Section 491 — Prosecution to be at instance of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. Successor to s.279 of the 1961 Act.
Sub-section (1) bars a person from being proceeded against for an offence under section 473, 474, 475, 476, 477, 478, 479, 480, 481, 482, 483 or 484 except with the previous sanction of the Principal Commissioner or Commissioner or Commissioner (Appeals) or Joint Commissioner (Appeals). Sub-section (2) permits the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General to issue such instructions or directions to those authorities as he deems fit for institution of proceedings under sub-section (1).
Sub-section (3) bars a prosecution for an offence under section 478 or 482 in relation to the assessment for a tax year in respect of which the penalty imposed or imposable on the person under section 439 has been reduced or waived by an order under section 469. Sub-section (4) allows any offence under the Chapter to be compounded, either before or after the institution of proceedings, by the Principal Chief Commissioner or Chief Commissioner or a Principal Director General or Director General.
Sub-section (5) protects the evidentiary position of a person proceeded against under sub-section (1): a statement made or an account or other document produced by him before an income-tax authority specified in section 236(a) to (k) is not inadmissible in those proceedings merely because the statement was made or the document produced in the belief that the penalty imposable would be reduced or waived under section 469, or that the offence would be compounded. Sub-section (6) provides that the Board's power to issue orders, instructions or directions under the Act includes the power to issue instructions or directions to other income-tax authorities for the proper composition of offences under the section, including directions to obtain the Board's previous approval.
Why it is there
Prosecution is the gravest step the Department can take against a taxpayer, so the section puts a named senior officer between the case and the criminal court and makes his sanction a condition of proceeding at all. Sub-section (3) keeps that consistent with the penalty side: where the penalty for the same assessment has been reduced or waived under section 469, the person is not to be prosecuted for the corresponding offences. The compounding power in sub-section (4) provides an exit short of trial, and sub-section (5) makes sure that a person who cooperated in the hope of relief cannot have that cooperation excluded as evidence merely for that reason.
Who it applies to
A person sought to be proceeded against for an offence under section 473 to 484 as listed in sub-section (1)
The Principal Commissioner or Commissioner or Commissioner (Appeals) or Joint Commissioner (Appeals), who gives the previous sanction
The Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General, who may issue instructions for institution of proceedings and who may compound an offence
A person whose penalty under section 439 has been reduced or waived by an order under section 469, for offences under section 478 or 482
A person who has made a statement or produced an account or document before an income-tax authority specified in section 236(a) to (k)
The Board, in issuing instructions or directions for the proper composition of offences
What this means in practice
Sanction is a condition precedent, and it is confined to the twelve sections listed in sub-section (1) — an offence outside that list is not covered by this bar. The sanctioning authorities are the Principal Commissioner, Commissioner, Commissioner (Appeals) and Joint Commissioner (Appeals); the Principal Chief Commissioner and Director General appear in sub-section (2) only to instruct them and in sub-section (4) as the compounding authorities, which are a different set of officers from the sanctioning ones. The bar in sub-section (3) is narrow in three ways at once: it covers only offences under section 478 or 482, only in relation to the assessment for the tax year for which the penalty was reduced or waived, and only where that reduction or waiver was by an order under section 469 in respect of a penalty under section 439. Compounding is available at any stage, before or after proceedings are instituted. Sub-section (5) does not make every such statement admissible — it removes only one ground of objection, that the statement or document was given in the belief that the penalty would be reduced or waived or the offence compounded.
An example
Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.
A person is sought to be prosecuted for an offence under section 478 in relation to a tax year's assessment. Before any complaint can be made, sub-section (1) requires the previous sanction of the Principal Commissioner or Commissioner or Commissioner (Appeals) or Joint Commissioner (Appeals). If, for that same assessment year, the penalty imposed on him under section 439 has been reduced by an order under section 469, sub-section (3) bars the prosecution altogether. If instead the prosecution proceeds, statements he made earlier before an income-tax authority specified in section 236(a) to (k) in the hope of a waiver cannot be excluded merely on that ground, and the offence may still be compounded by the Principal Chief Commissioner or Chief Commissioner or a Principal Director General or Director General.
Where you meet this section
You meet this in the sanction order that must precede a prosecution complaint under any of the listed offences, and in a compounding application made to the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General, before or after proceedings have been instituted. It is also the first thing to check when a prosecution complaint is served: whether the required previous sanction exists.
The words themselves
A person shall not be proceeded against for an offence under section 473, 474, 475, 476, 477, 478, 479, 480, 481, 482, 483 or 484 except with the previous sanction of the Principal Commissioner or Commissioner or Commissioner (Appeals) or Joint Commissioner (Appeals).
