(1) If the Commissioner or the Additional Commissioner or Appellate Deputy Commissioner or the Tribunal, in the course of any proceedings under this Act is satisfied that a dealer has concealed his turnover or the aggregate amount of purchase prices in respect of any goods or has furnished false particulars of his sales or purchases, as the case may be, in his return or returns for any year or part thereof or has furnished a false return or returns for such period, the Commissioner or the Additional Commissioner or Appellate Deputy Commissioner or the Tribunal, as the case may be, may initiate proceeding separately for imposition of penalty under this section.

(2) The proceeding under sub-section (1) shall be initiated by the Commissioner or the Additional Commissioner or Appellate Deputy Commissioner or the Tribunal, as the case may be, by issue of a notice in the prescribed form for giving the dealer an opportunity of being heard. On hearing the dealer, the Commissioner or the Additional Commissioner or Appellate Deputy Commissioner or the Tribunal, as the case may be, shall pass an order not later than one calendar year from the date of initiation of such proceeding, directing the dealer that he shall in addition to the tax payable by him,in addition to interest at the rate specified in sub-clause (iii) of clause (a) of sub-section (4) of Section 19, pay by way of penalty a sum which shall not be less than one and half times but shall not exceed two times the amount of tax evaded.

(3) If the total tax shown as payable according to the return or returns and paid by a dealer for any period or part thereof is less than eighty percent of the total tax assessed/re-assessed under Section 21 such dealer shall be deemed to have concealed his turnover or aggregate of his purchase prices or to have furnished false particulars of his sales or purchases in his return or returns or to have furnished a false return or returns for the purpose of sub-section (1) unless he proves to the satisfaction of the Commissioner or the Additional Commissioner or Appellate Deputy Commissioner or the Tribunal, as the case may be, that the concealment of the said turnover or the aggregate of purchase prices or furnishing of particulars of sales or purchases or furnishing of the false return or returns was not due to any fraud or gross negligence on his part.