New Delhi, Sep 9 : The Income Tax department has responded to former BharatPe CEO Ashneer Grover's questions over notices being issued to startups for documents related to three-year ITR details of their investors and shareholders saying this has been the practice as it places the initial onus on the assessee-company to prove identity of investor, creditworthiness of investor and genuineness of transactions. In a post on 'X', the IT department said, '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." It said that the 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 a Venture Capital Fund or a Venture Capital Company registered with SEBI) shall be treated as explained under section 68 only if the source of funds from a resident shareholder is also explained by the investor, the post read. '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," it said. It further said that alternatively if the PANs of the investors are shared with the AO by the Company, he can verify the ITRs of the investors. 'This has been the practice as reflected in various tweets in the thread," it explained. The remarks from the IT department came after Grover questioned the tax authority's other notice. In a tweet, Groveer said: 'In the last 1 month, a number of startups (a few in my portfolio as well) have received Income Tax notices asking to furnish information about shareholders. Bahut interesting hai (Its very interesting)- they are asking start-up companies to furnish three year ITR of all shareholders. 1) How and why will companies have ITR of shareholders ! 2) Why would a shareholder/individual share their ITR with a private company'? 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 Finance Minister to please look at it," he tweeted. /IANS