I know when using Karma gen, you can take Initiation/Submersion grades when you generate a character. Where does it specifically say this in the books?

I am not sure that it does. It is in the hands of the GM as to whether he allows it. But give me a few to look it up.
EDIT: Page 43, Runner's Companion, Tweaking the Karma System Text Box.

In other words, it doesn't actually say that. It's an optional rule requiring GM permission.

Well, Yes. Of course...

From my experience, karmagen that allows initiation is going to really accelerate the Pwnzor magic characters quickly gain over mundanes. Unless you are going for a game that starts epic, or you have some carefully monitored players who will not abuse their power... I highly recommend against allowing Initiation at chargen.

Unless you are going to let cyber characters start with double money and +4 avail... then It might be equally pimp-pwnz0r redicu-gaming goodness!

Yes, it's a horrible idea.

I've never had any problems with it, Initiation at Character Generation that is.

Ditto.

It's all about who you play with though.

Personally, I don't know how mages survive for long without Masking. It's all but a must-have in my mind. Then you have techniques like Psychometry add a lot of fun to the game for me, too. And neither of those (or most of the other techniques you can pick up) are game changers. They mostly just give you options other than summoning spirits and hurling stunbolts everywhere.

And so what if you can raise your Magic Attribute that way during character creation? It's going to cost a fortune to do it to a level where it actually shows up as something really noticeable.