Tribunal's orders dismissed for undue haste, lack of reasoning; appeals remanded for fresh hearing before a different bench
In a significant judgment delivered on September 10, 2026, the Delhi High Court (Division Bench comprising Justices Dinesh Mehta and Rajneesh Kumar Gupta) quashed the orders passed by the Income Tax Appellate Tribunal (ITAT) in a batch of seven appeals involving Patanjali Ayurved Limited. The court observed serious procedural lapses and a lack of judicial reasoning in the ITAT's handling of these tax appeals, which arose from search and seizure proceedings under the Income Tax Act, 1961.
The appeals concerned assessment years 2013-14, 2014-15, 2015-16, and 2017-18, initiated following a search action conducted in the "Hawala Traders Group." The Assessing Officer had issued notices under Section 153C of the Income Tax Act, which deals with assessments based on seized material. The ITAT had passed a common order disposing of seven appeals, including cross-appeals filed by the revenue and the assessee, without dealing with the parties' contentions or providing any reasoning or rationale behind its decision. Shockingly, the order was scanty, consisting of less than seven paragraphs, and was passed with undue haste.
The Court noted that the ITAT had issued a common order covering appeals that were heard and pronounced on different dates (6th August 2025 and 13th August 2025), which indicated a procedural anomaly and recklessness. The lack of application of mind and the failure to address the merits of the case or provide reasoned orders were deemed unacceptable for an appellate authority entrusted with fact-finding.
Further, the Court highlighted that the Assessing Officer's orders had clarified that no incriminating material seized during the search pertained to Patanjali Ayurved Limited, referencing the Supreme Court's decision in PCIT v. Abhisar Buildwell Pvt. Ltd. (2023) 454 ITR 212. Despite this, the ITAT had quashed the assessments citing that the assessment years were "unabated," but failed to justify its conclusion with any rationale.
Due to these procedural defects and absence of reasoned findings, the Delhi High Court set aside all seven ITAT orders, irrespective of the fact that some of the orders were not challenged on monetary grounds. The appeals were restored to their original numbers and remanded for fresh adjudication before a different bench of the ITAT. The Court also directed the President of the Tribunal and the Secretary of the Ministry of Law and Justice to ensure compliance with this direction.
Importantly, the Court refrained from commenting on the merits of the case, leaving the ITAT free to take an independent view consistent with law during the fresh hearing.
This judgment emphasizes the importance of procedural propriety, reasoned orders, and judicial discipline in tax appellate proceedings, and serves as a stern reminder to the ITAT to uphold the highest standards of adjudication.
Bottom Line:
Procedural lapses by Income Tax Appellate Tribunal - Orders passed with undue haste and recklessness, lacking reasoning and rationale - Tribunal's orders quashed and remanded for fresh adjudication by a different bench.
Statutory provision(s):
Income Tax Act, 1961 Sections 143(3), 153C
