BMA s.43

BMA s.43 — the law in short

What the courts have decided on section BMA s.43, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Krishore Kumar Rajagopal v DDIT ITATHelps taxpayer
  I left my foreign ESOPs out of Schedule FA. Is the Rs 10 lakh penalty automatic?
  No. Section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015 says the officer 'may direct' a penalty, so the levy is discretionary. Where the ESOP perquisite had already suffered TDS and the capital gain on sale was offered to tax, the Tribunal treated the omission from Schedule FA as a technical breach and deleted the Rs 10 lakh penalty for each year.
• Addl. CIT v Adijin Perfumes Pvt Ltd ITATHelps taxpayerNo later treatment found
  The foreign investment was in the audited balance sheet and in Part A-BS of the return but not in Schedule FA. Is that a failure to furnish information for s.43?
  No. Following a coordinate bench, the Tribunal dismissed the Revenue's appeals and upheld the deletion of Rs 10,00,000 penalties for six years. The statutory trigger for s.43 is the failure to furnish in the return of income any information relating to a foreign asset; where the asset was disclosed in the audited accounts and in the balance-sheet schedule of the return, the return cannot be said to have been silent about it, and the unfilled Schedule FA is a lapse in the reporting format of the return rather than a complete failure to furnish information.
• Vinil Venugopal v DDIT (Special Bench) ITATHelps taxpayer
  Is the Rs 10 lakh penalty under s.43 of the Black Money Act automatic once the officer finds a foreign asset missing from Schedule FA?
  No. A Special Bench of the Tribunal, answering a reference on the point, held that the word 'may' in s.43 carries its plain meaning, is directory, and cannot be read as 'shall'. The imposition of the penalty is therefore not mandatory and not automatic: the Assessing Officer has a discretion to impose it or not, depending on the facts and circumstances of each case. The Special Bench answered the reference only; it did not examine the merits of the penalty orders before it, and directed the appeals to be placed before the Division Bench for disposal.
• Akil Abbas Rassai v DDIT (Inv) ITATHelps taxpayerNo later treatment found
  A foreign life policy was bought and paid for by my brother-in-law with my wife as beneficiary, and another one lapsed in 2014. Do either of them belong in my Schedule FA?
  On this order, neither. The Mumbai Tribunal deleted the s.43 penalties for all seven years. On the Isle of Man policy it proceeded on the assessee's claim that his brother-in-law bought the policy and paid every premium and that the assessee's wife was the inducted beneficiary, held that on that footing the assessee cannot be held beneficial owner or beneficiary, and deleted that penalty subject to verification by the Assessing Officer of who purchased the policy and who paid the premiums. On the UAE policy it held that a policy which had lapsed before the penalty provisions came into operation from assessment year 2016-17 could not attract them.
• Elangovan Malarmangai v JCIT ITATCuts both waysNo later treatment found
  The assessment under the Black Money Act has been quashed. Does the s.41 penalty go with it, and does the s.43 penalty go too?
  The s.41 penalty goes; the s.43 penalty does not. Because s.41 is a penalty on undisclosed foreign income and assets assessed under s.10, once the Tribunal deleted the additions on a legal ground the s.41 penalty of Rs 18,09,74,151 became infructuous and was directed to be deleted. The Rs 10,00,000 penalty under s.43 was separately upheld in the same order, because it turns on what was or was not put in the return and not on the assessment.
• Shiv Kumar Nayyar v Addl. CIT ITATHelps taxpayerNo later treatment found
  Both a s.41 and a s.43 penalty have been levied on me under the Black Money Act for the same year. Are they attacked the same way?
  No. The s.41 penalty is arithmetic tied to the assessment, so where the addition is reduced in the quantum appeal the Tribunal simply sends the penalty back to be recomputed. The s.43 penalty is a separate levy needing its own foundation, and here it was quashed outright because the Assessing Officer had recorded satisfaction for assessment years 2012-13 to 2017-18 but not for the year in which the penalty was imposed.
• Timothy John Brinkman v DDIT (Inv.) ITATHelps taxpayerNo later treatment found
  I am a foreign national who became resident in India and missed Schedule FA in my first return, but I put it right in a revised return. Is the Rs 10 lakh penalty still due?
  Not on these facts. The Mumbai Bench deleted a penalty under s.43 where a British citizen, resident in India for a fixed five-year assignment, omitted his United Kingdom assets from Schedule FA in the original return and disclosed them in a revised return filed within the time allowed by s.139(5). The Tribunal held that the Revenue had not established that he had ever been an Indian citizen or that the foreign investments came out of undisclosed Indian income, and that the Act is aimed at undisclosed foreign income and assets, not at a bona fide omission.
• Palanirajan Rajarajan v Addl. CIT ITATHelps taxpayerNo later treatment found
  Your return for the year was late and treated as invalid, though it did disclose the foreign assets in Schedule FA. Can the Rs 10 lakh penalty under s.42 still stand?
  On this order it was deleted - but not because s.42 was held to confer any discretion. The Tribunal deleted Rs 10 lakh penalties for both years, under s.43 for AY 2016-17 and under s.42 for AY 2017-18. The discretion reasoning, drawn from the word 'may' in s.43 and from Hindustan Steel, belongs to the s.43 year. For the s.42 year the route is factual and technical: the belated return did disclose the foreign assets in Schedule FA, the officer adopted the income admitted in that return, the return filed under s.153C substituted the regular return, and the late filing was 'mere technical breach'.
• Sanjay Bhupatrai Shah v DDIT ITATHelps taxpayerNo later treatment found
  My name is on a foreign account only as a second holder and my son owns it. Is the Rs 10 lakh penalty still mine?
  No, on these facts. The Mumbai Tribunal deleted s.43 penalties on a father who had been named as a joint holder of a foreign investment for administrative convenience where the son had declared full ownership of it. The omission from Schedule FA rested on a bona fide belief that he was not the owner, and financing an asset does not make the financier its owner.
• Prasad Nimmagadda v DIT (Inv) ITATHelps taxpayerNo later treatment found
  I disclosed the foreign assets in every year except one. Does the s.43 penalty for that one year stand?
  Not on these facts. The Tribunal deleted a s.43 penalty where the same foreign assets had been shown in Schedule FA for the years before and the years after, and the source of the investment had been accepted. It reasoned from s.46 that if the penalty were bound to follow the default there would have been no purpose in requiring a show-cause notice at all.
• JCIT v Vikash Marda ITATHelps taxpayerNo later treatment found
  They have issued notices under the Black Money Act for 2014-15 and 2015-16. Can the Act reach those years at all?
  No. The Kolkata Bench held that the first previous year under the Act is financial year 2015-16, so the first assessment year it can reach is 2016-17, and assessments framed for 2014-15 and 2015-16 were without jurisdiction. The batch is nine Revenue appeals covering both the assessments made under s.10(3) and the deletion of penalties levied under ss.41 and 43, and all nine were dismissed. On the asset, a fund in the United States built out of salary earned there while the assessee was a tax resident of the United States, and taxed there, was held not to fall within the definition of undisclosed asset under the Act.
• Ocean Diving Centre Ltd v CIT(A) ITATHelps taxpayer
  The foreign investment was in my balance sheet and elsewhere in the return, just not in Schedule FA. Does that still cost Rs 10 lakh?
  No, on these facts. The Mumbai Tribunal cancelled a s.43 penalty where a resident company's investment in Panamanian entities was shown in its balance sheet and in another schedule of the return but not in Schedule FA. The officer has a discretion under s.43 and it has to be exercised judicially; where there is no defiance of law and no mala fide or dishonest breach, the section is not attracted.
• CBDT instruction of 18 August 2025 on Black Money Act prosecutions CBDT Circulars & InstructionsHelps taxpayer
  The foreign asset is small and no penalty is proposed. Can they still prosecute me for leaving it out of Schedule FA?
  Not on the Board's own instruction. It directs that prosecution under s.49 or s.50 of the Black Money Act is not to be initiated in cases where penalty under s.42 or s.43 is not imposed or not imposable because the asset falls within the proviso to those sections - assets other than immovable property whose aggregate value does not exceed Rs 20 lakh. It amends an earlier instruction of 15 March 2022.
• Statutory position — ss.41 and 43 of the Black Money Act and s.72(c): the penalty of three times the tax computed under s.10, the Rs 10 lakh penalty for not reporting a foreign asset in the return with its twenty lakh rupee proviso from 1 October 2024, and the deemed year of acquisition for an asset acquired before commencement CBDT Circulars & InstructionsCuts both ways
  My client's Black Money assessment covers a foreign account opened in 2009 and not declared under the one-time compliance window. The department has charged tax and a penalty of three times the tax, and says the year is fixed by s.72(c). What do those provisions actually say?
  Section 41 provides that the Assessing Officer may direct that, in a case where tax has been computed under s.10 in respect of undisclosed foreign income and asset, the assessee shall pay by way of penalty, in addition to tax if any payable by him, "a sum equal to three times the tax computed under that section". It is therefore a multiple of the tax computed under s.10, and it follows the s.10 computation — if the computation goes, the base of the penalty goes with it. Section 43 is a different and smaller penalty: where a resident other than not ordinarily resident within s.6(6) of the Income-tax Act has furnished a return under s.139(1), (4) or (5) of that Act and fails to furnish any information, or furnishes inaccurate particulars, in that return relating to any asset (including financial interest in any entity) located outside India held by him as beneficial owner or otherwise, or in respect of which he was a beneficiary, or relating to any income from a source located outside India, the Assessing Officer "may direct that such person shall pay, by way of penalty, a sum of ten lakh rupees". Its proviso, as substituted by the Finance (No. 2) Act, 2024 with effect from 1 October 2024, reads: "Provided that this section shall not apply in respect of an asset or assets (other than immovable property), where the aggregate value of such asset or assets does not exceed twenty lakh rupees." The footnote on the departmental page records that before that substitution the proviso excluded only "an asset, being one or more bank accounts having an aggregate balance which does not exceed a value equivalent to five hundred thousand rupees at any time during the previous year". Section 72(c), in the removal-of-doubts provision at the end of the declaration chapter, is the hinge of the retrospectivity argument and reads: "where any asset has been acquired or made prior to commencement of this Act, and no declaration in respect of such asset is made under this Chapter, such asset shall be deemed to have been acquired or made in the year in which a notice under section 10 is issued by the Assessing Officer and the provisions of this Act shall apply accordingly".

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.