 51 of the TPA, then the Respondent was required to make a decision
within sixty (60) days under Section 51(11) of the Act.

41. That the Respondent magnanimously gave time to the Appellant to avail the requisite documents but
to no avail and in adherence to the law issued an additional income tax assessment on 22nd December
2021 amounting to Kshs. 1,375,821.54 for the years 2016, 2017 and 2018.

42. That the Respondent issued the assessment within the sixty days timeline and outlined its statement
of ndings on the material facts and the reasons for the decision as required by section 51(10) of the
Tax Procedures Act, 2015.

43. The Respondent buttressed its arguments with the Tribunal’s decision in Tax Appeals No. 50 of 2017,
Local Productions Kenya Limited vs. The Commissioner of Domestic Taxes wherein the Tribunal
upheld the need for giving reasons on the part of the Respondent.

44. That the Respondent also relied on TAT No. 162 of 2021 Githima Limited vs. Commissioner of
Domestic Taxes where it was held the Commissioner might choose any format at his disposal of writing

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 an objection decision, but must at all times include a statement of ndings on the material facts and
reasons for the decision. That therefore its decision was proper in law as it adhered to the set criteria.

45. That the Respondent provided the material facts and the reasons for the decision and the Appellant
cannot claim otherwise.

46. The Respondent reiterates its decision in the assessment that the Appellant did not provide evidence of
dissolution of the partnership for her to distance herself from the prot and liabilities; no documents
provided to support the objection and the Commissioner rightfully assessed the income of the
partnership on the partners.

47. That it is trite law that the onus of proving a tax assessment is erroneous or excessive lies on the taxpayer,
and this was not discharged by the Appellant to the Respondent.

48. That in Mechai International vs. Commissioner of Domestic Taxes TAT Appeal No. 38 of 2021 the
Tribunal stated that:

“ as is the case with all tax law, enjoin the tax payer to maintain records of his/hers/its business
aairs. In our humble view, this obligation on the tax payer is tied to and must be viewed
through the tax payer's obligation of proong that the Commissioner's assessment is wrong,
incorrect or excessive. As such, the only way of dispensing with the legal burden of proof on
the Appellant under Section 56 (1) of the TPA 2015 is through production of evidentiary
record to proof that the Commissioner erred in his assessment. This burden is particularly
heightened when a request is made by the Commissioner for documents in support of an
objection notice.”

49. That in Kenya Revenue Authority vs. Man Diesel & Turbo Se, Kenya [2021] eKLR where the court
relied on the decisions of various jurisdictions on the issue of the burden of proof stating as follows:

“ The Supreme Court of Canada in Johnston v Minister of National Revenue {1948}

S.C.R. 486 decided that the onus is on the taxpayer to "demolish the basic fact on which
the taxation rested." Also, the Supreme Court of Canada provided guidance on this issue in
Hickman Motors Ltd. v Canada {1997} 2 SCR 33.6 that the onus is met when a Taxpayer
makes out at least a prima facie case. prima facie is another legal term that literally means
"on its face. "To prove a case "on its face" you must provide evidence that, unless rebutted,
would prove your position.
That according to the said decision, a prima facie case is made when the taxpayer can produce
unchallenged and uncontradicted evidence. Once the taxpayer has made out a prima facie
case to prove the facts, the onus then shifts to the Revenue Authority to rebut the prima
facie case. If the Revenue Authority cannot provide any evidence to prove their position,
the taxpayer will succeed;”

50. That the Appellant did not produce unchallenged and uncontradicted evidence to the Respondent.

51. That Section 24(2) of the TPA stipulates that:

“ The Commissioner shall not be bound by a tax return or information provided by, or on
behalf of, a taxpayer· and the Commissioner may assess a taxpayer's tax liability using any
information available to the Commissioner.”

