The assessee was alleged to have concealed the declaration of endowment in a foreign country in his return of income filed for the assessment year 2002-03 and thereby wilfully attempted to evade tax, penalty and interest and prosecution was launched against him for offences under sections 276C(1) and 277. The assessee filed an application for compounding of the offences. Meanwhile the penalty imposed on him was reduced by the Commissioner (Appeals) and this was confirmed by the Tribunal. The application for compounding was rejected by the Director General of Income-tax. On a writ petition to quash the order the Court held that even if the Director General of Income-tax was of the view that the application was required to be rejected in the preliminary stage itself, there was a duty cast on him to forward such a compounding application to the committee, who was vested with the jurisdiction to handle the application and not assume such powers on himself. Likewise, when one among the two offences, namely, section 276C(1) had been classified as a non-technical offence, for the compounding of which powers were vested with the committee, the Director General of Income-tax would have no powers to go into the merits of the compounding application. The Director General of Income-tax had exceeded his jurisdiction in taking up the assessee’s compounding application. Just because the order reducing the penalty had been put under challenge in appeals, it could not be said that the order reducing the penalty itself had been kept under abeyance. In this background, it could only be said that the assessee would be entitled to the benefit of section 279(1A) of the Act and the mere challenge to the order reducing the penalty may not suffice to deny such a benefit. The rejection of the application for compounding was not justified.  (Followed Prem Dass v. ITO (1999) 236 ITR 683 (SC) / (1999) 5 SCC 241  (Order of single judge dt 28-08 2019)  (AY. 2002-03 )