Compounding barred for offences with prior substantial imprisonment or related prior convictions under direct tax laws. Offences under Direct Tax laws cannot be compounded if the assessee was previously convicted and sentenced to imprisonment for two years or more, with or without fine. Similarly, compounding is barred where the person has a prior conviction under any other law carrying prescribed imprisonment of two years or more (with or without fine) that is directly related to the offence sought to be compounded.