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52. That in Republic vs. Kenya Revenue Authority Ex-Parte Bata Shoe Company (Kenya) Limited (2014]
eKLR the court expressed itself as follows:-

“ Payment of tax is an obligation imposed by law. It is not a voluntary activity. That being
the case, a taxpayer is not obliged to pay a single coin more than is due to the taxman. The
taxman on the other hand is entitled to collect up to the last coin that is due from a taxpayer.”

53. That the Respondent is mandated to ensure ecient and eective collection of revenue even through
various assessments. That the Respondent is condent that no prejudice is suered by the Appellant
with the three assessments issued. That the Appellant when aggrieved by the assessment is at liberty to
disapprove the assessment as per Section 56 of the Tax Procedures Act, 2015.

54. That Section 31(1) of the Tax Procedures Act, 2015 empowers the Respondent to issue additional
assessments within ve years of the reporting period.

55. That the Respondent further relies on the cases of Republic vs. Public Procurement Administrative
Review Board & 2 Others Ex-Parte Pelt Security Services Limited (2018] eKLR and Republic vs. Kenya
Revenue Authority Ex-Parte Bata Shoe Company (Kenya) Limited [2014] eKLR.

56. That it is quite evident that the assessments made were within the jurisdiction of the Respondent
and they have no hint of unreasonableness and neither do they defy logic but illustrate the duty and
mandate of the Respondent in revenue collection.

57. That contrary to the averments of the Appellant, it is crystal clear and by the admission of the
Appellant, that she was in a partnership at Motorcar Enterprises accordingly.

58. That the Appellant has passionately denied any involvement in the partnership and avers that she did
not enjoy any benets from the partnership. That it is however, ironical that the Appellant is reluctant
and has blatantly refused to produce documents to prove her case.

59. That if indeed the Appellant did not receive income from the partnership business with her estranged
husband, she should not resist in providing copies of accounts covering the period under review,
supporting ledgers and documents to either show resignation or dissolution of the said partnership.

60. That Section 7(1) of the Partnership Act stipulates each partner in a partnership shall have
responsibility for the business of the partnership; a partnership agreement/deed is dened as the
agreement between persons who carry on business in common with a view of making a prot.

61. That the Appellant failed to produce documents to show the duties and obligations of the partners
under the partnership at the time of the objection necessitating the Respondent to use the facts as were
available at the time of making the objection decision.

62. That it is prudent to note that the Appellant during the period assessed received the income from the
partnership and failed to remit her respective taxes leading to the assessments.

63. That the Appellant's assertions of not being involved in the partnership ought to be disregarded as she
did not cease to be a partner according to Section 27 of the Partnership Act and neither did she provide
documentation to substantiate her claim. That the said provision states as follows:

“ A person shall cease to be a partner in a partnership if-

a. the person dies;

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 b. the person is expelled as a partner by his co-partners under the provisions of
section 29;

c. the partnership is dissolved;

d. the Court makes an order under section 44(1)(a) or (b) to remove the person
as a partner;

e. a bankruptcy order or an award for sequestration is made against the person.”

64. That in Boleyn International Ltd vs. Commissioner Domestic Taxes TAT No. 55 of 2018 this Tribunal
found the following paragraph from Pierson vs. Belcher (H.M. Inspector of Taxes) (1956-1960) 38 TC
387 to be instructive:

“ But the matter may be disposed of, I think, even more shortly in this way: there is an
assessment made by the Additional Commissioners upon the Appellant; it is perfectly
clearly settled by cases such as Norman v Golder 26 T.C 293, that the onus is upon the
Appellant to show that the assessment made upon him is excessive or incorrect: and of
course, he has completely failed to do so. That is sucient to dispose of the appeal, which
accordingly I dismiss with costs.”

65. The Respondent also relies on the cases of Digital Box Limited vs. Commissioner of Domestic Taxes
TAT Appeal No. 115 of 2017 and Dyer & Dyer Limited vs. Commissioner of Domestic Taxes, TAT
139 of 2020.

66. That it is evident that the Appellant has not discharged the burden of proof in proving the assessments
were erroneous and excessive and neither did the Appellant prove that she is not liable for taxes of the
income received under the partnership.

