‘Why will companies have ITR of shareholders’: Ashneer Grover questions govt on I-T Act section

Ashneer Grover, known for his stint as a shark on Shark Tank as well as for co-founding fintech platform BharatPe before he was ousted, asked the finance ministry to look into the list of documents and proofs that the Income Tax Department asks under Section 142(1) of the Income Tax Act 1961.

Section 142(1) of the I-T Act enables the I-T department to issue a notice to seek more clarification or further details about the returns, and the filing of the same in a prescribed manner.

“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?” he asked, further asking why a shareholder would share his or her ITR with a private company.

Grover questioned the reasoning behind the requirements. The company does not provide loans to the shareholders, the shareholder holds equity in the company, he said.  He requested the Finance Ministry to look into it.

The document he shared asks for the usual documents including name, address, PAN card of the shareholders, along with number and shares allotted to the shareholders, total value of the share allotted to the shareholders, and the payment received from each shareholder during the financial year.

It also said, “Provide documentary evidence to substantiate the identity and ITR of last 3 years of shareholders to substantiate creditworthiness of the shareholders as well as proof of genuineness of transaction in respect of fresh credit of the share capital/premium account.”

“Unnecessary process to make chaos feel like work. I'm sure every shareholder when investing has shared their Pan card. Any verification should be between the IT officials and individual shareholders. The intention could be wise, but the approach isn't right,” said a user, while another said, “They can only put pressure on salary earning middle class people.”

However, some saw no merit in his complaints. “If govt asks for documents and if you are an honest shareholder, what is the problem in sharing details? Do you have something to hide? If not then send what they are asking for. You are not bigger than India,” asked a user, while another said, “It's a routine procedure not to check creditworthiness but to confirm the authenticity of shareholders and to cross verify real shareholders and proxy ones.”

But Grover is not one to give up. He responded that ITR has two parties – the taxpayer and the I-T department. “Why can't the IT department pull ITR from its own system by punching in PAN,” he questioned.

Former CFO and board member of Infosys TV Mohandas Pai also quoted Grover's post and said that tax terrorism is increasing. He too asked the PMO and Prime Minister Narendra Modi to intervene.

Also read: 'Tougher than entering IITs': Ashneer Grover on nursery admissions in Delhi-NCR