Roman Catholic Church of St Stephen Vs CIT (Exemptions) (ITAT Mumbai)
Missed the First Notice for 12AB Renewal? Church Gets One More Chance, With a Clear Warning
Summary: The Roman Catholic Church of St Stephen applied to renew its registration under section 12AB. The Commissioner of Income Tax (Exemptions) asked for documents, but the institution did not supply them. Its application was rejected. Before the Mumbai Tribunal, the assessee acknowledged its failure to respond, attributing it to staff problems, and sought another opportunity.
The Tribunal restored the application for a fresh decision. It noted that the Commissioner had provided one opportunity, but had rejected the application without a further opportunity or a show-cause notice. The relief came with an express warning: the institution must now file the relevant documents without delay or default, and cannot expect leniency for another failure.
One Notice, No Documents, Then Rejection
The assessee, a charitable institution, filed its application for renewal under section 12AB on 30 September 2025. On 18 January 2026, the Commissioner issued a notice seeking the complete set of documents and details required under Rule 17A(2).
The institution did not comply with that notice. The Commissioner consequently rejected the application by order dated 4 March 2026.
In its appeal, the institution complained that it had not received a proper and meaningful opportunity to submit the material, apart from the one notice. At the same time, it fairly admitted that it had failed to file the relevant documents in response. It explained that the omission arose from staff problems and asked for the matter to be sent back so it could produce the material.
That admission is significant. This was not a case in which the Tribunal found that the institution had submitted a complete response which the Commissioner overlooked. The issue was whether, despite an acknowledged failure to respond to the first notice, the application should receive one further chance of examination.
The Reliance on an Earlier Mumbai Tribunal Order
The institution relied on a Mumbai Tribunal order in Resource & Support Center for Development v. CIT(E), dated 5 August 2026. In the passage reproduced in the present order, that bench had stressed that deciding a section 12AB application involves examining the institution’s objects, the genuineness of its activities and the applicable statutory requirements.
The earlier bench had directed a fresh examination where rejection substantially rested on non-compliance, without explaining which documents were missing or why the material on record was insufficient. It called for a reasoned decision after an effective opportunity to furnish documents and explanations.
The department supported the Commissioner’s rejection in the present appeal. The Tribunal therefore had to weigh the opportunity already given against the value of deciding the renewal application on a complete record.
Tribunal Recognised the Assessee’s Lapse
The Tribunal did not fault the Commissioner for failing to send the initial notice. It expressly found that the Commissioner had afforded the institution an opportunity to provide documents and that the institution had failed to use it.
The Tribunal nevertheless considered the subsequent procedure important. According to its order, the Commissioner rejected the application without providing another opportunity and without issuing a show-cause notice. Taking the circumstances as a whole, the bench concluded that a fresh hearing would serve a just and proper decision of the case.
It accordingly remanded the application to the Commissioner for decision afresh after giving the institution a reasonable opportunity of being heard. The Commissioner must examine the application on the material presented and decide it in accordance with law. The Tribunal made no finding that the institution satisfied the conditions for renewal.
The Second Chance Has a Condition
The Tribunal’s direction to the institution was unusually direct. It must file the relevant documents afresh before the Commissioner without delay or default. The bench added that, in the event of a subsequent default, the institution would not be entitled to any leniency.
That warning gives the remand its practical meaning. The institution has an opportunity to put forward the documents needed to support its section 12AB application. The fresh proceeding also places responsibility on it to answer the Commissioner’s requirements promptly and fully.
The appeal was allowed for statistical purposes. In this context, that means the rejection has been set aside and the application revived for reconsideration. Registration has not yet been renewed.
Author’s Comments
The order balances two straightforward facts. The Commissioner had called for documents, and the assessee did not provide them. Yet the Tribunal considered a final rejection after that single opportunity, without a further hearing or show-cause notice, too abrupt for a decision on renewal of charitable registration.
Its value as a precedent lies in the opportunity granted despite an admitted initial lapse. It should not be read as excusing repeated non-compliance. The Tribunal expressly warned that the next default would attract no leniency. The outcome now depends on the institution filing the required material and the Commissioner examining its eligibility on that completed record.
