Stove Kraft appeals Rs 1.35 crore tax demands after 2023 searches

Stove Kraft Limited has appealed additional tax demands of Rs 1.35 crore for assessment years 2022-23 and 2023-24 after Income Tax Department searches in November 2023, while management says the related assessment and reassessment proceedings are not likely to materially affect its September 30, 2026 financial position or performance.

What tax demands has Stove Kraft appealed?

Stove Kraft has appealed aggregate additional tax demands of Rs 1.35 crore for assessment years, or AYs, 2022-23 and 2023-24. The company received assessment orders under Section 143(3) of the Income-tax Act, 1961, and demand notices under Section 156 for these years. Both appeals were pending before the Commissioner of Income Tax Appeals as of the November 4, 2026 results filing.

The Rs 1.35 crore amount is the combined demand disclosed for the two appeal years, not a separate amount for each year. Stove Kraft did not disclose the demand attributable to AY 2022-23 or AY 2023-24 individually, and it did not provide a decision timetable for the Commissioner of Income Tax Appeals. The filing therefore identifies the aggregate amount under appeal but not the outcome for either year.

How did the November 2023 searches lead to the proceedings?

The proceedings followed Income Tax Department search operations at Stove Kraft's various business premises in November 2023 under Section 132 of the Income-tax Act, 1961. Stove Kraft said it made the necessary stock-exchange disclosures when the searches occurred. The process subsequently extended across six assessment years, from AY 2019-20 through AY 2024-25.

Stove Kraft later received Section 148 notices for AY 2019-20 and AY 2020-21. For AY 2020-21, it filed a revised return incorporating certain adjustments that it said did not materially affect its financial position or results. For AY 2019-20, Stove Kraft did not submit a revised return because it did not anticipate changes to previously reported information.

The company also received notices under Section 142(1) for AY 2020-21, AY 2022-23 and AY 2023-24, and said it responded to them. By November 4, 2026, it had received assessment orders and demand notices for AYs 2019-20 through 2024-25. Proceedings were concluded for four years, while the two 2022-23 and 2023-24 cases had moved to appeal.

What is management's view on Stove Kraft's tax adjustments?

Management's position is that the adjustments supporting the Rs 1.35 crore demands are either erroneous or do not adequately consider the submissions and evidence Stove Kraft provided. That stated view underpins its appeals for AY 2022-23 and AY 2023-24. It is not a final determination by the tax authorities or the appellate body.

Management also assessed that the November 2023 searches and related assessment or reassessment proceedings would not likely have a material adverse effect on Stove Kraft's financial position as at September 30, 2026. The assessment also covers the quarter and half year ended on that date. The company did not quantify a potential outcome beyond the Rs 1.35 crore demand attached to the two pending appeals.

The filing does not say that all matters arising from the 2023 searches have been resolved. It identifies concluded assessment proceedings for AYs 2019-20, 2020-21, 2021-22 and 2024-25, while the 2022-23 and 2023-24 appeals remain pending. This distinction separates completed assessments from the Rs 1.35 crore dispute before the appellate authority.

What did the auditor conclude about Stove Kraft's tax dispute?

Price Waterhouse Chartered Accountants LLP drew attention to the tax-search and assessment matter in its November 4, 2026 review report, but did not modify its conclusion on Stove Kraft's standalone financial statements. The auditor referred to Note 6, which describes the November 2023 searches, notices and orders for various assessment years, and the company's responses, appeals or rectification applications.

The review report said the Income Tax Department had yet to conclude proceedings for certain assessment years, without identifying those years individually. It also recorded management's view that the searches and the related assessments or reassessments were not likely to materially harm the standalone financial results for the quarter and half year ended September 30, 2026. The auditor's conclusion was explicitly not modified in respect of this matter.

The report describes a review as providing moderate assurance and as narrower in scope than an audit. Based on that review, the auditor said nothing had come to its attention to indicate that the standalone statement for the September 30, 2026 quarter and half year was materially misstated or failed to make required disclosures.

How do the proceedings compare with Stove Kraft's latest results?

Stove Kraft reported standalone profit after tax of Rs 29.16 crore for the quarter ended September 30, 2026, compared with Rs 21.36 crore in the quarter ended September 30, 2025. Revenue from operations increased to Rs 584.67 crore from Rs 474.42 crore in the same year-on-year comparison. These are the reported results alongside management's assessment of no material adverse impact from the tax matters.

For the half year ended September 30, 2026, standalone profit after tax rose to Rs 46.21 crore from Rs 31.79 crore a year earlier. Revenue from operations increased to Rs 1,065.25 crore from Rs 814.53 crore. Stove Kraft has one reportable segment, Kitchen and Home Appliances, and therefore did not disclose separate segment results that could isolate an effect from the tax dispute.

The September 30, 2026 standalone balance sheet reported current tax assets of Rs 2.55 crore and current tax liabilities of Rs 4.88 crore. These captions are separate from the Rs 1.35 crore additional demand under appeal. Stove Kraft did not state that either balance-sheet figure represented a provision for the disputed demand.

Conclusion

The filing places the Rs 1.35 crore tax demand within a wider process following searches in November 2023, spanning six assessment years from 2019-20 to 2024-25. Four assessment proceedings were described as concluded, while two appeals remain pending. Management contests the adjustments, and the auditor highlighted the matter without modifying its review conclusion.

The next disclosed matter to watch is the outcome of the AY 2022-23 and AY 2023-24 appeals before the Commissioner of Income Tax Appeals, for which no decision date was given. Future disclosures may also clarify the assessment proceedings that the auditor said had not yet been concluded for certain years, or quantify any changed tax impact.