Bona fide explanation for delayed return filing defeats section 270A penalty where income was later disclosed and tax paid.

Penalty under section 270A was held unsustainable because the assessee later disclosed the income in reassessment, paid tax before completion of assessment, and did not conceal material facts. The explanation for non-filing of the return-that tax was believed to have already been deducted and reflected in Form 26AS-was accepted as bona fide, bringing the case within the statutory exception under section 270A(6)(a). The limited difference between returned and assessed income, together with deletion of the section 69A addition in quantum proceedings, supported deletion of the penalty in favour of the assessee.

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Issues: Whether penalty under section 270A of the Income-tax Act, 1961 was sustainable in the facts of the case, and whether the assessee's explanation for non-filing of return brought the case within the exception under section 270A(6)(a).

Analysis: The assessee had not filed the return within time but had disclosed the income later in reassessment, paid the tax before completion of assessment, and there was no concealment of material facts. The difference between returned and assessed income was limited, and the addition under section 69A had also been deleted in quantum proceedings. In these circumstances, the explanation that the return was not filed under a bona fide belief that tax had already been deducted and reflected in Form 26AS was accepted as plausible and bona fide. The case was therefore found to fall within the statutory exception for bona fide explanations.

Conclusion: Penalty under section 270A was held to be unsustainable and deleted, in favour of the assessee.

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