New Delhi: The Delhi High Court has quashed all seven orders passed by the Income Tax Appellate Tribunal (ITAT) in tax appeals involving Patanjali Ayurved Limited, flagging what it called a “shocking picture” of procedural lapses and expressing strong displeasure over the manner in which the tribunal handled the cases.
A bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta said the ITAT order reflected “non-application of mind” and “undue haste”, besides being “bereft of any logic, reasoning or rationale”. The court also referred to a “procedural lacuna” and said the tribunal members had shown “undue haste rather recklessness” in passing and signing the order.
The appeals before the high court were filed by the income tax department, with Patanjali as the respondent. The revenue department challenged the ITAT orders that had earlier granted relief to Patanjali in four appeals.
The high court set aside all seven orders and restored the matters for fresh consideration before a different ITAT bench, while making clear that it had not expressed any opinion on the merits of the tax dispute.
Four appeals heard, pronounced in a day
The procedural issue arose from the manner in which the seven appeals were disposed of by the tribunal. Four appeals filed by Patanjali ITA 534 to 537/Del/2025 concerning assessment years 2013-14 to 2015-16 and 2017-18, were heard and pronounced on 6 August 2025.
Three cross-appeals filed by the revenue department ITA 605 to 607/Del/2025 showed 13 August 2025 as both the date of hearing and date of pronouncement.
Despite the different dates, a common order was passed on 13 August on the cross-appeals filed by the opposites sides. The high court asked how one order could cover appeals heard and pronounced a week apart. The court also noted that the ITAT order contained fewer than seven paragraphs. It clarified that the brevity was not the issue, but the lack of reasoning and application of mind was.
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Assessments challenged before ITAT
The seven appeals arose from a search action conducted between 31 October and 3 November 2018, which led to proceedings under Section 153C of the Income Tax Act.
Section 153C enables the tax authorities to assess a person other than the person searched where material found during the search is considered relevant to that person.
The proceedings ultimately culminated in assessment orders dated 27 March 2023. These were subsequently challenged before the Commissioner of Income Tax (Appeals), whose orders passed in November and December 2024 were then taken before the ITAT. The ITAT quashed the four assessments challenged by Patanjali and dismissed the three cross appeals.
ITAT finding challenged
The income tax department then approached the high court against the ITAT orders.
The judgement records that the revenue department’s senior standing counsel Puneet Rai contended that the ITAT had treated the assessment years as “unabated” after the assessing officer issued the Section 153C notice on 6 August 2021, while rejecting the revenue department’s contention on the issue.
The judgement did not decide the appeal on merits. Instead, the high court focused on the procedural defects in the ITAT order. It said the order was “bereft of any logic, reasoning or rationale” and criticised the tribunal members for showing “undue haste rather recklessness” while passing and signing it.
All seven orders set aside
The high court said it had “no other option” but to set aside all seven ITAT orders and restore the appeals to their original numbers for fresh adjudication.
The matters will be heard by a different ITAT bench. The court also directed that a copy of its order be sent to the ITAT president and the secretary of the law and justice ministry.
The court clarified that it had made no observation on the merits of the tax dispute. The fresh ITAT bench will therefore be free to examine the issues and take an independent view.
Aditya is an alum of ThePrint School of Journalism, interning with ThePrint.
(Edited by Nardeep Singh Dahiya)
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