ITRs are Authentic Proof of Income in MACT Claims: Calcutta HC enhances Compensation from ₹15 Lakh to ₹39 Lakh [Read Order]

TheCalcutta High Court has modified a compensation award, enhancing the compensation amount awardable to a victim from ₹15.05 Lakh to ₹39 Lakh, after affirming that Income Tax Returns (ITR) are statutory documents and serve as authentic proof of a victim's income.

The Court emphasized that when a self-employed person files returns during their lifetime, there is no scope for inflating income, and Tribunals should not disregard such documents in favor of arbitrary assessments.

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The matter originated from a fatal road accident on December 23, 2014. The deceased, a goldsmith by profession, was standing on a footpath while returning from his place of work when a high-speed motorcycle, driven in a rash and negligent manner struck him. The victim sustained injury and died on the spot.

A police case was subsequently instituted under Sections 279 and 304A of the Indian Penal Code against the motorcycle rider. The parents of the deceased filed a claim under Section 166 of the Motor Vehicles Act, 1988, asserting that the victim was the sole breadwinner earning ₹30,000 per month.

“Section 166. Application for compensation.- (1) An application for compensation arising out of an accident of the nature specified in sub-section (1) of section 165 may be made-(a) by the person who has sustained the injury; or

(b) by the owner of the property; or

(c) where death has resulted from the accident, by all or any of the legal representatives of the deceased; or

(d) by any agent duly authorised by the person injured or all or any of the legal representatives of the deceased, as the case may be

Provided that where all the legal representatives of the deceased have not joined in any such application for compensation, the application shall be made on behalf of or for the benefit of all the legal representatives of the deceased and the legal representatives who have not so joined, shall be impleaded as respondents to the application.”

During the trial proceedings, the Respondent No. 1 ICICI Lombard General Insurance Co. Ltd. contested the claim made by the family of the deceased.

The claimants produced three years of Income Tax Returns and examined an official from the Income Tax Department to verify the records. However, the Learned Trial Judge at the Fast Track Court, Paschim Medinipur, assessed the monthly income at a flat rate of ₹10,000, citing the absence of bank passbooks to corroborate the business earnings.

Accordingly, the trial court ordered compensation amount of ₹15,05,000 with interest @ 6% per annum from the date of filing of the claim application till full liquidation.

Aggrieved by this assessment, the mother of the deceased moved the High Court and sought enhancement of the amount based on the statutory filings.

The appellants were represented by Ashique Mondal and Shahmeraz Alam citing that the Tribunal erred in assessing the monthly income of the victim as ₹10,000 per month and not considering the three consecutive years of income tax submitted, and that the Tribunal ought to have considered the annual income of ₹3,18,470c on the basis of income tax return for AY 2014-2015.

Saswata Bhattacharyya appeared for the ICICI Lombard General Insurance Co. Ltd. and argued that the Trial Court was justified in seeking bank statements and that the original award required no interference.

Justice Biswaroop Chowdhury observed that while a salaried person’s income is verified via salary slips, a self-employed person’s income is determined by declarations made to Tax Authorities. The Court noted that once an ITR is accepted by the authority, it becomes an authentic document.

The Bench remarked that it is unnecessary for a Motor Accident Claims Tribunal to sit in review of an assessment already made by a competent authority, especially when the returns were filed prior to the accident.

Relying on the Supreme Court decisions in Malarvizhi vs. United India Insurance and Surendar Kaur Singh vs. United India Insurance Company Limited (2020), the Court held that the determination of income must proceed on the basis of the ITR where available.

Consequently, the Court accepted the victim's annual income of ₹3,18,470 as per the AY 2014-2015 return. After adding 40% for future prospects and applying a multiplier of 17, the Court calculated the total compensation, including funeral expenses and filial consortium, at ₹39,00,000. The Insurance Company was directed to deposit the balance amount with 6% interest.