The Income Tax Appellate Tribunal (ITAT) Chennai has ruled in favor of Mr. Kishore Kumar Rajagopal, canceling a ₹10 lakh penalty imposed by the Income Tax Department for failing to disclose employee stock options (ESOPs) in his income tax return for the assessment year 2016-17. Mr. Kumar, who received ESOPs from Vedanta Resources PLC (UK) while working abroad, did not include them in the Schedule Foreign Assets (FA) of his return filed on February 22, 2018. The Income Tax Department initiated penalty proceedings under Section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (BMA), which were upheld by the Commissioner of Appeals. However, during the appeal, Kumar's Chartered Accountant, Prakash Shridhar Hegde, argued that the omission was accidental and that the perquisite value of the ESOPs had already been subjected to tax deducted at source (TDS). The tribunal acknowledged that the omission was due to a lack of clarity in reporting requirements during the initial year of implementation. Citing judicial precedents, ITAT Chennai found that the penalty under Section 43 is discretionary and cannot be imposed for mere technical lapses. Consequently, the tribunal deleted the penalty, emphasizing that there was no intention to conceal income or evade taxes.