Best Agrolife Limited tax impact remains unascertainable

Best Agrolife Limited’s auditor said the financial-statement impact of unresolved income-tax proceedings cannot currently be ascertained for assessment years without departmental orders. The issue follows a search conducted from 26 September 2023 to 30 September 2023, while Best Agrolife has disclosed a Rs 0.95 crore demand for assessment year 2021-22 and management has identified no current standalone adjustment.

What did Best Agrolife’s auditor flag?

Best Agrolife’s auditor flagged that the effect of tax-search proceedings, including any financial-statement adjustments, is presently unascertainable for assessment years where the Income Tax Department has not issued an order. Walker Chandiok & Co LLP made the observation in its review of consolidated unaudited results for the quarter ended 30 September 2026 and the six months from 1 April 2026 to 30 September 2026.

The auditor drew attention to the issue but did not modify its review conclusion dated 30 October 2026. It said nothing had come to its attention that caused it to believe the consolidated statement did not meet disclosure requirements under Regulation 33 of the Securities and Exchange Board of India, or SEBI, Listing Obligations and Disclosure Requirements Regulations, 2015.

This wording does not quantify an additional tax liability for the September 2026 consolidated results. Rather, it identifies uncertainty over the final financial effect for unresolved years, because orders, appeals, rectification applications and reassessment proceedings have not all reached a conclusion.

When did the income-tax search take place?

The Income Tax Department carried out a search and seizure operation under Section 132 of the Income Tax Act, 1961, from 26 September 2023 to 30 September 2023. The auditor said the operation covered Best Agrolife’s head office, other premises of the holding company, two subsidiaries and the residences of certain key managerial personnel, or KMPs.

Best Agrolife’s standalone financial-results note places the operation in the year ended 31 March 2024 and says the company provided support, cooperation and documents requested by the department. The four-day search was followed by assessment orders for certain years, as well as reassessment notices and related proceedings that remained open at 30 September 2026.

The scope of the matter extends beyond the holding company in the consolidated review report. Walker Chandiok said Best Agrolife and its subsidiaries had received both favourable and demand orders for certain assessment years, while Best Agrolife and one subsidiary had received reassessment notices for earlier years that were still pending.

Which Best Agrolife orders and notices are disclosed?

Best Agrolife disclosed a Rs 0.95 crore demand for assessment year 2021-22 concerning the disallowance of certain expenses. The standalone note says management filed a rectification application with the Income Tax Department, meaning the filing does not present the demand as finally resolved or paid.

For assessment year 2023-24, Best Agrolife said it received an assessment order under Section 143(3) during the year ended 31 March 2025. No addition was made to the income submitted by the company in relation to the search. That outcome contrasts with the 2021-22 demand, which remains subject to the stated rectification application.

Best Agrolife also disclosed reassessment notices for assessment years 2022-23 and 2024-25. The auditor’s consolidated report does not attach a rupee amount to all open matters; it refers instead to appeals and/or rectification applications against received orders and reassessment proceedings that are yet to be concluded.

Why has Best Agrolife not recorded a further adjustment?

Best Agrolife’s management said that, after considering available information and facts as of 30 October 2026, it had not identified a need for adjustments in the standalone financial results. The statement is qualified by the uncertainty surrounding the eventual outcome of the search and seizure proceedings.

The auditor’s finding applies to the consolidated statement for the six months ended 30 September 2026 and is not inconsistent with management’s standalone assessment. Management reported no adjustment was required on information then available, while the auditor said the eventual impact and adjustments, if any, could not yet be ascertained for years without departmental orders.

The filing does not attribute the movement in reported current tax liabilities to the search proceedings. Best Agrolife’s standalone net current tax liabilities were Rs 34.86 crore at 30 September 2026, compared with Rs 11.14 crore at 31 March 2026, but the company does not state that the Rs 23.72 crore increase arose from the 2023 search, the 2021-22 demand or reassessment notices.

What does the unmodified review conclusion mean?

Walker Chandiok issued an unmodified review conclusion despite highlighting the tax uncertainty for the period ended 30 September 2026. The firm explained that a review under Standard on Review Engagements 2410 involves inquiries and analytical procedures and is substantially less extensive than an audit, so it does not provide audit-level assurance.

The report separately said four subsidiaries included in the consolidated statement had combined revenue of Rs 277.28 crore for the quarter and Rs 584.12 crore for the six months ended 30 September 2026. Walker Chandiok relied on reports from other auditors for those entities, which is separate from its emphasis on the tax proceedings.

One additional subsidiary had total assets of Rs 1.17 crore at 30 September 2026 and unaudited interim results certified by its board. Walker Chandiok said that subsidiary was not material to the group and did not modify its conclusion over that reliance, just as it did not modify its conclusion over the tax-search matter.

Conclusion

The combined disclosures show that Best Agrolife has received differing outcomes after the September 2023 search. The 2023-24 assessment resulted in no income addition, while the 2021-22 expense-disallowance order created a Rs 0.95 crore demand that is subject to rectification. For other unresolved years, the auditor cannot determine the final effect on the consolidated financial statement.

The next disclosures to watch are final departmental orders on reassessment matters, decisions on appeals or rectification applications, and any change in management’s 30 October 2026 assessment that no standalone adjustment is currently needed. Those outcomes will determine whether Best Agrolife records an adjustment for assessment years still without final orders.