Reopening notice invalid where fund approval had not been withdrawn on the notice date; reassessment failed.
A reopening notice under section 148 was invalid because it proceeded on the mistaken assumption that approval of the superannuation fund had already been withdrawn. Rule 2 and Rule 3 of Part B of Schedule IV require withdrawal of approval to be communicated in writing and to specify the date from which it takes effect. As the withdrawal order was passed after the notice and no earlier operative communication existed, approval remained in force on the notice date. The reassessment therefore lacked a valid factual basis and could not stand, and the Tribunal's setting aside of the proceedings was upheld.
Issues: Whether the notice for reopening under section 148 was valid when the withdrawal of approval of the superannuation fund had not taken effect on the date of notice.
Analysis: Rule 2 and Rule 3 of Part B of Schedule IV of the Income-tax Act, 1961 require the Commissioner to communicate approval or withdrawal of approval in writing and to specify the date from which such withdrawal takes effect. The order withdrawing approval was passed on 31.03.2014, while the reopening notice had been issued earlier on 24.03.2014. In the absence of any communication making the withdrawal operative from an earlier date, the Tribunal was correct in holding that the approval was still in force on the date of the notice. The reopening, therefore, rested on an incorrect factual premise that the approval had already been withdrawn.
Conclusion: The notice under section 148 was invalid and the consequential reassessment could not stand.
Final Conclusion: The Revenue's challenge failed, and the reassessment proceedings set aside by the Tribunal were upheld.
Ratio Decidendi: A reopening notice based on a mistaken assumption that approval has already been withdrawn is unsustainable where the governing rules require written communication of withdrawal and the withdrawal is effective only from the date specified in that communication.
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