Smite is aimed at the bag of holding. Not at the boss itself.
Going by the rules. When a bag of holding is destroyed. The contents contained within are scattered to the Astral Plane.
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Boss isn’t fully inside the bag and so isn’t its contents.
Now… if this was the disembodied head of Nixon in a jar that’d be another matter.
Aroooooo!
Yeah. This was quite amusing on Dungeons & Daddies but I wouldn’t allow it either. Essentially 1 Sleight of Hand or Athletics roll plus an attack roll with advantage (blind) shouldn’t equal an instant kill even if it destroys a magic item.
Would closing a gate and thereby bisecting a being also bisect their soul?