The Income Tax Department on Friday responded to entrepreneur Ashneer Grover's questions over notices being issued to startups for documents related to three-year Income Tax Return (ITR) details of their investors and shareholders.
Taking to X (formerly Twitter), Mr Grover had asked the finance ministry to look into the list of documents and proofs that the I-T department asks under Section 142(1) of the Income Tax Act 1961. "In the last 1 month, a number of start-ups (a few in my portfolio as well) have received Income Tax notices asking to furnish information about shareholders," he said, quoting the requirements of furnishing 3 years of ITR from all shareholders.
"How and why will companies have ITR of shareholders?" Mr Grover wrote, asking why a shareholder would share his or her ITR with a private company. Further, he also questioned the reasoning behind the requirements. He stated the company does not provide loans to the shareholders, and the shareholder holds equity in the company. "Request @FinMinIndia to please look at it," he tweeted.
Now, responding to Mr Grover's tweet, the I-T department wrote, "Dear @Ashneer_Grover, Section 68 of the Income-tax Act, 1961 (the Act) under which the Assessing Officer (AO) has made the inquiry about creditworthiness of the shareholder/investor, places the initial onus on the assessee-company to prove the following: Identity of the investor, Creditworthiness of the investor and Genuineness of the transaction."
"Finance Act, 2012 mandated that the nature and source of any sum credited as share capital, share premium etc., in the books of a closely held company (excluding Venture Capital Fund or a Venture Capital Company registered with SEBI) shall be treated as explained u/s 68 only if the source of funds from a resident shareholder is also explained by investor," the Income Tax Department further explained.
"In the present case, it appears that the AO has sought to examine the genuineness of the transaction and source of investment by the shareholder-investor, to verify if the amount invested is commensurate with the income shown in the ITRs of the investors," the post added.
The department also explained that alternatively if the PANs of the investors are shared with the AO by the company, they can verify the ITRs of the investors. "This has been the practice as reflected in various tweets in the thread," the post read.
Featured Video Of The Day
Jai Jawan: John Abraham's Real-Life Experience In Infantry Combat Vehicle: "Seems Indestructible"
Influencer Tries Cheesecake With Baked Beans And We Can't Digest The Idea Indian YouTuber Who Criticised Iconic Las Vegas Hotel Gets Room Upgrade, Company Responds Viral: X User Shares Photo Of Water Filter Turned Brown In Noida, Internet Calls It "Scary" Parents Gave Names Of Interns, Doctors To CBI In Kolkata Horror: Sources How Extreme Weather Is Leading To Rise In Child Marriages In Pakistan Who Is Jasveen Sangha, "Ketamine Queen" Charged With Matthew Perry's Death Pilot Dies After Plane Crashes During Aerobatic Show In France "Vandals, Scandals Marring Civic Life In Bengal": Governor On Kolkata Rape Group Backed By Bloomberg, NASA To Launch 1st Methane-Hunting Satellite Track Latest News Live on NDTV.com and get news updates from India and around the world.