Delhi High Court Sets Aside Seven ITAT Orders Involving Patanjali Ayurved for Procedural Lapses

In a strongly worded judgment, the Delhi High Court has set aside seven orders passed by the Income Tax Appellate Tribunal (ITAT) concerning tax appeals of Patanjali Ayurved Limited, criticizing the tribunal for “procedural lapses”, “undue haste”, and a “complete lack of reasoning”.

A Division Bench of Justice Dinesh Mehta and Justice Rajneesh Kumar Gupta observed that the ITAT, being the “highest fact-finding body”, had disposed of multiple appeals through a common order that did not address any of the assessee’s contentions or discuss the issues involved. The court described the order as “bereft of any logic, reasoning or rationale”.

A Shocking Revelation of Procedural Lapses

The case involved a batch of seven cross-appeals arising from a search action conducted between October 31 and November 3, 2018, in connection with the Hawala Traders Group. Proceedings under Section 153C of the Income Tax Act were initiated, leading to assessments for the years 2013-14 to 2015-16 and 2017-18.

When the matter first came before the High Court on February 2, 2026, even counsel for Patanjali Ayurved expressed surprise at the manner in which the ITAT had handled the appeals. After reviewing certified copies of the tribunal’s order, the counsel acknowledged an “apparent procedural error on part of the Tribunal”.

The Flawed Common Order

The court noted a glaring discrepancy: four appeals were recorded as heard and pronounced on August 6, 2025, while three Revenue appeals were heard and pronounced on August 13, 2025. Yet, a single common order was issued covering all seven appeals.

“We fail to understand that how a common order can be passed and released in relation to four appeals, which were heard and qua which the order was pronounced on 06.08.2025, whereas other three appeals were heard and order was pronounced on 13.08.2025,” the Bench observed.

The impugned order, comprising fewer than seven paragraphs, quashed the assessments and allowed the assessee’s appeals while dismissing the Revenue’s cross-appeals. The High Court found the order “shocking” for its non-application of mind and lack of transparency.

Court’s Stinging Criticism

The Bench did not mince words in its criticism of the ITAT. “These appeals portray a rather shocking picture of the procedural lapses and opaqueness in which the Income Tax Appellate Tribunal, the highest fact-finding body, has been passing the orders in a zeal rather over-anxiety of disposing the cases,” the judgment stated.

It further noted that the tribunal had shown “undue haste rather recklessness while passing and signing the order”, and that even the staff had failed to bring the discrepancies to the members’ attention. “Such type of negligence cannot be countenanced,” the court added.

Directions and Implications

While clarifying that it had made no observations on the merits of the tax dispute, the High Court set aside all seven ITAT orders, including those not directly challenged due to monetary limits prescribed by the Central Board of Direct Taxes. The appeals were restored to their original numbers for fresh consideration by a different bench of the ITAT.

The court also directed that copies of its order be sent to the President of the ITAT and the Secretary of the Ministry of Law and Justice for information.

The judgment serves as a stern reminder to appellate authorities about the importance of reasoned orders and procedural integrity in judicial decision-making.