Dismissing the appeal, the Court held that the order of the single judge in so far as it remitted the matter back to the Director General (Investigation) to compound the case by fixing the compound fee, did not warrant interference, inasmuch as even while remanding the matter, the judge had made it clear that the judgment in Prem Dass v. ITO, (1999) 236 ITR 683 (SC) would apply to the assessee, and further, the assessee was entitled to the benefit of section 279(1A) of the Act. The Department, having failed to challenge the order, was bound by it. The observation in the contempt proceedings that the order of the judge did not contain any positive direction was grossly misconceived and contrary to the plain language of the order of the judge. The assessee’s entitlement to compound in terms of section 279(2) of the Act stood resolved conclusively by the order of the single judge in the previous round of litigation and the Department, having failed to challenge the order on the writ petition, it could not raise contentions contrary to the findings therein. That the directions of the court issued in writ jurisdiction could not be watered down under the garb of examining compliance with the orders of the judge in a contempt proceeding or jurisdiction. The judge had conclusively held that the assessee was entitled to compound in view of the reduction of penalty by the appellate authority, thereby attracting section 279(1A) of the Act as explained by the Supreme Court in Prem Dass v. ITO, (1999) 236 ITR 683 (SC) it was not necessary to examine whether the case would be governed by the 2008 or 2019 circular.(AY. 2002-03)