No Penalty Where Return Filed After Probate Grant and Income Fully Disclosed in Form 26AS

Estate of Binoy Kumar Chandra Vs Office of ITO (ITAT Kolkata)

The appeal was filed by the assessee against the order of the National Faceless Appeal Centre dated 17.09.2025 for Assessment Year 2020–21, concerning the imposition of a penalty of ₹12,77,227 under Section 270A of the Income-tax Act, 1961. The penalty had been levied by the Assessing Officer (AO) on 23.06.2024 and subsequently confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)].

The case arises from the death of Mr. Binoy Kumar Chandra on 13.06.2019, after which his estate was formed. A petition for probate of executors, along with the will dated 13.06.2019, was filed before the Calcutta High Court on 26.08.2021. The probate was granted to the executors on 09.03.2022 and received on 15.03.2022. By that time, the statutory deadline for filing the income tax return had already expired, and consequently, no return was filed within the prescribed time.

Subsequently, the AO issued a notice under Section 148A(b) on 06.02.2024. The assessee responded by admitting the income reflected in Form 26AS and explaining the reasons for not filing the return earlier. Thereafter, an order under Section 148A(d) was passed on 22.03.2024, followed by issuance of notice under Section 148. In response, the assessee filed a return of income on 10.05.2024, declaring a total income of ₹80,68,052 as reflected in Form 26AS, and paid the applicable taxes along with interest.

Following this, notices under Sections 143(2) and 142(1) were issued and duly complied with. The AO completed the assessment on 17.12.2024, accepting the returned income without any modifications. Despite this, a penalty under Section 270A was imposed on 23.06.2024 for under-reporting of income. The assessee challenged the penalty before the CIT(A), but the appeal was dismissed on the ground that no satisfactory explanation or evidence had been provided for the failure to file the return on time.

Before the Tribunal, it was observed that the income declared in the return was already reflected in Form 26AS and was subject to tax deduction at source at the rate of 10%. It was also noted that the estate could not file a return prior to the grant of probate, as the executors were formally authorized only after receiving the probate from the High Court.

The Tribunal examined the provisions of Section 270A(6), which exclude certain income from the scope of “under-reported income” if the assessee provides a bona fide explanation and discloses all material facts. It found that the explanation given by the executors was reasonable and bona fide, as the delay in filing the return was due to circumstances beyond their control, namely the delay in obtaining probate.

Further, the Tribunal referred to the FAQs issued by the Income Tax Department regarding registration as a representative assessee. These guidelines clarify that legal heirs or executors can act on behalf of a deceased person or estate only after furnishing specified documents, including a court order appointing executors. Based on these guidelines, the Tribunal concluded that the obligation to file the return arises only after the executors are formally recognized through a court order.

The Tribunal also noted that the period during which probate was pending coincided with the COVID-19 pandemic. It highlighted that the Supreme Court had extended limitation periods from 20.03.2020 to 28.02.2022 through suo motu orders. Since the probate was granted on 09.03.2022 and received on 15.03.2022, this period was effectively covered by the extended limitation.

In view of these facts, the Tribunal held that the delay in filing the return was justified and beyond the control of the executors. Accordingly, it concluded that the penalty imposed under Section 270A and confirmed by the CIT(A) could not be sustained. The Tribunal set aside the order of the CIT(A) and directed the AO to delete the penalty.

FULL TEXT OF THE ORDER OF ITAT KOLKATA

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 17.09.2025 for the AY 2020-21. The penalty was levied by the Id. AO u/s 270A of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) vide order dated 23.06.2026.

2. The only issue raised by the assessee is against the imposition of penalty of Rs.12,77,227/- by the A.O. and its confirmation by the Learned CIT(A), under section 270A(2)(b) of the Act.

3. The facts in brief are that Mr. Binoy Kumar Chandra, died on 13.06.2019 and post demise of the said person, estate of the deceased was formed, as “Estate of Binoy Kumar Chandra”. Thereafter, a petition was filed before the Hon’ble Calcutta High Court on 26.08.2021, for probate of executors along with the will dated 13.06.2019. The probate of executors was granted by the Hon’ble Calcutta High Court to Shri Uday Kumar Chandra and Shri Suvro Chandra on 09.03.2022. The probate was received on 15.03.2022. By the time, the time limit for filing the Income Tax return had already expired and, therefore, the return of income could not be filed. A notice u/s 148A(b)of the Act, was issued by the A.O. on 06.02.2024, which was complied with by admitting the income appearing in Form 26AS, as income and providing reasons for not filing the return of income. Thereafter, order u/s 148A(d) of the Act, was passed on 22.03.2024, and notice u/s 148 of the Act, was issued. Finally, on the same date the assessee by filing a return of income on 10.05.2024, declared a total income of Rs.80,68,052/- as appearing in Form 26AS and also paid due taxes along with interest thereon. Thereafter, notice u/s 143(2) and 142(1) of the Act, were issued and the assessee duly complied with the said notices. The assessment was accordingly framed by the A.O., vide order dated 17.12.2024, accepting the returned income. Thereafter, a penalty order was passed u/s 270A of the Act on 23.06.2024, levying a penalty of Rs. 12,77,227/- under Section 270A of the Act. Aggrieved by the same, the assessee preferred the appeal before the Id. CIT(A).

