The Delhi High Court has set aside a common order by the Income Tax Appellate Tribunal (ITAT) that disposed of seven appeals involving Patanjali Ayurved Limited citing that the Income Tax Appellate Tribunal (ITAT) had failed to discuss the issues and the assessee’s contentions, while issuing a single order for appeals heard and pronounced on two different dates. All seven appeals will now be heard afresh by a different ITAT Bench.

The Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta described the tribunal’s handling of the matters as showing “non-application of mind and undue haste”. It said the order was so lacking in reasoning that the court could not discern its logic or rationale. 

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The underlying dispute arose from a search conducted between October 31 and November 3, 2018, in a group described in the ITAT order as the Hawala Traders Group. The search led to proceedings against Patanjali under Section 153C of the Income-tax Act, 1961. According to the tribunal’s order reproduced in the High Court judgment, the assessment proceedings concerned assessment years 2013-14, 2014-15, 2015-16 and 2017-18, and culminated in assessment orders dated March 27, 2023.

Four appeals before the ITAT were filed by Patanjali, while the Revenue filed three cross-appeals. The tribunal allowed Patanjali’s four appeals and dismissed the Revenue’s three appeals. It held that the assessment years were “unabated” when the assessing officer issued the Section 153C notice on August 6, 2021. It also stated that the additions were not based on specific incriminating material seized during the search, referring to the Supreme Court’s decision in PCIT v. Abhisar Buildwell Pvt. Ltd. The tribunal consequently quashed the four assessments and treated the parties’ other arguments on the merits as academic.

The High Court did not decide whether that conclusion on Section 153C or incriminating material was correct. Its concern was how the tribunal reached and recorded its decision. The court observed that the tribunal had disposed of seven appeals in an order that did not contain even seven paragraphs and had neither addressed Patanjali’s contentions nor adequately discussed the questions arising in the appeals. The judges stressed that the length of an order was not the problem; the absence of a reasoned examination was.

The court also identified a procedural discrepancy in the certified copies. The four appeals filed by Patanjali were shown as heard and pronounced on August 6, 2025. The Revenue’s three appeals were shown as heard and pronounced on August 13, 2025. Yet the tribunal issued one common order covering all seven, stating that it had been pronounced in open court on both August 6 and August 13. The High Court questioned how an order pronounced in four appeals on the earlier date could also dispose of three appeals heard a week later.

When the High Court first listed the matter on February 2, 2026, counsel for Patanjali sought to check the record and certified copies. After doing so, counsel acknowledged an apparent procedural error by the tribunal, possibly inadvertent. The High Court, however, found that the discrepancy, together with the absence of reasoning, could not be treated as a minor lapse. It expressed displeasure at what it called recklessness in passing and signing the order.

The High Court set aside the ITAT’s decisions in all seven appeals, including tribunal orders that the Department had not challenged before it, apparently because of the monetary limits for filing appeals. It restored Patanjali’s four appeals and the Revenue’s three cross-appeals to their original numbers for fresh adjudication.

The court directed that a copy of its judgment be sent to the President of the ITAT and the Secretary of the Ministry of Law and Justice. It also instructed the ITAT President to ensure that a Bench other than the one that issued the set-aside order hears the restored appeals.

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