Discretionary penalty under the Black Money Act may not apply where Schedule FA non-disclosure is only a bona fide technical lapse.

Section 43 of the Black Money Act is described as discretionary, not automatic, because the word "may" and the hearing requirement require a judicious exercise of power on the facts of each case. Where a foreign investment was made from disclosed, tax-paid funds routed through regular banking channels, and the related income and capital loss were reported in returns, a failure to complete one disclosure column in Schedule FA is treated as a bona fide technical lapse rather than a substantive concealment. On that reasoning, penalty is said to be unwarranted where the omission is only venial and the asset's source is fully explained.

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Issues: Whether penalty under section 43 of the Black Money (Undisclosed Foreign Income & Assets) and Imposition of Tax Act, 2015 was leviable for non-disclosure of a foreign investment in Schedule FA where the investment was made through disclosed, tax-paid funds and the omission was claimed to be inadvertent.

Analysis: Section 43 uses the expression "may", and the accompanying hearing requirement indicates that imposition of penalty is not automatic but depends on a judicious exercise of discretion on the facts of each case. The foreign investment was sourced from disclosed mutual fund redemptions, remitted through regular banking channels in compliance with FEMA and LRS, and the related income and later capital loss were also disclosed in the relevant returns. The only lapse was failure to fill one disclosure column in Schedule FA. In these circumstances, the omission was treated as a bona fide and technical lapse, and the precedents relied on by the Revenue did not compel a different result.

Conclusion: Penalty under section 43 was not warranted, and the assessee succeeded.

Ratio Decidendi: Penalty for non-disclosure of foreign assets under section 43 of the Black Money Act is discretionary and is not to be imposed mechanically where the assessee establishes bona fide, tax-paid source of the asset and the default is only a technical or venial omission.

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