Respondent’s Prayers
67. The Respondent prayed that the Tribunal:

a. Upholds the Respondent’s decision dated 22nd December, 2021 as proper in law and in
conformity with the provisions of the law.

b. Finds that the Appellant to pay the additional Income Tax Assessment amounting to Kshs.
1,375,821.54.00.

c. Dismisses the Appeal with costs as the same is devoid of any merit.

Issues for Determination

68. The Tribunal upon due consideration of the pleadings and the written submissions of the parties was
of the considered view that the Appeal raises the following issues for its determination:

a. Whether there is a valid Appeal before the Tribunal

b. Whether the assessment is justied

Analysis and Determination

69. The Tribunal having ascertained the issues for determination as set out above proceeds to deal with
the same as hereunder.

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a. Whether there is a valid Appeal before the Tribunal
70. This dispute arose from a demand of tax on partnership income that the Respondent avers was earned
by the Appellant.

71. On its part, the Respondent states that it issued its objection decision within the sixty days timeline
allowed by the law and outlines its statement of ndings on the material facts as required by Section
51(10) of the TPA.

72. The Appellant on her part argues that the Respondent issued its objection decision dated 22nd
December 2021 out of time contrary to Section 51(11) of the Tax Procedures Act, 2015.

73. The Respondent avers that it is evident from the email correspondences between the Appellant and
Respondent that the last communication on 2nd November 2021 from the Respondent requested for
documentation that would validate the notice of objection by the Appellant.

74. In its pleadings, the Appellant avers that the objection decision dated 22nd December, 2021 was issued
78 days after the objection was lodged on 5th October, 2021.

75. The Tribunal has reviewed in detail all the documents submitted by the parties and established that
indeed there were various email conversations after the Appellant’s objection and the last email was
submitted by the Appellant on 2nd November, 2021 wherein she reiterated her grounds of objection
to the Respondent. Prior to this email, the Respondent had sent an email on the same date to the
Appellant requesting for further information to enable an independent review of the objection and
issuance of a decision.

76. Section 51(11)of the Tax Procedures Act states as follows regarding the issuance of objection decisions
by the Commissioner:

“ The Commissioner shall make the objection decision within 60 days from the date of receipt
of the-

a. the notice of objection; or

b. any further information that the Commissioner may require from the
taxpayer, failure to which the objection shall be deemed as allowed.” (Emphasis
Added)

77. The Tribunal notes that with the email correspondences between the parties and the last having been
made on 2nd November, 2021, the Respondent’s objection decision issued on 22nd December, 2021
was well within the 60-day timeline as provided under Section 51(11) of the TPA.

b. Whether the assessment is justied

78. The Appellant argued that her stake in the partnership was 30% and she did not derive any income
whatsoever from this stake during the tax period to which the assessments relate.

79. The Appellant also submitted that if there was any income derived from the partnership, it was wholly,
exclusively and solely enjoyed by her partner. She stated further that owing to the dysfunction of the
partnership, she successfully applied to have the partnership cease business on 16th September 2019.
The Tribunal notes that the Appellant attached a Notice of Cessation of Business and a Certicate of
Cessation of Business to support this averment.

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80. The Respondent, on its part, averred that it issued income tax assessments on the Appellant’s
undeclared income and the same was communicated via iTax. That further, the Respondent was
guided by the information provided by the Appellant in arriving at the assessment.

81. The Respondent further stated that the Appellant’s grounds for Appeal were insucient and that the
Appellant had not discharged her burden of proof or provided any evidence to support her averments.

82. The Tribunal notes that the Partnership Deed was attached to the Appellant’s pleadings and therefore
the averment by the Appellant that she was only entitled to 30% of the partnership’s earnings
was substantiated by the Deed. Further, an email dated 23rd May, 2019 from the Appellant to the
Respondent’s ocer shows that the Appellant had in this email attached the Partnership Agreement
referred to in the parties’ pleadings, explained her stake of 30% in the partnership and informed the
Respondent that she was in the process of winding up as she had already served her resignation from
the partnership to the other partner.

