Penalty proportionality: limit penalties for minor, easily rectifiable tax breaches, require show cause notice and hearing. Constrains administrative penalties by requiring proportionality for minor breaches and easily rectifiable documentation errors, mandating that penalties be commensurate with the facts and severity of the breach. Procedural safeguards require a notice to show cause and a reasonable opportunity to be heard, and penalty orders must explain the nature of the breach and the legal basis for the penalty range. Voluntary disclosure before discovery may mitigate penalty quantification. Exceptions apply where penalties are fixed sums or fixed percentages under the Act.