Answer

1. F

   Facts

   Filing an appeal does not by itself stop recovery. Without a stay or the 20% payment and stay request, CPC can adjust the refund after the intimation period.

2. P

   Provisions and law

   • Sec 245, Income-tax Act 1961 (now Sec 438, Income-tax Act 2025)Refund can be set off against an earlier demand only after a written intimation to the taxpayer
   • Sec 246A, Income-tax Act 1961 (now Sec 357, Income-tax Act 2025)Appeal to the Commissioner (Appeals) against an order or intimation, in Form 35 (now Form 99)
   • CBDT Office Memorandum dated 31 July 2017 (stay of demand on 20% payment)A demand under first appeal is normally stayed on payment of 20% of the disputed demand, unless the case is exceptional
3. A

   Analysis

   CBDT guidance lets officers stay the demand under first appeal if 20% is paid, unless the case is exceptional. Example: demand ₹1,50,000 under appeal and refund ₹25,000. You can let the ₹25,000 adjustment count towards the 20% (₹30,000), pay ₹5,000 more, and ask for a stay on the rest. Tell CPC in the response that the appeal is pending and a stay is sought.

4. C

   Conclusion

   1. 1Work out 20% of the disputed demand
   2. 2Decide whether to let the refund count towards that 20%
   3. 3File a stay application with the jurisdictional officer
   4. 4Respond: Disagree, reason appeal filed, stay petition filed
   5. 5Keep copies of the appeal and stay request

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