Natural justice breach can render an ex parte reference order void and justify recall in advisory proceedings.

An ex parte order passed without notice to an assessee, where counsel's name was omitted from the cause list, is vitiated for breach of audi alteram partem and is treated as non est. The High Court held that its advisory jurisdiction under section 256 of the Income-tax Act, 1961 does not prevent recall of such an order, because the defect lies in the denial of hearing rather than in any review on merits. The court therefore recognised inherent power to recall the earlier order and directed the reference to be relisted for hearing.

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Issues: Whether the Court could recall its earlier ex parte order answering the reference in favour of the Commissioner when the assessee had not been heard because its counsel's name was omitted from the cause list.

Analysis: The omission in the cause list deprived the assessee of notice and an opportunity of hearing. An order passed in breach of the audi alteram partem rule is vitiated and non est. The advisory character of the Court's jurisdiction under section 256 of the Income-tax Act, 1961 does not deprive the order of its judicial character or prevent recall of an order rendered without hearing the opposite party. The earlier decision was therefore treated as an order suffering from inherent infirmity, not as a prohibited review on merits.

Conclusion: The Court held that it had inherent power to recall the earlier order, and the application was allowed. The reference was directed to be listed again for hearing before the appropriate Bench.

Ratio Decidendi: An ex parte order passed in breach of natural justice is a nullity, and a court has inherent jurisdiction to recall such an order even in advisory reference proceedings under section 256 of the Income-tax Act, 1961.

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