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ESPP Stocks and Summon U/S 131(1A)

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Rakesh C

21 Points Posted on 21 March 2023

I have received a summon from IT India referring to undisclosed foreign assets or interest.

It does not specify any assets in specific but only assets of such nature that I have is ESPP stocks.

I left the company that gave me ESPP stock in year 2020 and missed declare ESPP stock for AY 21-22.

How do I reply to summon? Can I correct the ITR for FY 21-22 before replying?

Replies (3)

Quick Summary

This discussion addresses an individual who received a tax summons from India regarding undisclosed foreign assets, specifically ESPP stocks from a former employer. The user missed declaring these stocks in their AY 21-22 tax return and is seeking advice on how to respond to the summons. A Chartered Accountant advises that the ITR for FY 21-22 cannot be revised now, but a written reply detailing the ESPP stocks and explaining the non-disclosure is necessary. While there's no intention of tax evasion, a penalty may still be levied, and professional tax consultancy is strongly recommended to manage the proceedings and potential tax demand.

CA Rakesh Ishi

Working at Private Company

7751 Points Posted on 26 March 2023

Once you have gathered all relevant information and sought professional help, you can reply to the summons in writing.

The reply should include a detailed explanation of your ESPP stocks, along with any supporting documents, such as purchase agreements, share certificates, and tax receipts.

You should also mention that you have corrected your ITR and filed a revised return, if applicable.

CA Sorav Gupta

Chartered Accountant

328 Points Posted on 27 March 2023

Draft a reply mentioning the details of the foreign asset and that no intention of tax evasion was there by non-disclosing of this information in the ITR. The AO will examine your contention and can levy a penalty on you under The Income Tax Act, 1961 due to the non-disclosure of specified information in the ITR.

It is suggested to obtain the consultancy of any tax expert in the drafting of reply & handling of proceedings to minimize the tax demand.

The ITR of F.Y. 21-22 can not be revised now as the time has lapsed.

In case of any further queries, kindly mail me at casoravgupta @ gmail.com

Thanks & Regards
CA. Sorav Gupta
(Practicing Chartered Accountant)