ITAT Mumbai Restores Section 12AB Renewal Application Despite Assessee's Admitted Default — One Final Chance, No Further Leniency
Case Overview
Case Name: Roman Catholic Church of St Stephen Vs CIT (Exemptions) (ITAT Mumbai)
Appeal Number: ITA No. 6028/MUM/2026
Date of Order: 24/09/2026
Forum: Income Tax Appellate Tribunal, Mumbai
Background and Factual Matrix
The Roman Catholic Church of St Stephen, functioning as a charitable institution, filed an application dated 30.09.2025 seeking renewal of its registration under Section 12AB of the Income Tax Act, 1961. In due course, the Commissioner of Income Tax (Exemptions) [CIT(E)] issued a notice dated 18.01.2026 calling upon the assessee to submit a complete set of documents and details as mandated under Rule 17A(2).
The assessee failed entirely to respond to this notice. As a direct consequence of this non-compliance, the CIT(E) rejected the renewal application by way of an order dated 04.03.2026 under Section 12AB(1)(b)(ii) of the Income Tax Act, 1961.
Aggrieved by the rejection, the assessee preferred an appeal before the Mumbai Bench of the Income Tax Appellate Tribunal.
Grounds Raised Before the Tribunal
The assessee raised the following grounds of appeal before the Tribunal:
The Ld. CIT (Exemptions) erred in passing order u/s. 12AA denying registration to the appellant u/s. 12AB of the Income Tax Act, without specifying the conditions that were not complied with, by the Appellant/assessee.
The Ld. CIT (Exemptions) was not justified in denying registration without putting the assessee to notice, as to what details were required to be filed by the Assessee with the Ld. CIT(E).
The Ld. CIT (Exemptions) misdirected himself in not specifying the details not filed by the assessee.
The Appellant craves leave to add/modify any grounds of appeal.
These grounds essentially challenged the quality and adequacy of the opportunity extended by the CIT(E) prior to rejection, while simultaneously conceding the fact of non-response.
The Assessee's Position Before the Tribunal
Before the Tribunal, the assessee adopted a candid but dual-pronged stance. On one hand, it openly admitted that it had not filed the requisite documents in response to the notice dated 18.01.2026. On the other hand, it contended that the opportunity furnished by the CIT(E) was limited to a single notice, and that the application was rejected without any further hearing or issuance of a show-cause notice.
The reason offered for the original non-compliance was staff-related difficulties within the institution. The assessee sought a remand of the matter to the CIT(E) for fresh consideration, pointing to a line of Tribunal orders where similar rejections — premised on a single opportunity followed by non-compliance — had been sent back for reconsideration.
Critical observation: This was not a situation where the Tribunal found that the assessee had submitted material that was disregarded by the CIT(E). The assessee's own admission placed the non-compliance squarely on record. The sole question was whether one opportunity, followed directly by rejection without a further show-cause notice, was sufficient finality for a
Section 12ABrenewal proceeding.
Precedent Relied Upon: Resource & Support Center for Development v. CIT(E)
The assessee placed reliance on a coordinate bench order of the Mumbai ITAT in Resource & Support Center for Development vs CIT(E), ITA Nos. 5731/Mum/2026 & 5752/Mum/2026, dated 05/08/2026, wherein the Tribunal had articulated the following: