Discretion, Not Default – Penalty Under The Black Money Act

It is a settled position of law that an imposition of penalty is a matter of discretion, in terms of the importance given to the requirement of an opportunity of hearing across statutes.¹ However, the intent of the Legislature may get masked under ambiguous terminology used by some of the statutes. One such instance is that of Section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 ('BMA'), on the use of the terms "may" and "shall".

In a case involving non-disclosure of foreign assets investment in a Cayman Islands entity by the Assessee,² in Schedule FA of their Income Tax Return, the Income Tax Department had imposed the maximum penalty of INR 10 lakh under Section 43 of the BMA for failure to furnish accurate particulars of foreign assets.