Cases Discussed
- Resource & Support Center for Development v. CIT(E), ITA Nos. 5731/Mum/2026 & 5752/Mum/2026, order dated 05/08/2026 (ITAT Mumbai) — Relied upon by the assessee. The present order reproduced the coordinate bench’s reasoning that a Section 12AB application should be examined afresh where rejection substantially rested on non-compliance, with an effective opportunity to furnish documents and explanations and a reasoned order thereafter.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal has been preferred by the Assessee against the order dated 04-03-2026, passed by the Ld. Commissioner of Income Tax (Exemptions) [in short ‘Ld.CIT(E)] u/s 12AB(I)(B)(II) of the Income Tax Act, 1961 (in short ‘the Act’) against rejection of application for renewal of registration u/s 12AB of the Act.
2. The Assessee raised following grounds of appeal, before the Tribunal :
1. 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.
2. 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).
3. The Ld. CIT (Exemptions) misdirected himself in not specifying the details not filed by the assessee.
4. The Appellant craves leave to add/modify any grounds of appeal.
3. The brief facts of the case are that assessee is a charitable institution and filed an application dated 30.09.2025 for renewal of registration under section 12AB of the Act. The Ld. Commissioner of Income Tax (Exemptions), vide notice dated 18.01.2026 sought complete set of documents/details as required under Rule 17A(2). However, the assessee failed to comply with said notice, so, the application is rejected vide an order dated 04-03-2026.
4. Aggrieved by rejection order, the assessee is in appeal before the Tribunal, and submitted that Ld. CIT(E) has not provided proper and meaningful opportunity, except once, to furnish the requite details in support its application. However, fairly admitted its fault for not filed relevant documents in compliance to notice dated 18-01-2026, it was due to staff problems. Now urged that there are several orders of Hon’ble Benches of Tribunal, wherein, for similar facts and rejection of application by providing one opportunity, were sent back to Ld. CIT(E) for reconsideration.
5. Also stated that facts of the present are squarely covered by the relied upon case law compilation furnished by the assessee and request for sending back to Ld. CIT(E). The assessee relied upon order of Co-ordinate Bench “D:, Mumbai, ITAT in case of Resource & support Center for Development vs CIT(E), ITA no. 5731/MUM/2026 & 5752/MUM/2026, dated 05-08-2026, the finding are as under :
“4. We have carefully considered the rival submissions and perused the material available on record. The power conferred upon the learned CIT(E) while considering an application for registration or renewal under section 12AB necessarily requires him to examine the objects of the trust, the genuineness of its activities and such other statutory requirements as are contemplated under the Act. Such an exercise necessarily presupposes due consideration of the material placed on record as well as an effective opportunity to the applicant to explain or furnish any further particulars that may be required for arriving at a proper satisfaction. In the present case, the impugned order proceeds substantially on the premise that the assessee had not complied with all the requirements contained in the notice issued by the learned CIT(E). However, no discussion has been made with regard to the nature of the documents allegedly not furnished or as to why the material available on record was insufficient for examining the assessee’s eligibility. Having regard to the entirety of the facts and circumstances, we are of the considered opinion that the ends of justice would be adequately served if the matter is restored to the file of the learned CIT(E) for fresh adjudication. We accordingly set aside the impugned order and restore the issue to the file of the learned CIT(E) with a direction to examine the assessee’s application afresh, consider all documents and explanations that may be furnished by the assessee, and thereafter pass a reasoned and speaking order in accordance with law after granting due and effective opportunity of hearing. We make it clear that we have not expressed any opinion on the merits of the assessee’s claim and all issues are left open for fresh consideration.
5. The assessee is also directed to extend full cooperation in the fresh proceedings and furnish all such documents, records and explanations as may be called for by the learned CIT(E), who shall thereafter decide the application independently and strictly in accordance with law. Subject to these observations, the appeal of the assessee in ITA No.5732/Mum/2026 is treated as allowed for statistical purposes.”
6. Per Contra ld CIT, DR relied upon the order of ld CIT(E).
7. We have given thoughtful consideration to the peculiar facts and circumstances, found that ld. CIT(E) has afforded an opportunity to furnish details/ documents to support its application, however, assessee failed to avail the same. Meanwhile, Ld. CIT(E) without providing another opportunity, and without issue of any SCN, rejected the applications. We, observed in totality for just and proper decision of the case and substantial justice, we deem it appropriate to remand the instant case to the file of the Ld. CIT(E) for decision afresh, suffice it to say by affording an reasonable opportunity of being heard to the Assessee.
8. The Assessee is directed to file the relevant documents afresh, before the Ld. Commissioner without any delay and default. We further clarify that in case of subsequent default, the Assessee shall not be entitled for any leniency.
9. In the result, Assessee’s appeal is allowed for statistical purposes.
Order pronounced in the open court on 24.09.2026.
