Seven ITAT orders involving Patanjali set aside over mismatched hearing and pronouncement dates; fresh hearing ordered

The Income Tax Appellate Tribunal (“ITAT”) disposed of seven cross-appeals concerning Patanjali Ayurved Limited for Assessment Years 2013–14, 2014–15, 2015–16 and 2017–18, arising from proceedings under Section 153C read with Section 143(3) of the Income-tax Act, 1961. The assessee’s appeals were ITA Nos. 534 to 537/Del/2025 and the Revenue’s appeals were ITA Nos. 605 to 607/Del/2025.

The ITAT’s common order contained only a few substantive paragraphs, did not adequately address the parties’ contentions, and quashed the assessments on the ground that no addition was based on specific incriminating material found during search. It also recorded that four appeals were heard and pronounced on 6 August 2025, while the remaining three appeals were heard and pronounced on 13 August 2025, although all seven were dealt with in the same common order.

The Delhi High Court found the order procedurally defective, opaque and lacking in reasoning. It consequently considered it necessary to interfere with all seven orders, including the orders not challenged by the Revenue because of applicable monetary limits.

1. Whether the ITAT’s common order, which failed to adequately discuss the issues and contentions and contained inconsistent dates of hearing and pronouncement, could be sustained in law?

2. Whether the High Court could set aside all seven ITAT orders, including orders not specifically challenged by the Revenue due to monetary-limit restrictions?

3. Whether the High Court should determine the merits of the Section 153C assessments or remand the matters for fresh adjudication?

The Court applied the fundamental requirement that an appellate adjudicatory order must disclose application of mind, address the relevant contentions and issues, and provide intelligible reasons, particularly where the Tribunal is the highest fact-finding authority.

Proceedings concerning the assessments arose under Sections 153C and 143(3) of the Income-tax Act, 1961.

The impugned ITAT order referred to the Supreme Court’s decision in PCIT v. Abhisar Buildwell Pvt. Ltd., (2023) 454 ITR 212 (SC), concerning the requirement of incriminating material in respect of completed or “unabated” assessments in search-related proceedings; however, the High Court expressly refrained from deciding the merits of that issue.

An order passed without proper reasoning or in a manner demonstrating procedural irregularity cannot be sustained and may be set aside for fresh adjudication.

The Court held that the ITAT order was not merely brief but fundamentally deficient: it did not meaningfully deal with the parties’ submissions, did not explain its reasoning, and contained an unexplained inconsistency in recording different dates of hearing and pronouncement for appeals disposed of through one common order.

Since the ITAT occupies the highest fact-finding position in the tax appellate hierarchy, such haste and lack of application of mind undermined the validity of the adjudication.

The Court therefore declined to examine whether the assessments were properly quashed under Section 153C or whether the principle in Abhisar Buildwell applied. To ensure a legally reasoned and independent adjudication, it set aside all seven orders and restored the appeals to the ITAT for fresh decision by a different Bench.

The President of the ITAT was directed to place the matters before a Bench other than the Bench that had passed the impugned order.

The Court clarified that it had made no finding on the merits and that the ITAT was free to decide the matters independently in accordance with law.

Pending applications were also disposed of.