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Issues:
Penalty under section 271(1)(c) of the Income Tax Act for assessment year 1976-77; Ex parte order passed by the CIT(A) due to repeated adjournment requests by the assessee. Analysis: The second appeal was filed against the confirmation of a penalty of Rs. 1,06,824 under section 271(1)(c) of the Income Tax Act for the assessment year 1976-77. The primary contention raised was that the CIT(A) erred in passing an ex parte order due to adjournment requests made by the assessee. The CIT(A) had passed the ex parte order based on multiple adjournment requests made by the assessee, leading to the appeal being decided on merits without the assessee's presence. The sequence of events leading to the ex parte order included adjournment requests made by the assessee on various dates. The CIT(A) had rejected further adjournment requests on 19th Feb., 1986, leading to the decision being made ex parte. The assessee had cited reasons such as unavailability of relevant papers and disruptions due to floods in Madras as grounds for adjournment requests. The Tribunal noted that while the Revenue argued in favor of the CIT(A)'s decision, the reasons for adjournment cited by the assessee should not have resulted in an ex parte order. The Tribunal observed that the assessee's requests for adjournment were not unreasonable, and the CIT(A) should have considered them more leniently. The Tribunal, without delving into the merits of the penalty, decided to set aside the CIT(A)'s decision and remanded the case for fresh adjudication. The Tribunal emphasized the need for a fair hearing and directed the CIT(A) to re-examine the case promptly from the stage of filing the appeal before the first appellate authority. As a result, the appeal was allowed, and the case was sent back for reconsideration.
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