, E , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE SHRI SHAMIM YAHYA , AM & SHRI SANDEEP GOSAIN, JM ITA NO S . 3139 & 3140 /MUM/20 1 6 ASST.YEAR S 2010 - 2011 & 2011 - 2012 SMT.SHASHIKALA R. BOHRA PROPRIETOR M/S.FERROCRAFT ENTERPRISES A - 98, ANAND NAGAR, ADDL.MIDC AMBERNATH 421 506. PAN : AFFPB9596Q . / VS. DY.COMMISSIONER OF INCOME - TAX CIRCLE 2 KALYAN. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : SHRI S.M.MAKHIJA /RESPONDENT BY : SHRI V.JU STIN / DATE OF HEARING : 16 .08.2017 / DATE OF PRONOUNCEMENT : 16.10. 2017 / O R D E R PER SHAMIM YAHYA, AM THESE ARE APPEALS BY THE ASSESSEE WHERE THE ASSESSEE IS AGGRIEVED THAT THE LEARNED CIT(A) HAS SUSTAINED 100% DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES, AS UNDER: - ASST.YEAR 2010 - 2011 RS.41,13,540 ASST.YEAR 2011 - 2012 RS.24,27,305 2. THE ASSESSING OF FICER IN THESE CASES HAS MADE 100% ADDITION ON ACCOUNT OF BOGUS PURCHASE. UPON ASSESSEES APPEAL, LEARNED CIT(A) CONFIRMED THE SAME. ITA NO S . 3139 & 3140 /MUM/20 1 6 . SHRI SHASHIKALA R. BOHRA . 2 3. AGAINST THE ABOVE ORDER, ASSESSEE IS IN APPEAL BEFORE THE ITAT. 4. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF N.K.INDUSTRIES V. DCIT ORDER DATED 20.06.2016 ,WHEREIN 100% DISALLOWANCE OF BOGUS PURCHASES WERE SUSTAINED. THE HONBLE APEX COURT HAS DISMISSED THE SPECIAL LEAVE PETITION AGAINST THIS ORDER. WE FIND THAT DISMISSAL OF A SPECIAL LEAVE PETITION BY THE HONBLE APEX COURT BY A NON - SPEAKING ORDER DOES NOT MERGE THE ORDER OF HONBLE HIGH COURT WITH TH AT OF THE HONBLE APEX COURT. 5. WE FIND THAT IN THIS CASE THE SALES HAVE NOT BEEN DOUBTED. IT IS SETTLED LAW THAT WHEN SALES ARE NOT DOUBTED, 100% DISALLOWANCE FOR BOGUS PURCHASE CANNOT BE DONE. THIS PROPOSITION IS SUPPORTED FROM HONBLE JURISDICTIONAL H IGH COURT DECISION IN THE CASE OF NIKUNJ EXIMP ENTERPRISES. HOWEVER, THE FACTS OF THE PRESENT CASE INDICATE THAT ASSESSEE HAS MADE PURCHASE FROM THE GREY MARKET. MAKING PURCHASES THROUGH THE GREY MARKET GIVES THE ASSESSEE SELLING ON ACCOUNT OF NON - PAYMENT OF TAX AND OTHERS AT THE EXPENSE OF THE EXCHEQUER. IN SUCH SITUATION, IN OUR CONSIDERED OPINION, ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE 12.5% DISALLOWANCE OUT OF THE BOGUS PURCHASES MEETS THE ENDS OF JUSTICE. THIS IS FOLLOWING THE DECISION OF THE H ONBLE GUJARAT HIGH COURT IN THE CASE OF SIMIT P. SHETH [ (2013) 356 ITR 451 ] , FOLLOWED BY THE ITAT MUMBAI BENCHES IN A NUMBER OF CASES. 6 . ACCORDINGLY, WE MODIFY THE ORDER S OF LEARNED CIT(A) AND DIRECT THAT THE DISALLOWANCE BE LIMITED TO 12.5% OF THE BOG US PURCHASE. ITA NO S . 3139 & 3140 /MUM/20 1 6 . SHRI SHASHIKALA R. BOHRA . 3 7 . IN THE RESULT, THESE APPEAL S FILED BY THE ASSESSEE ARE PARTLY ALLOWED . ORDER PRONOUNCED ON THIS 16 TH D AY OF OCTO BER , 2017. SD/ - SD/ - ( SANDEEP GOSAIN ) ( SHAMIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 16. 10. 2017 . DEVDAS* / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT , MUMBAI. 4. / CIT(A), MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE.