SB holds levy of penalty under Black Money Act for default in reporting of foreign assets, as discretionary and not automatic

 This Tax Alert summarizes a decision of the Special Bench of the Income Tax Appellate Tribunal, Mumbai (SB) dated 14 October 2025 in the case of Vinil Venugopal and Ranjeeta Vinil ^[1] (Taxpayers), wherein the issue before the SB was whether the imposition of penalty under Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA) for default in disclosure of foreign assets/income in the return of income (ROI), is “mandatory” and “automatic”.

The SB held that the use of the expression “may” under BMA, together with the fact that BMA also requires the tax authority to grant an opportunity of being heard to the taxpayer, indicates that penalty levy is discretionary in nature and not automatic.