New Delhi: The government's recent decision to give relief to start-ups on assessment of angel tax notices would provide a safeguard to them and promote their growth, according to experts.

Seeking to calm the nerves of startups worried about angel tax, the government last week assured that explanation given by them to a tax notice in a limited scrutiny case would be summarily accepted without any questions asked by the taxman.

The Central Board for Direct Taxes (CBDT) circular with this effect "brings in more safeguard by requiring assessing officers to procure his or her supervisor's consent before starting on any inquiry under the angel tax provision against a start-up company which has not got DPIIT approval," S. Vasudevan, Partner, Lakshmikumaran & Sridharan said.

However, he added that the circular does not specify any minimum rank of the consenting superior officer.

"Also, lack of guidelines as to how the assessing officer or his supervisory officer selects cases for scrutiny may continue to haunt the start-ups," he added.

Amit Maheshwari, Partner, Ashok Maheshwary & Associates LLP said that CBDT's clarification will help start-ups which are facing questioning in their assessments and will also give a clear direction to assessing officers on what to do in such cases.

Naveen Wadhwa, DGM, Taxmann said that the board has also issued a circular to provide relief to start-ups which are undergoing assessment proceedings with respect to angel tax issue.

"The CBDT has directed the assessing officers to accept the contention of start-ups with regards to angel tax issue if start-up is an eligible start-up in view of latest notification of DPIIT," he said.

Nangia Advisors (Andersen Global) Managing Partner Rakesh Nangia said, "Directions of the CBDT that the tax officer will have to summarily accept the contentions of the start-up on valuation of its shares shall provide the relief intended to be provided to the start-ups."