Ex parte tribunal proceedings and recall under section 254(2) require fair hearing where counsel withdraws without notice.

The Tribunal should not have proceeded ex parte after the assessee's authorised representative withdrew on the hearing date without adjournment or fresh notice to the assessee. On those facts, the Court held that sufficient cause was shown for recall under section 254(2) of the Income-tax Act, 1961, because a party should not ordinarily be decided against on merits merely on written submissions when counsel withdraws without informing the party and oral arguments may be material. The order rejecting recall was set aside and the matter was directed to be heard afresh.

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Issues: Whether the Tribunal was justified in proceeding ex parte and in rejecting the assessee's application for recall under section 254(2) of the Income-tax Act, 1961.

Analysis: The assessee's authorised representative had withdrawn on the date of hearing, and the matter was decided without adjournment or fresh notice to the assessee. In those circumstances, the Court held that the assessee had shown sufficient cause for recall. It further observed that where counsel withdraws without informing the party, the matter ordinarily should not be decided on merits merely on the basis of written arguments, as oral submissions may also be material.

Conclusion: The Tribunal was not justified in proceeding ex parte or in rejecting the recall application; the order refusing recall was set aside and the matter was directed to be heard afresh.

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