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In [2022] 445 ITR 622 (Raj)the CPC adjusted the refund against the demand in dispute before Commissioner ( A). 

The High court in writ course directed the CPC to refund the amount of refund adjusted by them in excess of 20 per cent. of the disputed demand within 30 days as according to it once the taxpayer has filed an appeal to CIT (A) the recovery of demand pending appeal will be an act in terrorem. The recovery action as per sections 222 and 223 of the Act can only be initiated by the Tax Recovery Officer and the adjustment from due refund can only be carried out after serving intimation and giving opportunity of hearing as per provisions of section 245 . 

This position holds good even if no stay application is filed by the taxpayer. 

The Court imposed costs upon the department for illegal recovery and much so went on to question the authenticity of office memorandum dated February 29, 2016 mandatorily seeking payment of 20 per cent of disputed tax for grant of stay. 

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