(1) Where it appears to the appropriate assessing authority that it is necessary to proceed against a dealer under section 117, such authority shall serve upon such dealer a notice in Form No. 80 directing him to appear before him in person or through an authorized agent and
(a) to produce before him the books of accounts, registers or documents for examination;
(b) to explain the books of accounts or documents produced by such dealer or evidence which came into the possession of the appropriate assessing authority; and
(c) to show cause on the date specified in such notice why penalty as specified in the notice shall not be imposed on him.
(2) The dealer may, if he so wishes, prefer any objection in writing or he may adduce any evidence in support of his contention on the date of hearing.
(3) After examining the books of accounts, documents or evidence, produced by the dealer and considering his objection, the appropriate assessing authority shall impose penalty upon the dealer under section 117 for such amount as he deems just and reasonable and serve upon the dealer a notice in Form No. 81 directing him to make payment of the amount in accordance with the provisions of section 117 and to produce the receipted challan in proof of such payment by the date specified in the said notice.