ITAT vacates stay of recovery after assessee fails to show bona fide grounds for adjournment citing pending appeals

ITAT Mumbai vacated stay of recovery against assessee after finding no bona fide grounds for adjournment. Assessee sought adjournment citing pending related appeals in another case (NSEIL) but failed to demonstrate similarity of facts or circumstances despite multiple requests. The tribunal held that mere pendency of appeals in other cases cannot justify adjournment or continuation of stay. Considering assessee's role as clearinghouse for National Stock Exchange serving millions of investors, tribunal granted facility to pay outstanding taxes for AY 2015-16 and 2017-18 in three equal instalments by October 2023. Appeals adjourned to December 5, 2023.

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Issues Involved:
1. Stay of recovery of outstanding demand.
2. Request for adjournment due to pending related appeals.
3. Similarity of issues between the assessee and another entity (NSEIL).
4. Compliance with conditions of stay order.
5. Determination of bona fide reasons and reasonable cause for adjournment.
6. Consequences of vacating the stay.

Detailed Analysis:

1. Stay of Recovery of Outstanding Demand:
The appeals in question were stay granted matters against the recovery of outstanding demands for assessment years 2015-16 and 2017-18. The stay was granted on the condition that the assessee shall not seek adjournment without bona fide reasons, and any adjournment without reasonable cause would lead to the stay being withdrawn forthwith.

2. Request for Adjournment Due to Pending Related Appeals:
The assessee requested adjournments on the grounds that the issues involved in their appeals were similar to those in the appeal of National Stock Exchange of India Ltd (NSEIL). The outcome of NSEIL's appeals was awaited, and the decision was expected to have a bearing on the assessee's appeals. The assessee sought adjournments multiple times, citing the pending decision in NSEIL's case.

3. Similarity of Issues Between the Assessee and NSEIL:
The assessee claimed that the primary issue involved was related to the disallowance of statutory contributions made to the Core Settlement Guarantee Fund (Core SGF) under SEBI regulations. The assessee argued that the issues in their appeals and those of NSEIL were "pari materia" (similar), as both arose from the same SEBI regulations and involved the same nature of contributions. However, the assessee failed to provide sufficient evidence, such as assessment orders, appellate orders, or grounds of appeal, to substantiate the similarity of issues.

4. Compliance with Conditions of Stay Order:
The bench repeatedly informed the assessee that they needed to submit necessary documents to prove the similarity of issues between their case and NSEIL's case. Despite being given multiple opportunities, the assessee did not provide the required evidence. The bench emphasized that the stay was conditional upon not seeking adjournments without bona fide reasons.

5. Determination of Bona Fide Reasons and Reasonable Cause for Adjournment:
The bench evaluated whether the assessee's request for adjournment was bona fide and based on reasonable cause. The assessee's failure to provide evidence of the similarity of issues, despite multiple requests, led the bench to conclude that the request for adjournment was not bona fide. The bench noted that merely citing the pendency of a related appeal in another case could not be considered a reasonable cause for adjournment, especially when no binding precedent was shown.

6. Consequences of Vacating the Stay:
Given the lack of evidence and the assessee's non-compliance with the conditions of the stay order, the bench decided to vacate the stay granted to the assessee. However, considering the potential impact on the clearinghouse operations and the broader market, the bench provided a structured payment plan for the outstanding taxes in three equal installments. The bench also granted the assessee the liberty to approach them for relaxation in case of financial difficulties and stayed the order vacating the stay until 20/10/2023 to allow the assessee to challenge the decision before the High Court.

Conclusion:
The bench vacated the stay granted to the assessee due to the lack of bona fide reasons and reasonable cause for adjournment. The assessee was directed to pay the outstanding taxes in installments and was given the opportunity to seek further relaxation if needed. The appeals were adjourned to 05/12/2023, and the bench stayed the order vacating the stay until 20/10/2023 to allow the assessee to challenge the decision before the High Court.

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