Supreme Court Restores Tribunal Award, Holds Post-Accident Filing of Income Tax Return Is Not Bar to Its Use

A bench of Justices Sudhanshu Dhulia and Ahsanuddin Amanullah heard an appeal against a Delhi High Court order which had reduced a motor-accident compensation award on the ground that an Income Tax Return for Assessment Year 2008-09 was filed after the date of the accident. The appeal arose from an award in a claim under Section 166 read with Section 140 of the Motor Vehicles Act, 1988 following the death of a motorcyclist and injuries to his wife.

The Supreme Court restored the Tribunal's award and held that the High Court's sole reason for excluding the Income Tax Return was legally unsustainable. The Court found the High Court's reasoning to be "erroneous" and observed that the period to which an Income Tax Return related — the financial year — and not the date of filing, determined its relevance for assessing income. The Court, in its reasoning, observed: "Just because on the date of the accident i.e., 12.08.2008, the Return for the Assessment Year 2008-2009 had not been filed, cannot disadvantage the appellants, for the reason that the period for which the Return is to be submitted covers the period starting 1st of April, 2007 and ending 31st March, 2008. Thus, for obvious reasons, the Return would be only for the period 01.04.2007 to 31.03.2008, and date of submission would be post-31.03.2008. No income earned beyond 31.03.2008 would reflect in the Income Tax Return for the Assessment Year 2008-2009. To reject the Return on the sole ground of its submission after the date of accident alone, in our considered view, cannot be legally sustained." The Court directed restoration of the Tribunal award of Rs.31,41,000 with interest at 9% per annum, subject to adjustment of any amounts already paid, and ordered payment within two months with provision for enhanced interest in case of delay.

Background The dispute arose from a 2008 collision between a Blue Line bus and a motorcycle, in which Kapil Bhargava died and his wife (the first appellant) suffered grievous injuries. The claimants filed MACT No.357515/2016 seeking Rs.40 lakh; the Tribunal awarded Rs.31,41,000 with 9% interest. The insurer challenged the award before the Delhi High Court in MAC. APP. Nos.589/2018 and 592/2018; the claimants appealed against the award for enhancement. The High Court reduced the compensation to Rs.16,97,370 on the ground that the deceased's Income Tax Return for Assessment Year 2008-09 had been filed after the date of the accident and therefore had to be excluded, relying on a computation based on the Assessment Year 2007-08 income.

The appellants argued that the return for Assessment Year 2008-09 related to the financial year 01.04.2007–31.03.2008 and therefore reflected pre-accident income; they contended that the High Court erred in excluding that return merely because it was filed after the accident. The insurer contended that the High Court's approach was correct and, at best, an average of returns for AYs 2007-08 and 2008-09 could have been adopted.

The Supreme Court reviewed authorities including Sarla Verma v. DTC and the Constitution Bench decision in National Insurance Co. Ltd. v. Pranay Sethi and relied on subsequent precedents affirming that Income Tax Returns are a "statutory document" and "reliable evidence" to assess income when available. The Court reiterated that "The Income Tax Return is a legally admissible document on which the income assessment of the deceased could be made." Finding the High Court's exclusion of the 2008-09 return to be a tenuous ground that unduly reduced a claim under a welfare statute, the Court restored the Tribunal award. The Court directed that payment be made with 9% interest per annum after adjusting amounts, within two months, failing which an additional 9% interest per annum would be payable on both principal and interest until actual payment; it made no order as to costs. The Civil Appeal was disposed.

Case Details: Case No.: Civil Appeal No. of 2025 (Special Leave Petition (Civil) No.10664 of 2019) | 2025 INSC 526 Case Title: Nidhi Bhargava & Ors. v. National Insurance Company Ltd. & Ors. Appearances: For the Petitioner(s): [Names not indicated in the judgment] For the Respondent(s): [Names not indicated in the judgment]