KRA loses Sh822m suit against lawyer
Prof Tom Ojienda who is the LSK representative to the Judicial Service Commission. Branded as non-tax compliant by the taxman, the lawyer, a member of the Judicial Service Commission, was said to be under investigation by KRA from March 1, 2016. PHOTO | FILE | NATION MEDIA GROUP
What you need to know:
- Mr Ojienda’s reprieve comes after two-year legal tussle in which the lawyer had sought orders prohibiting the taxman from demanding the monies as total tax due from 2009 to 2016.
KRA had written to Mr Ojienda on June 7, 2016, directing the lawyer to remit Sh444 million as total tax due between 2009 and 2016.
Mr Ojienda argued that the requests were unreasonable, procedurally unfair and illegal since KRA had already purportedly made an assessment of the alleged tax due and payable
Senior Counsel Tom Ojienda can now breathe easy after the High Court restrained the Kenya Revenue Authority (KRA) from demanding Sh822 million tax arrears.
Mr Ojienda’s reprieve comes in the wake of a relentless two-year legal tussle in which the lawyer had sought orders prohibiting the taxman from demanding the monies as total tax due from 2009 to 2016.
KRA had written to Mr Ojienda on June 7, 2016, directing the lawyer to remit Sh444 million as total tax due between 2009 and 2016.
NON-TAX COMPLIANT
Subsequently, another letter dated September 5, 2016 referred to as amended assessment demanded tax arrears amounting to Sh379 million for the period 2011 to 2016.
Sensationally branded as non-tax compliant by the taxman, the lawyer, a member of the Judicial Service Commission (JSC), was said to be under investigation by KRA from March 1, 2016.
KRA said the lawyer was on their radar after alleged information from the Senate that Nairobi County had procured legal services from his law firm on January 7, 2014 at a cost of Sh92.8 million to prosecute a case against the Nairobi Metropolitan PSV Sacco.
It was further revealed that the lawyer sued the City County in August 2015 to recover legal fees amounting to Sh724 million and another Sh280 million had been wired into his personal account for legal services allegedly rendered to Mumias Sugar Company.
TAXABLE INCOME
The taxman argued that it traced some of the questionable payments made to Mr Ojienda to his Barclays Bank, Hurlingham Branch Account.
KRA allegedly set out the particulars of the various bank accounts which it believed Mr Ojienda held either personally or jointly, and indicated the ones which were part of the tax assessment.
“We analysed the statements of the various bank accounts held by the lawyer at Barclays Bank and Standard Chartered to determine the nature and value of deposits within the period under review with a view to ascertaining the taxable income,” said the taxman
However, it was contended that deposits from loans, salaries, interbank transfers and disbursements were excluded as they do not constitute taxable income.
Thereafter, KRA tabulated the taxable income after excluding the salaries, per diems, disbursements and interbank transfers.
INVESTIGATIONS
The lawyer argued that it was not only manifestly unreasonable but also the move depicted malice since the amount he purportedly owed KRA in terms of Value Added Tax (VAT) alone “is more than the actual amount I have ever received in my accounts”.
While overruling KRA, Justice George Odunga in his ruling said the authority had taken the wrong end of the stick in the matter following the fallout between the parties over documentation.
The judge noted that KRA, after September 5, 2016, having issued its objection decision, was no longer looking for documents to assess Mr Ojienda’s financial tracks but was conducting investigations and seeking evidence of tax offences as provided for in law.
IMPUGNED ASSESSMENT
Mr Ojienda argued that the requests were unreasonable, procedurally unfair and illegal since KRA had already purportedly made an assessment of the alleged tax due and payable, before seeking more documents and evidence to prove its assessment.
He said this was a clear indication that the taxman lacked evidence before its purported impugned assessment.
Justice Odunga observed that KRA may have relied on information emanating from third parties without carrying out its own investigations and only seeking to support the same after making the decision.
PURELY POLITICAL
It was the judge’s view that the decision by the taxman was arrived at prior to the exercise of the powers conferred on the commissioner of taxes. He dismissed the tax assessment exercise by KRA as unreasonable and irrational.
Mr Ojienda said the purported investigation and subsequent assessment was calculated to embarrass him and termed the entire process as malicious, defamatory, vindictive and purely political with an intention to intimidate him in the performance of his duties as a legal practitioner and a member of JSC.
