Unverifiable purchases

[GYAN JAIN]

THE AO ISSUED NOTICE U\S 131 TO THE PURCHSERERS AND SOME NOTICE RETRUN BACK AS MARK NOT FOUND OR ADDRESS IS NOT CORRECT , WHETHER THE AO CAN DEEMED SUCH PURCHASESAS UNVERIFIABLE PURCHASES , WHILE CONFIRMATIONS FROM ALL THE PURSHASERERES ARE SUBMITTED BY THE ASSESSEE TO AO . ADVISE ME

[DEV KUMAR KOTHARI]

I think the AO issued notices to Suppliers of assessee and not to purchasers- there seems a mistake in your query. Besides confirmation of purcahses from suppliers you need to establish that goods were received, accounted for and used/ sold or held as closing stock to establish that the purchases are genuine. In case of manufacturing activity consumption of material should be normal and not excessive. If excessive consumption is shown or excessive wastage is shown, without valid reason, then there can be doubt of bogus purchases.

[Mukesh Kumar]

It is matter of evidence and proof. Why the letters return back as Mark not found or address not correct. One case or two case may be exceptional but each case! unbelievable. It means, there is something which is doubtful. All depend upon that how you are able to prove the genuineness and reasons to prove your transactions.

AI Summary

Verification of purchases: returned supplier notices and lack of accounting evidence enable tax authority to treat purchases as unverifiable. Whether purchases are unverifiable depends on evidentiary proof: the assessee must establish receipt, accounting, and that goods were used, sold, or held as closing stock; for manufacturing, consumption must be normal. Returned notices to suppliers or repeated address failures raise doubt, and unexplained excessive consumption or wastage can indicate bogus purchases, so confirmations alone may be insufficient to dispel the assessing officer's concerns.