Section 491(1), Income-tax Act, 2025.
Any offence under this Chapter may be compounded, either before or after the institution of proceedings, by the Principal Chief Commissioner or Chief Commissioner or a Principal Director General or Director General.
Section 491(4), Income-tax Act, 2025.
in respect of which the penalty imposed or imposable on him under section 439 has been reduced or waived by an order under section 469
Section 491(3), Income-tax Act, 2025.
What people get wrong
Treating sanction as required for every offence in the Chapter. Sub-section (1) lists the sections it covers; compounding under sub-section (4), by contrast, extends to any offence under the Chapter.
Confusing the sanctioning authorities with the compounding authorities. Sanction under sub-section (1) comes from the Principal Commissioner, Commissioner, Commissioner (Appeals) or Joint Commissioner (Appeals); compounding under sub-section (4) is by the Principal Chief Commissioner, Chief Commissioner, Principal Director General or Director General.
Reading the section 469 bar as covering all offences. Sub-section (3) applies only to offences under section 478 or 482, and only for the assessment for the tax year whose section 439 penalty was reduced or waived.
Assuming compounding is only available before a complaint is filed. Sub-section (4) permits it either before or after the institution of proceedings.
Reading sub-section (5) as making such statements automatically admissible. It removes only the objection that the statement or document was given in the belief that the penalty would be reduced or waived under section 469 or that the offence would be compounded.
What this replaced
The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.
279 - Prosecution to be at instance of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner
A circular binds the department, not you and not a court. Every one below was written under the 1961 Act; it reaches this section because the department’s own concordance carries the provision it names to this one.
Circular No. 1/2020 — Relaxation of time compounding of offences under direct tax laws one time measure extension of timeline 2020-01-03
Circular No. 25/2019 — Relaxation of time compounding of offences under direct tax laws one time measure 2019-09-09
Read this before you rely on it. Every decision below was decided under the Income-tax Act, 1961. It appears here because it is tagged to a 1961 provision that the department’s own mapping carries to section 491. That is an inference we have drawn, not a holding on the new section: where the words changed in the move, the reasoning may not survive. Treat this as the place to start looking, not as authority on the 2025 Act.
Madhumilan Syntex Ltd v Union of IndiaSupreme CourtHelps departmenttagged s.279 I deposited the TDS late but with interest. Can the company and its directors still be prosecuted?
P. Jayappan v ITOSupreme CourtHelps departmenttagged s.279 The complaint under s.276C and s.277 was filed while my reassessment is still running. Is it premature?
Sasi Enterprises v ACITSupreme CourtHelps departmenttagged s.279(1) The firm never filed its returns and the assessments were made under s.144. Can we get the s.276CC complaint discharged because the assessment was…
Vijay Krishnaswami v DDIT (Investigation)Supreme CourtHelps taxpayertagged s.279 The Settlement Commission accepted my disclosure. Can the department still prosecute me for evasion?
Vinubhai Mohanlal Dobaria v CCITSupreme CourtHelps taxpayertagged s.279(2) I filed my return late. When is the 276CC offence committed, and is it still a first offence?
A.M. Enterprises v State of JharkhandHigh CourtHelps taxpayertagged s.279(1) I paid the TDS with interest before sanction and no penalty was ever levied. Can they prosecute?
B. Mohammad Iqbal v ACITHigh CourtHelps taxpayertagged s.279 The section 276CC complaint against me was filed by an Assistant Commissioner although my case was with the Income-tax Officer, and no assessment was…
ITO v MKY Constructions P LtdHigh CourtHelps taxpayertagged s.279(1) We paid the whole TDS default with interest before the complaint was filed. Can we still be prosecuted under s.276B?
Jai Singh Goel v CCITHigh CourtHelps taxpayertagged s.279 The Commissioner has refused to compound my s.276CC offence. Can I take that refusal to the High Court?
Vipul Aggarwal v ITOHigh CourtHelps taxpayertagged s.279 The sanction for prosecution names the company as the assessee. Can the complaint proceed against me as its director?
CBDT Compounding Guidelines 2024CBDTHelps taxpayertagged s.279(2) I want to compound my income tax offence. What do the current guidelines let me do?
s.276CC: prosecution for not filing the returntagged s.279 A s.276CC notice has come for a year where the return went in late. What actually has to be shown, and does the proviso save me?
Read with
Section 236
Section 439
Section 469
Section 474
What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.