83. Further, the Tribunal makes reference to the tax assessments referred to by the Appellant as having
been issued by the Respondent on 1st October, 2021. The said assessments were dated 31st August,
2018, a fact that is not in dispute by the parties. These assessments are the basis of the Appellant’s
objection dated 4th October, 2021 and led on 5th October, 2021. These documents were attached to
the Appellant’s pleadings.

84. The Tribunal notes that provision of documents as evidence is well stated under Section 30 of the Tax
Appeals Tribunal Act which provides as thus:

“ 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 dierently.”

85. The Tribunal notes further that Section 56(1) of the Tax Procedures Act states as follows in relation to
general provisions relating to objections and appeals:

“ In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax
decision is incorrect.”

86. Additionally, the Tribunal found it appropriate to rely on the provisions of Section 107 of the Evidence
Act which provides that:

“ Whoever desires any court to give judgment as to any legal right or liability dependent on
the existence of facts which he asserts must prove that those facts exist.”

87. The court in Alfred Kioko Muteti vs. Timothy Miheso & Another [2015] eKLR held that a party can
only discharge its burden upon adducing evidence. Merely making pleadings is not enough. The court
stated that:

“ Thus, the burden of proof lies on the party who would fail if no evidence at all were given
by either party…. Pleadings are not evidence, and it is not enough to plead particulars of
negligence and make no attempt in one’s testimony in court to demonstrate by way of
evidence how the accident occurred and how the 1st defendant was to blame for the said

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 accident. It is trite law that he who alleges must prove and that burden does not shift to the
adverse party even if the case proceeds by way of formal proof and or undefended.”

88. Similarly, in the case of Boleyn International Ltd vs. Commissioner of Investigations and Enforcement,
Nairobi TAT Appeal No. 55 of 2018, the Tribunal held that:-

“ We nd that the Appellant’s at all times bore the burden of proving that the Respondent’s
decisions and investigations were wrong. The tribunal is guided by the provisions of Section
56(1) of the TPA, 2015 which states: “In any proceedings under this part, the burden shall
be on the taxpayer to prove that a tax decision is incorrect.”

89. The Tribunal conrms that, contrary to the averments by the Respondent that the Appellant had not
adduced sucient evidence to back its pleadings, the Appellant attached the Partnership Deed, the
Certicate of Registration of the partnership, the Notice of Cessation of business dated 16th September
2019 and a Certicate of Cessation of Business by the Registrar of Companies dated 5th December
2019 all of which support the Appellant’s averments as to her status as far as the partnership in question
is concerned.

90. Consequently, the Tribunal nds that the Appellant discharged the burden of proof placed upon her
in demonstrating that the Respondent erred in its assessment of income tax. The Respondent did not
appropriately consider the Appellant’s specic shareholding in the partnership and by extension her
tax liability in respect of the revenue generated by the partnership.

Final Decision
91. Based on the foregoing analysis the Tribunal determined that the Appeal is merited and the Orders
that accordingly recommend themselves are as follows: -

a. The Appeal be and is hereby allowed.

b. The Respondent’s Objection Decision dated 22nd December, 2021 be and is hereby set aside.

c. The Respondent to recompute the Appellant’s tax liability based on her 30% stake in the
partnership as per the Motorcar Enterprises Partnership Deed.

d. Each party to bear its own costs.

92. It is so ordered.
DATED AND DELIVERED AT NAIROBI THIS 2TH DAY OF JUNE, 2023.
.................................
ERIC N. WAFULA
CHAIRMAN
..................................
CYNTHIA B. MAYAKA
MEMBER
.....................................
GRACE MUKUHA
MEMBER

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.......................................
JEPHTHAH NJAGI
MEMBER
.........................................
ABRAHAM K. KIPROTICH
MEMBER

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