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of <h1>Tax recovery adjustments against disputed demand beyond 20% pre-deposit cap under CBDT circular; excess recovery to be refunded.</h1> The dominant issue was whether tax recovery/adjustment against an outstanding demand exceeded the permissible pre-deposit threshold under the applicable ... Refund claim - adjustment made towards the tax demand including the pre-deposit 10% of the disputed tax which is in excess of demand amount - as submitted that even if 20% is required to be deposited as per the CBDT circular, the total amount that ought to have been deposited by the petitioner is only Rs. 76,03,056/-. Therefore, the balance sum of Rs. 16,27,422/- (i.e.,Rs.2,30,478 – Rs. 76,03,056) has been recovered in excess. HELD THAT:- In the light of the submissions made by the learned counsel for the petitioner and the learned counsel for the respondents, this writ petition is disposed of by directing the respondents to consider the petitioner’s representation dated 25.06.2025 on merits within a period of six weeks from the date of receipt of a copy of this order and any amount recovered in excess of 20% shall be refunded to the petitioner. The writ petition sought a direction to consider the petitioner's representation dated 25.06.2025 under section 220(6) of the Income Tax Act, 1961 and to refund Rs. 16,27,422/- allegedly recovered beyond the 'statutory threshold of 20%.' The petitioner had challenged the assessment order dated 23.04.2024 by filing an appeal under Section 246A and had 'pre-deposited 10% of the disputed tax' (Rs. 38,01,528/-). During pendency of the appeal, the department adjusted refunds for Assessment Years 2021-2022 (Rs. 3,47,040/-) and 2024-2025 (Rs. 50,81,910/-), totalling Rs. 54,28,950/-, against the outstanding demand. The petitioner contended that total recovery/adjustment (including pre-deposit) was Rs. 92,30,478/- against demand of Rs. 76,03,056/-, and that recovery beyond 20% should be refunded. The court disposed of the petition directing the respondents 'to consider the petitioner's representation dated 25.06.2025 on merits within a period of six weeks' and ordered that 'any amount recovered in excess of 20% shall be refunded to the petitioner.'
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