The assessee was assessed under section 143(3) read with section 144B, which reduced its returned loss but did not give rise to a tax demand. Subsequently, a penalty was levied under section 270A, which the assessee disputed before the First Appellate Authority. During the pendency of the appeal, the Revenue adjusted refunds from subsequent years (AY 2022-23 and AY 2023-24), resulting in a recovery exceeding 20 per cent of the disputed penalty. The Hon’ble High Court of Bombay held that as per CBDT Instruction No. 1914 (as modified by Office Memorandums dated 29-2-2016 and 31-7-2017), the Assessing Officer cannot recover more than 20 per cent of the disputed demand as a pre-condition for stay without explicit directions from the Principal Commissioner. Since no such direction was received, the action was contrary to CBDT instructions. The Assessing Officer was directed to retain only 20 per cent of the disputed penalty and refund the balance sum to the assessee. Referred, CBDT Instruction No.1914 dated 21-3-1996, as modified by Office Memorandums dated 29-2-2016 and 31-7-2017. Directed to refund the amount.  (AY. 2021-22)