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Delhi HC Quashes 7 ITAT Orders Involving Patanjali Ayurved Over Procedural Lapses and
The has delivered a scathing judgment setting aside seven orders passed by the in a batch of cross-appeals involving Patanjali Ayurved Limited, flagging a "shocking picture" of and . A Division Bench comprising Justice Dinesh Mehta and Justice Rajneesh Kumar Gupta on quashed all seven ITAT orders, directing that the matters be heard afresh by a different Bench of the Tribunal.
The Court found that the ITAT had disposed of seven connected appeals through a single common order of fewer than seven paragraphs, without addressing the assessee's contentions or properly discussing the issues involved. More strikingly, four appeals were recorded as heard and pronounced on , while three cross-appeals by the Revenue were shown as heard and pronounced on . Yet a common order was issued covering all seven.
Background of the Tax Dispute
The appeals arose from a search action conducted between in the . Following the search, proceedings under were initiated against Patanjali Ayurved Limited for assessment years , , , and . Section 153C enables the Assessing Officer to assess a person other than the one searched if material found during the search is considered relevant to that person.
The assessments culminated in orders dated . These were challenged before the , who passed orders in . Thereafter, both Patanjali and the Revenue approached the ITAT. The Tribunal quashed the four assessments challenged by Patanjali, holding that the assessment years were "," and dismissed the three cross-appeals filed by the Revenue, relying in part on the 's decision in regarding the requirement of in search-related assessments.
The Procedural Lapses That Shocked the Court
When the matter first came before the High Court on , even counsel for Patanjali expressed surprise at the discrepancy in the dates recorded in the ITAT order. After verifying the Tribunal's record and certified copy, counsel fairly submitted that there appeared to be a procedural error, possibly due to inadvertence.
The High Court, however, did not treat the matter lightly. It observed that the impugned order was
"bereft of any logic, reasoning or rationale"
and reflected
"
and
"
on the part of the Tribunal Members. The judges stated:
"We are not much concerned with the size of the order but what shocks us is, the
and
which learned Members of the Tribunal have exhibited."
The Court further noted that the Tribunal staff had failed to bring the discrepancy in dates to the attention of the Members before the order was signed. It described the conduct as showing "
rather recklessness" and held that
"such type of negligence cannot be countenanced."
Court's Decision and Directions
The High Court concluded that it had "no other option" but to set aside all seven ITAT orders. This included not only the four orders challenged by the Revenue but also three orders that were not independently under challenge, apparently because of the monetary limits prescribed by the for Revenue appeals.
The Court restored the appeals to their original numbers for fresh adjudication. It directed that the matters be heard by a Bench other than the one that passed the impugned order. Additionally, a copy of the High Court's judgment was ordered to be sent to the and the Secretary of the for their information.
Importantly, the High Court clarified that it had made no observation on the merits of the tax dispute. The fresh ITAT Bench is free to examine the issues and take an independent view in accordance with law.
Legal Implications and Impact on Practice
This judgment sends a strong message to the ITAT and other quasi-judicial tribunals about the necessity of maintaining procedural regularity and demonstrating judicial application in every order. The 's emphasis on the "shocking picture" of opaqueness highlights that brevity is not a virtue if it comes at the cost of reasoning.
For tax practitioners, the case underscores the importance of scrutinizing tribunal orders for procedural defects, especially where common orders are passed in multiple appeals with different hearing dates. The decision also reinforces the principle that the highest fact-finding body must set an example in transparency and diligence.
The directive to send a copy to the ITAT President and the Law Ministry suggests that systemic issues may be at play. The Court's intervention could prompt the ITAT to review its internal procedures for recording hearing dates and issuing orders.
Conclusion
The 's quashing of the seven ITAT orders in the Patanjali Ayurved case serves as a reminder that is the bedrock of judicial adjudication. While the substantive tax dispute remains to be resolved, the Court's focus on the manner in which the Tribunal functioned ensures that future proceedings will be conducted with greater care and accountability. The matter now returns to a fresh ITAT Bench for a , leaving the legal questions open for proper determination.
