Adjustment of Refund

Once outstanding demand is paid, interest demand for the delayed payment is raised; which you cannot disagree. It that be the case, no other solution; otherwise file grievance.

You should have raised the grievance as & when the order was issued. When no objection raised within 30 days, its presumed to be acceptable. Still try to file rectification request with proof of tax paid and for any mismatch between the tax credit as per form 26AS and assessment order.

If your TDS is not deposited and as such not reflected in form 26AS, even commissioner will not be able to help you. You should better get the TDS refunded from your deductor/s.

As such its not mistake of ITD. Get TDS reflected in form 26AS and ask for its credit. Without that its all in vain.