Delhi High Court: Quashes Patanjali ITAT Orders over Procedural Lapses

• The Delhi High Court set aside seven Income Tax Appellate Tribunal (ITAT) orders concerning Patanjali Ayurved Ltd.
• The court cited significant procedural irregularities and a lack of reasoned judgment by the ITAT.
• All seven tax appeals, stemming from Section 153C proceedings, must now be heard afresh by a different ITAT bench.
• The ITAT had issued a single common order for appeals heard on different dates, displaying "non-application of mind."
• This ruling highlights the High Court's expectation for appellate bodies to demonstrate due diligence and provide logical reasoning.

This ruling underscores the Delhi High Court's expectation for appellate bodies to demonstrate due diligence and provide logical reasoning in their judgments.

The Delhi High Court has set aside seven orders issued by the Income Tax Appellate Tribunal (ITAT) concerning tax proceedings involving Patanjali Ayurved Ltd. The court's decision, which effectively quashes Patanjali ITAT orders, was based on significant procedural irregularities and a pronounced lack of reasoned judgment by the tribunal.

In a directive, the High Court mandated that all seven tax appeals be heard afresh by a different ITAT bench. This ruling specifically avoided delving into the merits of the underlying tax dispute, emphasizing that the tribunal retains the autonomy to decide these matters independently and in accordance with established legal principles. To underscore the gravity of its findings, the High Court also ordered that a copy of its judgment be forwarded to the president of the ITAT and the Secretary of the Ministry of Law and Justice.

The High Court's primary concern centered on the manner in which the ITAT disposed of the appeals, highlighting a series of procedural lapses. These seven appeals originated from proceedings initiated under Section 153C of the Income Tax Act, following a search operation conducted on the Hawala Traders Group between October 31 and November 3, 2018. The cases pertained to the assessment years 2013-14, 2014-15, 2015-16, and 2017-18.

A striking inconsistency emerged regarding the hearing dates: four appeals filed by Patanjali were recorded as having been heard and pronounced on August 6, 2025, while three appeals brought by the Revenue were noted for August 13, 2025. Despite these distinct dates, all seven matters were inexplicably consolidated and addressed within a single common order. The High Court expressed its inability to comprehend how such an order could have been issued when records clearly indicated separate hearing and pronouncement dates. This discrepancy was brought to light when the case first reached the High Court on February 2, 2026, prompting Patanjali's counsel to verify the tribunal's records and subsequently confirm a procedural error, possibly due to inadvertence, on the part of the ITAT.

Beyond the procedural issues, the Delhi High Court also took strong exception to the substance and structure of the ITAT's judgment. The tribunal had disposed of all seven appeals in an order comprising fewer than seven paragraphs. The court clarified that its concern was not merely the brevity of the document, but rather the complete absence of reasoned analysis and inadequate consideration of the specific issues raised before the tribunal.

The bench observed that the ITAT had neither adequately addressed the contentions put forth by the assessee nor sufficiently discussed the complex issues inherent in the appeals. The order was characterized as difficult to comprehend, lacking in logic, reasoning, or any discernible rationale. The judges concluded that the tribunal had demonstrated a clear "non-application of mind and undue haste" in its handling of these significant tax appeals. Given that the ITAT stands as the highest fact-finding authority within the appellate hierarchy, the High Court deemed such negligence from an entrusted appellate body to be entirely unacceptable, underscoring the importance of thorough and reasoned judgments in all ITAT procedural irregularities Delhi HC cases.

The original ITAT decisions had treated the relevant assessment years as "unabated," leading to the quashing of four assessments. The tribunal had allowed Patanjali's four appeals while simultaneously dismissing three cross-appeals filed by the Revenue. In reaching its conclusions, the ITAT had referenced the Supreme Court's 2023 ruling in *PCIT v. Abhisar Buildwell Pvt. Ltd*, which pertains to the necessity of incriminating material in assessments linked to search operations.

However, the Delhi High Court explicitly refrained from evaluating the correctness of the tribunal's findings on these specific tax issues. Instead, its judgment serves as a powerful reminder of the critical importance of due process and reasoned decision-making in appellate bodies. This ruling underscores the Delhi High Court's expectation for appellate bodies to demonstrate due diligence and provide logical reasoning in their judgments, offering a significant precedent for challenging ITAT orders based on procedural irregularities and a lack of proper judicial application of mind, particularly in cases involving Section 153C Income Tax Act Patanjali proceedings.

This ruling provides grounds for challenging Income Tax Appellate Tribunal (ITAT) orders based on procedural irregularities and lack of reasoned judgment, reminding practitioners to scrutinize the process and not just the merits of tribunal decisions. It underscores the Delhi High Court's expectation for appellate bodies to demonstrate due diligence and application of mind.

Source: Original reporting via legal news outlets