Notice of demand dated 19.07.1991 was issued by Revenue in respect of assessment year 1985-86 for Rs. 9,33,020 and for assessment year 1987-88 for Rs. 3,11,206 – Upon petitioner depositing Rs. 6,00,000 with Revenue in October 1991, demand was stayed . Revenue appropriated deposit amount towards petitioner’s tax liability of Rs. 3,11,206 for assessment year 1987-88 .  Assessee applied under the Kar Vivad Samadhan Scheme .  For the   assessment  year 1987-88 in Certificate of Intimation dated 26.2.1999, liability of petitioner was determined @ 50% of total liability at Rs. 6,16,838 towards penalty and interest only . On writ the Court held that   since Tax Recovery Officer had already adjusted amount of Rs. 3,11,206 out of deposit amount of Rs. 6,00,000, petitioner was not liable to pay any interest on said amount of Rs. 3,11,206  As regards balance amount after adjusting any other penalty and interest that might arose for assessment year 1987-88, should be adjusted towards outstanding liability for assessment year 1985-86 (AY. 1985-86 ,  1987-88)