4. In the appellate proceedings, the Id. CIT(A), after taking into account, the submissions of the assessee ,dismissed the appeal of the assessee by holding that assessee could not offer any explanation/ evidences for not filing the return of income and, therefore, penalty was rightly imposed by the A.O.

5. After hearing the rival contentions and perusing the material available on record, we find that the probate of executors was granted by the Hon’ble Calcutta High Court on 09.03.2022, and the probate was received on 15.03.2022. Nonetheless, it is undisputed that the income as declared in the return of income filed, in response to notice u/s 148 of the Act was duly appearing in the Form 26AS on which a TDS at the rate of 10 per cent was also deducted. We also note that Shri Binoy Kumar Chandra died on 13.06.2019, and, thereafter, his estate was formed and, therefore, it was not possible to file the return of income of the estate unless a probate was granted by the Hon’ble Court in favor of the executors. We have perused the provisions of section 270A(6) of the Act, which provides that unreported income for the purpose of this section shall not include the following:-

(a) the amount of income in respect of which the assessee offers an explanation and the Assessing Officer or the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as the case may be, is satisfied that the explanation is bona fide and the assessee has disclosed all the material facts to substantiate the explanation offered;

5.1 Therefore, considering the provision of section 270A(6) of the Act, we are of the view that the explanation of the executors is reasonable and bonafide and the reasons for not filing of return are beyond the control and capacity of the executors. Therefore, the penalty as levied by the A.O. and confirmed by the CIT(A) cannot be sustained.

5.2 We have also perused the FAQs issued by the Income Tax Department with regard to registration as Representative Assessee/ Register to Act on behalf of another person/ authorized another person to act on behalf of self, which provides for following criteria to appoint legal heir or executor in case of the deceased or estate of the deceased.

“Question 4:

Who can register as a Representative Assessee? What are the required documents an individual need to furnish to be a Representative Assessee?

The below table lists the cases where one can register as Representative Assessee along with the documents to be furnished:

Copy of legal heir proof as per the norms includes the following:

Legal Heir Certificate issued by Court of Law/ Local Revenue Authority.

Surviving family member certificate issued by the Local Revenue Authority.

Family Pension certificate issued by Central/ State Government.

Register Will.

Letter issued by the banking or Financial Institution in their letter head, with official seal and signature mentioning the particulars of nominee or joint account holder to the account of the deceased at the time demise.

“Question 7:

What is category of Assessee on behalf of whom you can register yourself? What are the required documents to register?

The below table lists category of the Assessee on behalf of whom you can register yourself along with the documents to be furnished:

5.3 Considering the above FAQs, Q4 & Q7 and the guidelines as provided by the Income Tax Department, we observe that the obligation to file return by the legal heirs or executors comes into play after the receipt of the order from the court appointing legal heir or executors. Considering the fact, we are inclined to set aside the order of CIT(A) and direct the A.O. to delete the penalty.

5.4 Before parting, we would like to mention that F.Y. 2020-21 and F.Y. 2021-22 were COVID period and, therefore, it took approximately three years to obtain probate from the Hon’ble Court after demise of Mr. Binoy Kumar Chandra on 13.06.2019. We would like to mention that Hon’ble Supreme Court has Suo moto extended the limitation from 20.03.2020 till 28.02.2022, vide order dated 10.01.2022 in Miscellaneous Application No. 21 of 2022, in Miscellaneous Application No. 665 of 2021 in Suo moto Writ Petitions(C) No. 3 of 2020. Since, the probate was granted on 09.03.2022, and was received on 15.03.2022 , the period was covered by the order of the Hon’ble Supreme Court. Therefore, set aside the order of CIT(A) and direct the A.O. to delete the penalty.

6. In the result, appeal of the assessee is allowed.

Order pronounced on 15.04.2026.