Penalty discretion under the Black Money Act vests with the Assessing Officer and is not automatic.

Imposition of penalty under Section 43 of the Black Money (Undisclosed Foreign Income and Assets) Act is discretionary: the statute's use of "may" for AO power and the mandatory-sounding quantum must be read with Section 46(3)'s opportunity-to-be-heard requirement, invoking strict construction of penal fiscal provisions. Authorities applying statutory interpretation treat Section 43 as directory, requiring the AO to consider facts and circumstances, including bona fide omission or inadvertence, before directing penalty; outcome therefore permits the AO to impose or waive penalty on a case-by-case basis.

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Issues: (i) Whether imposition of penalty under Section 43 of The Black Money (Undisclosed Foreign Income And Assets) And Imposition Of Tax Act, 2015 for non disclosure of foreign assets in Schedule FA is mandatory/automatic or discretionary.

Analysis: Section 43 of the Black Money Act uses the word "may" in relation to the Assessing Officer's power to direct payment of penalty for failure to furnish information or for furnishing inaccurate particulars regarding foreign assets, while prescribing the quantum of penalty in mandatory terms. Section 46(3) of the Act requires that no order imposing penalty shall be made unless the assessee is given an opportunity of being heard. Applying principles of statutory interpretation, charging or penal provisions in fiscal statutes are to be construed strictly and the use of "may" indicates discretion. Relevant authorities show that where a statute uses "may" and also contemplates an opportunity of hearing, the decision to impose penalty cannot be treated as automatic; instead the authority must consider facts and circumstances, including bona fide omission or inadvertence, before exercising the power. The Special Bench in Vinil Venugopal vs. DDIT (Inv.) (reported) interpreted Section 43 as directory and not mandatory and held that the Assessing Officer has discretion whether to impose penalty; factual determinations and exercise of discretion remain open for application to each case.

Conclusion: The imposition of penalty under Section 43 of the Black Money Act is discretionary and not mandatory; the Assessing Officer has the discretion to impose or waive penalty depending on facts and circumstances. This conclusion is in favour of the assessee.

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