Bona fide explanation and full disclosure can defeat section 270A penalty when a return filed under section 148 is accepted without addition.

Section 270A penalty for under-reporting is discussed in the context of a taxpayer who had not filed a return under section 139(1), later filed a return in response to notice under section 148, and faced no variation in assessed income. The analysis notes that under-reporting may arise where no return is furnished or the first return is filed under section 148, but sub-section (6) excludes cases where the explanation is bona fide and all material facts are disclosed. Because the income was reflected in Form 26AS, the return was accepted as filed, and no addition was made, the explanation for non-filing was treated as bona fide and the penalty was deleted.

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Issues: Whether penalty for under-reporting of income under section 270A of the Income-tax Act, 1961 was leviable where the assessee had not filed the return under section 139(1), later filed the return in response to notice under section 148, and the returned income was accepted without any variation.

Analysis: Section 270A fastens penalty where income is under-reported, and sub-section (2) contemplates such under-reporting in specified situations, including where the income assessed exceeds the maximum amount not chargeable to tax when no return has been furnished or a return is filed for the first time under section 148. However, sub-section (6) excludes a case where the explanation offered is bona fide and all material facts are disclosed. The assessee's salary income was reflected in Form 26AS, the return filed in response to notice under section 148 was accepted as filed, and no addition or variation was made in assessment. On those facts, the accepted income did not represent concealment or misrepresentation, and the explanation for non-filing was treated as bona fide.

Conclusion: The penalty under section 270A was not sustainable and was deleted.

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