i-Tax is Mandatory for Valid ”Tax Objections” High Court Rules

Case Study: Commissioner of Investigation & Enforcement v Zhao (Income Tax Appeal E010 of 2025) [2025] KEHC 16297 (KLR) (Commercial and Tax) (27 October 2025) (Judgment

Background Facts

• KRA issued Zhao with a Notice of Tax Assessment for Kshs. 1.136 billion for the period 2018-2023 on 7th September 2023.
• Dissatisfied, Zhao sent a physical objection letter dated 29th September 2023 to the personal email addresses of KRA’s officers.
• KRA, claiming no formal objection was filed on the official i-Tax portal, issued a demand notice on 8th November 2023.
• After engagement, KRA authorized a late objection. Zhao then formally lodged its objection on the i-Tax system on 30th November 2023.
• KRA issued its Objection Decision on 29th January 2024, slightly reducing the assessment to Kshs. 1.129 billion.
• Zhao appealed to the Tax Appeals Tribunal, arguing that the Objection Decision was issued outside the 60-day statutory period stipulated in Section 51(11) of the Tax Procedures Act (TPA).
• The Tribunal agreed with Zhao, holding that the objection date was 29th September 2023, making the decision late. Consequently, it deemed the objection allowed and set aside the entire tax assessment.

KRA appealed to the High Court

The core issue for the High Court’s determination was:

What constitutes the valid date for lodging a tax objection from which the Commissioner’s 60-day deadline to issue an objection decision begins to run?

Arguments of the Parties

• KRA: Argued that the valid objection date was 30th November 2023, when the objection was formally filed on the i-Tax system. Therefore, the decision on 29th January 2024 was within the 60-day limit.
• Zhao: Maintained that the valid objection date was 29th September 2023, when the physical letter was sent. Therefore, the 60-day period expired on 28th November 2023, and the subsequent decision was late and invalid.

Court’s Analysis and Findings

The High Court conducted a thorough analysis and made the following key findings:

• Invalidity of the Physical Letter: The Court held that the physical letter sent on 29th September 2023 did not constitute a valid notice of objection. The i-Tax system is the prescribed electronic platform for such filings, and its use is critical for creating an auditable trail, assigning unique reference numbers, and providing certainty for computing statutory timelines.
• Valid Date of Objection: The Court found that the valid notice of objection was lodged on 30th November 2023 when Zhao used the i-Tax system. The 60-day period under Section 51(11) of the TPA began from this date.
• Timeliness of the Decision: Since the 60-day period started on 30th November 2023, KRA’s Objection Decision issued on 29th January 2024 was rendered within the statutory timeline.
• The Court noted that by choosing to re-lodge the objection via i-Tax on 30th November, Zhao was estopped from reverting to the earlier, invalid correspondence to compute time.

Final Decision

The High Court allowed KRA’s appeal and set aside the Tribunal’s judgment. However, it did not simply reinstate the massive tax assessment. Instead, the Court made the following orders:

• The Tribunal’s judgment of 22nd November 2024 was set aside.
• KRA’s Objection Decision of 29th January 2024 was found to be timely.
• Crucially, the matter was remitted to the Tax Appeals Tribunal for a fresh hearing to determine the substantive merits of Zhao’s objection to the tax assessment.