Final assessment prevails over provisional assessment; penalty cannot be levied where no tax liability or evasion exists.

A regular final assessment supersedes a provisional assessment, and only the final assessment governs tax liability and recovery. Where the final assessment accepts the assessee's position and no tax liability survives, penalty cannot be imposed on the basis of the earlier provisional assessment. In the absence of tax avoidance or evasion, the jurisdiction to levy penalty does not arise. The penalty demand notice was therefore set aside.

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Issues: Whether penalty could be levied on the basis of a provisional assessment after the regular final assessment had been made and accepted.

Analysis: Once the regular final assessment order is passed, it supersedes the provisional assessment order and the final assessment alone governs the tax liability and recovery. Where the regular assessment accepts the position taken by the assessee and there is no tax liability, penalty cannot be imposed. In the absence of a case of tax avoidance or evasion, the jurisdiction to levy penalty does not arise.

Conclusion: Penalty was not leviable and the demand notice for penalty was rightly set aside; the writ petition was dismissed.

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