A Special Bench of the Tribunal was constituted to decide whether the use of the word “may” in section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 should be construed as “shall”, i.e., whether the imposition of penalty is mandatory once the requirements of section 43 are satisfied. The assessees, husband and wife, had not disclosed in Schedule FA of their income tax return foreign investments in Avestar Global Opportunities SPC (Cayman Islands). The Assessing Officer levied a penalty of Rs.10 lakhs each under section 43 for such non-disclosure, which was confirmed by the CIT(A). The Tribunal held that the word “may” in section 43 indicates discretion and cannot be read as “shall”. The requirement under section 46(3) to afford an opportunity of hearing before imposing penalty also shows that the penalty is not automatic. The Bench observed that if imposition of penalty were mandatory, such an opportunity would be redundant. Relying on Hindustan Steel Ltd. v. State of Orissa (1972 )83 ITR 26 (SC) and Ankit International v. ACST (2011 ) 46 VST 1  (Bom),(HC)  it was held that even where the statute prescribes a minimum penalty, the authority can refrain from levying penalty where the breach is technical, venial, or due to bona fide oversight. The Tribunal distinguished Revenue’s reliance on Nirmal Bhanwarlal Jain v. CIT(A)-51 [BMA No.13 (Mum) of 2023, dated 31-7-2023]  and Ms. Shobha Harish Thawani v. JCIT, [2023] 154 taxmann.com 564 ( Mum)( Trib)holding that in those cases, the claim of bona fide mistake was unsubstantiated. It held that when two interpretations of a fiscal provision are possible, the view favourable to the assessee should prevail. Accordingly, it was held that the imposition of penalty under section 43 is not mandatory, and the Assessing Officer has discretion to impose or waive the penalty depending on the facts of the case. The matter was directed to be placed before the Division Bench for decision on merits. (BMA Nos. 33 & 34/Mum/2024, dt. 14/10/2025]