You are right.
But can you prove it?
That thought stuck with me after reading the recent Doshi Enterprises Ltd v Commissioner of Investigation and Enforcement case.
Because when the taxman asks:
“What is this KSh 5 million deposit?”
Saying:
“It was a loan.”
may not be enough.
You need the evidence.
KRA had used bank analysis to identify credits that it treated as undeclared income and sales.
Doshi Enterprises argued that some of those deposits were not revenue.
They included things like:
→ Inter-bank transfers → Loan repayments → Reversals → Director reimbursements → Related-party transactions → Foreign currency transactions
And here's where the case gets interesting.
The Tribunal found that, for some of these transactions, the documentation provided did not sufficiently connect the explanation to the actual bank transaction.
For example, some of the records provided were ledgers where bank advice or contra entries were needed.
Some bank statements supplied related to a different period from the transaction being explained.
And for 2020, the Tribunal noted that financial statements had been provided without the underlying primary documents needed to support the explanation.
The lesson?
Having documents is not the same as having evidence.
Your evidence needs to tell a connected story.
If KRA asks:
“What is this KSh 5 million deposit?”
Don't just say:
“It's a loan.”
Show the trail:
Loan agreement ↓ Bank disbursement ↓ Bank receipt ↓ Accounting entry ↓ Repayment trail
If it's an inter-bank transfer:
Source account ↓ Transfer ↓ Receiving account ↓ Matching amount ↓ Ledger entry
If it's a reversal:
Original transaction ↓ Reversal ↓ Bank evidence ↓ Accounting entry
The documents should connect.
That's what good bookkeeping should give you.
Not just numbers.
An evidence trail.
And this is what stood out to me from the September 2026 Tribunal decision:
The Tribunal said the taxpayer needed to be specific and precise in relating its explanations to the documents provided.
In other words, don't just throw a pile of documents at KRA and expect them to figure out the story.
Show them the story.
The Tribunal ultimately partially allowed the appeal. It set aside the corporation tax assessment for 25 April–31 December 2020 and directed KRA to recompute VAT to exclude realised forex losses. But it upheld the corporation tax assessment for 2017 to 24 April 2020, finding that the taxpayer had not sufficiently discharged its burden of proof for much of that period.
And that's why this line stuck with me:
You can be right.
But can you prove it?
Because when the question comes, your memory won't defend your books.
Your evidence will.
Good bookkeeping isn't just about recording what happened.
It's about leaving behind a trail that can explain what happened.
