(1) Where, in the course of any proceeding under this Act, the proceeding conducting Authority is satisfied that any person has, either in the said proceeding or in any earlier proceeding relating to an assessment in respect of the same income year, has evaded tax payable under this Act by misrepresenting particulars of income, assets, liabilities, expenses or other important information relating to the payable tax of the assessee, the proceedings conducting authority shall impose on the said person a penalty equal to A + B, where—

A = amount of tax evaded x 15%,

B = amount of tax evaded x 10% x C,

C = the total number of years from the assessment year in which the evasion occurred to the assessment year in which the evasion was discovered.

(2) For the purposes of this section,—

(a) “Proceeding conducting Authority” means—

(i) income tax authority not below the rank of Deputy Commissioner of Taxes; and

(ii) Taxes Appellate Tribunal;

(b) “amount of tax evaded” means— C – D in any assessment year, where—

C = taxes and other amount payable in any assessment year, if income, assets, liabilities, expenses or any other important information were not misrepresented,

D = amount actually paid in the relevant assessment year.