Refund adjustment against tax demand limited to 20% where stay applications were already filed, with balance restoration directed.

Refund set-off against outstanding income-tax demands was restricted to 20% where stay applications had already been filed before the adjustment. The Court proceeded on the basis that payment of 20% would have left the balance 80% stayed, so the earlier refund adjustment could not exceed that limit. The remaining amount adjusted against the demands for the relevant assessment years was required to be restored, and refund of the balance 80% was directed.

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Issues: Whether the refund adjusted against outstanding demands for the assessment years 2015-16 and 2016-17 was liable to be reversed in part, and whether the respondents were required to confine the adjustment to 20% of the demand.

Analysis: The applications for stay of demand had been filed before the adjustment of the refund arising for the assessment year 2023-24. The Court proceeded on the basis that, if the petitioner had made payment of 20% of the demand on the date of the stay applications, the balance 80% would have stood stayed. In view of the adjustment already made, the appropriate course was to limit the set-off to 20% of the demand and to restore the remaining amount that had been adjusted.

Conclusion: The adjustment was confined to 20% of the demand for the assessment years 2015-16 and 2016-17, and the respondents were directed to refund the balance 80% already adjusted.

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