Assessee-company, engaged in manufacture and sale of electric two-wheelers, filed return declaring loss, which was initially accepted.  Pursuant to revision under section 263, Assessing Officer passed fresh order under section 144 read with section 263/144B, making addition under section 56(2)(viib) and levying penalty under section 271(1)(c), resulting in total demand of Rs. 3.11 crores. Commissioner (Appeals) directed assessee to pay 20 per cent of demand, which it discharged by way of earlier refund adjustments. Assessee also filed rectification petition for set-off of unabsorbed depreciation. Meanwhile, refund of Rs. 3.74 crores determined for assessment year 2024-25 was adjusted by CPC against disputed demand for assessment year 2016-17. On writ  allowing the petition the Court held that,  since 20 per cent of tax demand stood discharged and both appeal and rectification petition were pending, assessee was entitled to refund of adjusted amount and deferment of recovery proceedings, adjustment of refund was set aside. (AY.2016-17 & 2024-25)