Delhi High Court Sets Aside Seven ITAT Orders in Patanjali Tax Case, Questions Tribunal’s Procedure

Yugcharan News / 16-09-2026

The Delhi High Court has set aside seven orders passed by the Income Tax Appellate Tribunal (ITAT) in a batch of cross-appeals involving Patanjali Ayurved Limited, raising serious concerns over the manner in which the tribunal had dealt with the tax dispute.

A Division Bench of Justice Dinesh Mehta and Justice Rajneesh Kumar Gupta observed that the proceedings before the ITAT reflected significant procedural shortcomings and a lack of adequate application of mind. The Court directed that the matters be considered afresh by a different bench of the tribunal.

The case, titled Pr Commissioner of Income Tax, Central 1 Delhi v Patanjali Ayurved Limited, arose from multiple appeals concerning the income-tax proceedings involving Patanjali Ayurved. The High Court’s intervention came after examining the manner in which the ITAT had dealt with the connected appeals.

The Court’s order is significant because it does not merely concern the tax issues between the parties. It also highlights the importance of reasoned adjudication and proper judicial procedure by appellate authorities dealing with tax disputes.

Seven ITAT Orders Set Aside

The Delhi High Court quashed seven separate orders passed by the ITAT after finding substantial procedural deficiencies in the tribunal’s handling of the matters.

The Court expressed strong concern over what it described as an opaque manner of functioning. The judges noted that the record before them raised questions about whether the tribunal had properly applied its mind to the issues that were placed before it.

Rather than allowing the disputed orders to continue, the High Court directed that the matters be heard again by another bench of the ITAT.

The direction means that the underlying tax disputes have not been finally decided by the High Court through its latest order. Instead, the matters will return to the appellate tribunal for fresh consideration in accordance with law.

This distinction is important because setting aside the ITAT orders does not, by itself, determine the ultimate tax liability or resolve every substantive issue involved in the Patanjali case.

Court Raises Concerns Over Tribunal Proceedings

The High Court’s observations focused substantially on the manner in which the ITAT had dealt with the appeals.

Appellate tribunals are expected to examine the material placed before them, consider the arguments of the parties and provide reasons for their conclusions. Reasoned orders are particularly important in tax litigation because they allow the parties and higher courts to understand how the tribunal reached its decision.

In the Patanjali matter, the Delhi High Court found that the record reflected deficiencies serious enough to justify setting aside the orders and sending the proceedings back for fresh adjudication.

The Court’s criticism also underlines the principle that judicial and quasi-judicial bodies must follow transparent procedures while deciding disputes. Parties appearing before an adjudicating authority are entitled to know that their arguments and evidence have been considered before a conclusion is reached.

The High Court therefore opted for a fresh hearing rather than attempting to decide the entire dispute itself on the basis of the existing tribunal orders.

Fresh Hearing Before a Different ITAT Bench

One of the key directions issued by the High Court is that the cases be reheard by a separate ITAT bench.

A fresh hearing is expected to give the parties an opportunity to present their respective positions before the tribunal again. The new bench will have to consider the matters independently and pass appropriate orders after examining the record and submissions.

The direction also separates the fresh adjudication from the earlier orders that have now been set aside.

The decision could therefore have implications beyond the immediate dispute. It serves as a reminder that tribunal proceedings must maintain procedural fairness and that appellate decisions need to demonstrate a clear consideration of the issues raised by the parties.

Importance of ITAT in Income-Tax Litigation

The Income Tax Appellate Tribunal is an important appellate forum in India's direct-tax system. It hears disputes arising from orders passed by income-tax authorities and plays a significant role in resolving tax litigation before matters potentially reach the High Courts.

Because the ITAT functions as an appellate authority, its orders are expected to contain reasons supporting the conclusions reached by the tribunal. Its decisions can have substantial financial consequences for taxpayers as well as the tax administration.

The Delhi High Court’s intervention in the Patanjali matter highlights the supervisory role played by constitutional courts when procedural irregularities are alleged or when an appellate order does not meet the required standards of adjudication.

The latest order also demonstrates that tax litigation is not limited to questions involving computation of income, deductions, assessments or liabilities. The procedural manner in which those questions are decided can itself become the subject of judicial scrutiny.

Patanjali Case to Be Considered Again

With the seven ITAT orders set aside, the connected matters will now return to the tribunal for reconsideration.

The fresh bench will have to hear the parties and examine the relevant issues afresh. The High Court has not, through this order, substituted its own final determination for the tribunal’s decision on the underlying tax disputes.

This means that the substantive questions arising from the income-tax proceedings remain open for adjudication.

The fresh proceedings will also provide the tribunal an opportunity to issue reasoned decisions addressing the relevant contentions and material on record.

For Patanjali Ayurved, the case remains an important tax litigation matter. For the income-tax authorities, the proceedings will similarly require the department to present its position before the new tribunal bench.

Broader Message on Judicial Accountability

The Delhi High Court’s order carries a broader procedural message for adjudicatory institutions.

Tribunals occupy an important position in India's justice system because they are designed to provide specialised adjudication in particular areas of law. Their functioning is therefore expected to combine subject-matter expertise with fairness, transparency and adherence to established legal principles.

When an appellate order fails to adequately address the issues raised before it, affected parties may seek judicial review. High Courts can examine whether the tribunal acted within the limits of its jurisdiction and whether the decision-making process complied with the requirements of law.

In the Patanjali matter, the Delhi High Court found the shortcomings significant enough to warrant setting aside the orders altogether and requiring a fresh hearing before another bench.

The decision does not conclude the underlying tax dispute. Instead, it resets the appellate proceedings and requires the ITAT to reconsider the matters through a new process.

The case will therefore continue to be watched for the outcome of the fresh proceedings. The new ITAT bench will now have to examine the connected appeals independently and pass fresh orders after hearing the parties.

The High Court’s intervention ultimately places emphasis on a basic requirement of adjudication: disputes must be decided through a transparent and reasoned process, with due consideration given to the submissions and material placed before the decision-making authority.