Run up to Dr. Ion and start punching away. Each time he tries to attack while you're still punching, side dash promptly and punch immediately after for a counter hit. Repeat it until he backs away to transform or to catch a breather. Catch up with him and repeat step 1 until you refill enough TP to unleash godhand.

Considering you have some of the strongest punches equipped (example: left jab 3, uppercut 3, long straight 3 etc) a single unleash should take out a huge chunk of life leaving you with just a little left. By then, you can simply perform Kungfu Tango or Discombobulator to finish him off.