Oravel Stays Limited vs Commissioner Of Income-Tax (Tds)-2, Delhi & Ors.

$~62
* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
Date of decision: 9 March, 2026
+ W.P.(C) 2932/2026 & CM APPL. 14140/2026
ORAVEL STAYS LIMITED .....Petitioner
Through: Mr. Ajay Vohra, Sr. Advocate with
Mr. Manuj Sabharwal, Advocate.

versus

COMMISSIONER OF INCOME-TAX (TDS)-2, DELHI & ORS.
.....Respondents
Through: Mr. Puneet Rai, SSC.

CORAM:
HON'BLE MR. JUSTICE DINESH MEHTA
HON'BLE MR. JUSTICE VINOD KUMAR
J U D G M E N T
DINESH MEHTA, J. (ORAL)
1. By way of present writ petition, the petitioner-assessee has challenged
order of the Commissioner of Income Tax (TDS-2), Delhi (hereinafter
referred to as ‘Appellate Authority’) passed on 09.02.2026, vide which the
petitioner’s stay application has been disposed of in the manner that subject
to payment of 20% of the total demand, remaining demand shall remain
stayed.

2. Mr. Ajay Vohra, learned Senior Counsel assisted by Mr. Manuj
Sabharwal appearing for the petitioner firstly invited Court’s attention
towards the orders dated 31.03.2025 passed in petitioner’s own case
(Annexure P-12 & P-13) for assessment years 2018-19 and 2019-2020,
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Signing Date:13.03.2026
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W.P.(C) 2932/2026 Page 1 of 4

respectively and argued that the predecessor of the Assessing Officer
himself had held the petitioner not to be in default and regardless of the
fact-situation remaining the same, the Assessing Officer, this time has held
the petitioner-assessee to be in default.
3. He then submitted that the Income Tax Appellate Tribunal, Bench ‘E’
New Delhi (hereinafter referred to as ‘the Tribunal’) vide its order dated
21.11.2025 in no ambiguous terms has held that in the present factual
backdrop, the petitioner was not required to deduct tax and hence no
disallowance could be made and in spite of the fact that such order was
brought to his notice, the respondent no.1 neither dealt with nor has he
followed the same and has passed the impugned order subjecting the
petitioner to the condition of deposit of 20% of the outstanding demand in
complete disregard of the law and order of the Tribunal.
4. He argued that if the impugned order is not interfered with, it shall
prejudice petitioner’s substantial rights in spite of the fact that the final fact
finding authority namely the Tribunal has ruled in its favour.
5. Mr. Puneet Rai, learned Senior Standing Counsel, while not disputing
the factum of passing of the order of Tribunal dated 21.11.2025, argued that
since limitation for filing appeal is still not over, it cannot be said that it has
attained finality because final decision on the question is yet to come from
this Court.
6. He, also didn’t point out anything to distinguish the facts involved in
the present case from the facts involved in the Tribunal’s order. He
nevertheless argued that the interim order cannot be claimed as a matter of
right and the same is within the discretion of the Assessing Officer and
Appellate Authority, which discretion should not be upturned unless any
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Digitally Signed
By:NAVEEN KUMAR
Signing Date:13.03.2026
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W.P.(C) 2932/2026 Page 2 of 4

glaring facts come to the notice of this Court.
7. Heard learned counsel for the parties.
8. We are not oblivious of legal position that in the matters relating to
stay, more particularly, in the matters relating to stay of demand in fiscal
matters, the Court should be loathe to interfere. But the case in hands is one
which calls for our interference, because of the striking features available in
the present case.
9. The Tribunal vide its order dated 21.11.2025 in petitioner’s own case,
for the very same assessment year while dealing with the issue of
disallowance of expenditure has clearly recorded a finding that the assessee
was not required to deduct tax at source and therefore, such finding being a
finding of fact and decision on the requirement of deduction of tax, had a
necessary bearing which not only Assessing Officer but also the Appellate
Authority should have taken into consideration while deciding the stay
application.
10. That apart, in petitioner’s own case, it has been held to be ‘an assessee
not in default’ vide orders dated 31.03.2025 (Annexure P-12 and P-13).
Such being the position, we are of the view that the petitioner-assessee
cannot be called upon to pay 20% of the outstanding demand, as has been
ordered by the Appellate Authority. Because in any case the amount levied
under Section 201(1A) of the Act of 1961 is a penalty and not any sort of tax
on petitioner’s income.
11. The impugned order dated 09.02.2026 so also order dated 11.09.2025
(Annexure P-2) passed by the respondent no.2 are therefore, quashed and set
aside.
12. The stay application filed by the petitioner is allowed in the manner
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By:NAVEEN KUMAR
Signing Date:13.03.2026
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W.P.(C) 2932/2026 Page 3 of 4

that during the pendency of the appeal, the petitioner shall not be required to
pay any part of the demand raised by the Assessing Officer vide its order
dated 18.11.2022 (Annexure P-3). The Appellate Authority shall, however,
decide the appeal expeditiously, as the demand has been stayed.
13. Needless to say that we have not recorded any finding or made
observation on the merit of the case. Whatever has been observed is relevant
only to the extent of deciding the requirement of payment during pendency
of appeal. The Appellate Authority shall therefore, independently apply its
mind on the facts and law involved in the present case, including the order
of the Income Tax Appellate Tribunal dated 21.11.2025 and decide the
appeal in accordance with law.
14. The writ petition is disposed of in the aforesaid terms alongwith
pending application(s).


DINESH MEHTA
(JUDGE)


VINOD KUMAR
(JUDGE)
MARCH 9, 2026/ nk

Signature Not Verified
Digitally Signed
By:NAVEEN KUMAR
Signing Date:13.03.2026
10:24:06
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