Using DVO valuation to assess income without rejecting taxpayer's books first-judgment set aside, tribunal order restored.

The dominant issue was whether the assessing authority could validly rely on a DVO's valuation without first rejecting the assessee's books of account. The SC held that a reference to the DVO is impermissible unless the books are rejected in accordance with law; absent such rejection, the valuation report cannot form the basis of assessment. Since the HC failed to consider this legal precondition, its reliance on the DVO report was misconceived. Consequently, the HC's judgment was set aside and the Tribunal's order in favour of the assessee was restored.

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The Supreme Court of India allowed a civil appeal, setting aside the High Court's judgment and restoring the Tribunal's order in favor of the assessee. The Tribunal found that the assessing authority wrongly referred the matter to the Departmental Valuation Officer without rejecting the books of account, leading to a misconceived reliance on the DVO's report.

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