Section 298 — Withdrawal of recognition

(1) The approving authority has the right to revoke recognition given to a provident fund if it fails to meet the conditions outlined in Part A of the FourthSchedule to the Income-tax Act, 1961, as it existed prior to its repeal, or Part A and Part C of Schedule XI to the Act or subsequent conditions set afterrecognition was granted under the said Act of 1961 and the Act and if the exemption granted under section 17 of the Employees' Provident Funds andMiscellaneous Provisions Act, 1952 (19 of 1952) is withdrawn under sub-section (4) of section 17 of the same Act, the recognition may be withdrawn.
(2) Before withdrawing recognition, the approving authority shall give an opportunity to the employer and the trustees of the fund to show cause whyrecognition should not be withdrawn.
Exemption from tax when recognition withdrawn.
299. If the approving authority withdraws recognition from a provident fund, the balance to the credit of each employee at the end of the financial year beforethe withdrawal of recognition shall, subject to the provisions of paragraph 9 of Part A of Schedule XI to the Act, be paid to him free of tax at the time whensuch employee receives the accumulated balance due to him, and the remaining accumulated balance due to him shall be subject to tax as if the fund had neverbeen recognised.