Indian Income Tax Law | Prosecution

Section 279 Income Tax Act: Previous Sanction for Prosecution and Compounding of Offences

Updated: 28 October 2026

Section 279 of the Income-tax Act, 1961 sets out who may authorise prosecution for specified tax offences, when prosecution is restricted, and how offences may be compounded. These procedural safeguards are important for taxpayers, directors, deductors and their advisers.

Law transition: The Income-tax Act, 2025 took effect on 1 April 2026. This article explains Section 279 of the 1961 Act for proceedings to which that Act continues to apply under the applicable repeal, savings and transition rules. For proceedings governed by the 2025 Act, check its current prosecution and compounding provisions rather than assuming the old section number continues.

What does Section 279 provide?

Section 279 is a procedural provision within Chapter XXII (Offences and Prosecutions). It does not itself create every underlying offence. Instead, it deals principally with previous sanction, a statutory protection linked to certain assessments, compounding, and the evidentiary use of statements or documents supplied to tax authorities.

Section 279(1): Previous sanction for prosecution

A person may not be proceeded against for offences specified in subsection (1) without previous sanction from a designated authority. The specified provisions include Sections 275A, 275B, 276, 276A, 276B, 276BB, 276C, 276CC, 276D, 277, 277A and 278, subject to the law applicable to the case.

The sanctioning authorities identified in the statutory text include the Principal Commissioner or Commissioner, Joint Commissioner (Appeals), Commissioner (Appeals) or appropriate authority, as applicable. The Principal Chief Commissioner, Chief Commissioner, Principal Director General or Director General may issue directions to the designated authorities regarding institution of proceedings. The expression appropriate authority refers to its definition in Section 269UA(c).

Meaning of previous sanction: approval by the statutorily designated authority before the relevant prosecution is instituted. The existence, competence and timing of sanction may therefore be significant issues in a prosecution case.

Section 279(1A): Protection after reduction or waiver of penalty

Subsection (1A) restricts prosecution under Sections 276C or 277 in relation to an assessment year where the relevant penalty imposed or imposable under Section 270A or Section 271(1)(iii) has been reduced or waived by an order under Section 273A. The precise statutory conditions and scope of the order must be checked; the provision is not a general immunity from all tax offences.

Section 279(2): Compounding of offences

An offence under Chapter XXII may be compounded before or after institution of proceedings by the Principal Chief Commissioner, Chief Commissioner, Principal Director General or Director General, subject to applicable CBDT directions and guidelines.

Meaning of compounding: an administrative mechanism for resolving prosecution exposure on prescribed conditions, generally involving payment of compounding charges and other dues. It is distinct from acquittal by a criminal court and is not an automatic entitlement.

The CBDT's revised compounding guidelines dated 17 October 2024, together with Circular No. 04/2025 dated 17 March 2025, explain the application process and relevant conditions. The FAQs state that compounding is not treated as an admission of the offence, and the revised framework makes offences under the Income-tax Act eligible for consideration for compounding. Eligibility for consideration does not guarantee approval.

Applicants should check the applicable filing period, required affidavit, payments, authority and any later instructions before filing. A criminal complaint may already have been lodged when compounding is sought.

Section 279(3): Statements and documents as evidence

A statement made, or an account or other document produced, before the income-tax authorities specified in Section 116(a) to (g) is not inadmissible merely because the person supplied it believing that a penalty might be reduced or waived under Section 273A, or that an offence might be compounded. Ordinary rules governing admissibility and evidentiary weight continue to matter.

Section 279(4) to (6): Sanction and compounding scheme

The provision also contains enabling machinery for a Central Government scheme intended to improve efficiency, transparency and accountability in granting sanction and compounding, including reduced physical interface and team-based processing. Statutory conditions and the historical deadline for notifications under subsection (5) should be read from the applicable official text.

CBDT instructions and directions

The concluding explanation confirms the Board's power to issue orders, instructions and directions for the proper compounding of offences, including directions about obtaining previous Board approval. Applicable guidelines should be read with the Act, not as a replacement for its requirements.

Practical checklist before prosecution or compounding

Identify the exact offence provision and the financial year or assessment year involved.
Verify the law governing the offence and any relevant transitional provisions.
Examine whether valid previous sanction was required and granted by the competent authority.
Review any Section 273A order that could engage subsection (1A).
For compounding, consult the current CBDT guidelines, prescribed application, documents, payments and timelines.
Preserve notices, sanction orders, complaint copies, payment records and correspondence.

Frequently asked questions

Is sanction required for every income-tax prosecution?

Section 279(1) specifically lists offences for which previous sanction is required. The requirements for any other offence must be determined from the applicable statutory provisions.

Can an offence be compounded after a prosecution complaint is filed?

Yes. Section 279(2) contemplates compounding before or after institution of proceedings, subject to the applicable guidelines and competent authority's decision.

Does payment of tax automatically end criminal prosecution?

No. Payment alone does not necessarily extinguish prosecution. A formal compounding order or other lawful disposal may be necessary.

Is compounding an admission of guilt?

CBDT Circular No. 04/2025 explains that compounding is not to be construed as admission of the offence.

Official law and guidance

This article provides general legal information, not case-specific advice. Verify the current statutory text, transitional rules and CBDT instructions before taking action.