Bona fide non-filing by an estate before probate defeats penalty under section 270A when income is otherwise fully disclosed.

Penalty under section 270A of the Income-tax Act was deleted because the estate could not validly file the return before probate was granted to the executors. The omission was treated as reasonable and bona fide, since the income was ultimately disclosed in Form 26AS with tax deducted at source and all material facts were available. In these circumstances, section 270A(6) applied, so the income was not to be treated as unreported and under-reporting penalty was unsustainable.

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Issues: Whether penalty under section 270A of the Income-tax Act, 1961 was sustainable where the return of income of the estate could not be filed before probate was granted to the executors and the omission was explained as bona fide.

Analysis: The return of income was filed after the executors received probate, and the income ultimately stood disclosed in Form 26AS with tax deducted at source. The estate could not validly act through executors until the court-appointed authority was obtained. In these circumstances, the explanation for non-filing of the return was held to be reasonable and bona fide, attracting the protection of section 270A(6) of the Income-tax Act, 1961, under which such income is not to be treated as unreported where the explanation is bona fide and all material facts are disclosed. The administrative guidance regarding registration and action by legal heirs or executors also supported the view that the obligation arose only after the court order appointing the executors.

Conclusion: The penalty under section 270A of the Income-tax Act, 1961 was not sustainable and was directed to be deleted.

Ratio Decidendi: Where non-filing of a return by the estate is attributable to the absence of probate or other court authorization for the executors, and the income is otherwise fully disclosed with a bona fide explanation supported by material facts, penalty for under-reporting cannot be sustained under section 270A of the Income-tax Act, 1961.

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