The assessee made an application for  compounding of offences, however, failed to deposit the compounding fees. Pursuant to the same, the revenue filed a complaint before the Metropolitan Magistrate. The assessee filed a fresh compounding application after making payment of compounding fees which was not considered or disposed-off. On writ the Court held that the compounding application cannot be rejected on the ground that delay in filing of the application, since no limitation period has been provided u/s 279 for filing or consideration of the compounding application.

The Court also held that the CBDT guidelines cannot provide for limitation nor can restrict the operation u/s. 279 and guidelines are subordinate to the principal Act and Rules and cannot override or restrict the application of specific provisions enacted by the legislature. Further, the Court also observed that there is no restriction on the number of applications that could be filed, and the only requirement of the provisions is that the complaint filed by the revenue should be still pending, which is admittedly pending in the present case. Accordingly, the Court directed to put a stay on the prosecution proceedings before the Metropolitan Magistrate, until the compounding application is disposed of. (Para 8(vii) of the circular dated December 23, 2014 [2015] 371 ITR (St.) 7)