Income tax appeal must be decided on merits; non-appearance alone cannot justify dismissal for default.

Section 254 of the Income-tax Act requires the Tribunal to dispose of appeals by reasoned order after hearing both sides, and Rule 24 does not authorise dismissal for default of appearance. The Tribunal, as the final fact-finding authority, must decide the appeal on merits even if the appellant or counsel is absent; if an ex parte order is made, the rule contemplates restoration on sufficient cause. The commentary therefore states that appellate tribunal proceedings cannot be concluded by a simple dismissal for non-prosecution, and the appeal should be remitted for fresh disposal on merits.

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Issues: Whether the Income Tax Appellate Tribunal can dismiss an appeal for non-appearance without deciding it on merits under Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963.

Analysis: Section 254 of the Income-tax Act, 1961 requires the Tribunal to pass such orders as it thinks fit after hearing both sides, and Rule 24, as read in the light of the settled law, does not authorise dismissal of an appeal for default of appearance. The Tribunal, as the final fact-finding authority, must decide the appeal on merits even if the appellant or counsel is absent, and if an ex parte order is passed, the rule contemplates restoration on sufficient cause. The judgment applies the established principle that appellate tribunal proceedings cannot be short-circuited by a dismissal for want of prosecution.

Conclusion: The Tribunal's dismissal of the appeal for want of prosecution was unsustainable, and the matter was remitted to the Tribunal for fresh disposal on merits. The issue was answered in favour of the assessee and against the Revenue.

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