IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH ‘E’, MUMBAI BEFORE SHRI AMIT SHUKLA, HON’BLE JUDICIAL MEMBER AND SHRI ARUN KHODPIA, HON’BLE ACCOUNTANT MEMBER ITA No. 3806/MUM/ 2025 (A.Y. 2012-13)

Kurz India Private Limited DCIT - 12(3)(1), Mumbai UG 6, Upper Ground, 39, Aayakar Bhavan, Maharshi v Daryacha Complex, Green Park Karve Road, New Marine Lines, s Market, South West Delhi, Mumbai – 400020.

Delhi – 110016.

PAN: AABCK 5203 H (Appellant) (Respondent)

Present for:

Assessee by : Shri Gaurav Makhijani, CA (virtually appear)

Revenue by : Shri Himanshu Joshi, Sr. DR Date of Hearing : 12.08.2025 Date of Pronouncement : 14.08.2025 O R D E R PER ARUN KHODPIA, AM:

The captioned appeal filed by the assessee is directed against the order of Commissioner of Income Tax, Appeals/ADDL/JCIT(A) Mysore (In short “ld. ADDL/JCIT(A)”), National Faceless Appeal Centre, dated 27.08.2024 for A.Y. 2012-13, which in turn arises from the order u/s 143(3) r.w.s. 92CA(3) passed by the Deputy Commissioner of Income Tax – 12(3)(1), Mumbai (in short “ld. DCIT”), Mumbai dated 11.03.2016. The grounds of appeal raised by the assessee are extracted as under:

“1. That on the facts and circumstances of the case and in law the order passed by the Additional Joint Commissioner of Income Tax (Appeals) [Ld. Addl/JCIT (A)) dated 27 August 2024 is bad both on facts and circumstances of the case and in law since it is based purely on surmises and conjectures without evidence to support the conclusion.

2. That on the facts and in the circumstances of the case and in law, the Ld. AddI/JCIT(A) erred in sustaining the partial ad-hoc disallowance of INR 8,00,000 made in an arbitrary manner purely on surmises and conjectures for various business expenses even after admitting that there is nothing placed on record by the Ld. AO pointing any specific instances of non-business purposes.

The Appellant reserves its right to add, alter, amend or withdraw any ground of appeal either before or at the time of hearing of this appeal.”

2 The brief facts of the case are that the assessee-company is engaged in the business of procuring and selling, both in local and export market altering, assembling and manufacturing of hot stamping foils, machine and tooling for the plastic, graphic, wood processing, textile and security product industries and any other industry in India and elsewhere which may use hot stamping technique. The assessee had filed its return of income for the A.Y. 2012-13 declaring a total income at Rs 4,64,49,060/- on 30.11.2012. The case of assessee, thereafter, was selected under scrutiny, notice u/s 143(2) dated 10.09.2013 was issued and duly served on the assessee. In the process of assessment, statutory notices were issued and in compliance, necessary replies were furnished by the assessee company. After deliberations, the ld. AO observed that there was unproportionate increase in the expenses of the assessee under the head Travelling, Sales promotion, Postage & Telephone and Miscellaneous expenses. In justification to the increase in these expenses, the assessee explained before the ld. AO that the rise in travelling expenses was because of opening of new branch and foreign travels during the year also the car running course is increased due to increase in number of cars. Regarding sales promotion increase, the assessee submitted that it was due to holding exhibitions during the year. For Post and telephone expenses, it was the submission by the assessee before the ld. AO that there is rise in courier and communication due to increase of sales during the year. The ld. AO considered the response of assessee; however, she did not find herself convenience with such explanations and accordingly had observed that the increase in turnover of the assessee was 12%, whereas travelling is increased by 30%, sales promotion by 80%, postage and telephone by 45% and miscellaneous expenses by 20%. The ld. AO thereafter noted that the assessee was asked to furnish complete details a