Insurer Cannot Demand Proof Of Source Of Income Beyond ITR In Accident Claim: J&K&L High Court

The Jammu & Kashmir High Court held that once the income of a deceased victim is duly proved through Income Tax Returns (ITR), the Insurance Company cannot insist on separate proof of the source of such income in motor accident compensation proceedings.

A bench of Justice Sanjeev Kumar Shukla, Justice Sanjay Parihar observed that neither the Motor Accident Claims Tribunal (MACT) nor the appellate court is required to go behind the Income Tax Return to examine the source of income reflected therein, particularly when no rebuttal evidence is led to dispute its correctness.

The sole ground urged by the Insurance Company was that although the claimant had placed on record and proved the Income Tax Return of the deceased for the relevant year, she had failed to establish the source from which the income was earned.

Rejecting the plea as “without substance,” the Court held that once the income is disclosed in a return filed before the Income Tax authorities and proved on record, the Tribunal cannot undertake an enquiry into the source of such income in claim proceedings under the Motor Vehicles Act.

The Court further noted that there was sufficient material to show that the deceased was a partner in a business firm, M/s Chander Parkash Prem Kumar, and was earning income from the said business. Importantly, no evidence in rebuttal was led by the Insurance Company to doubt the authenticity or correctness of the ITR produced by the claimant.

While dismissing the insurer's appeal, the Court found merit in the claimant's submission that the Tribunal had failed to award just compensation by not taking into account the actual income of the deceased and by not applying the correct multiplier.

Reassessing the compensation, the Court:

Took the annual income of the deceased as ₹2,71,747;

Added 10% towards future prospects in terms of the Constitution Bench judgment in Pranay Sethi;

Deducted 50% towards personal expenses, noting that the deceased had left behind only one dependent; and

Applied the multiplier of 9 in accordance with Sarla Verma.

On this basis, the loss of dependency was calculated at ₹13,45,149.

Under conventional heads, the Court awarded:

₹15,000 towards funeral expenses; and ₹40,000 towards loss of consortium.

The total compensation was thus determined at ₹14,00,149.

The modified amount, after deducting the sum already received, was directed to be paid to the claimant along with interest at the rate of 7.5% per annum from the date of filing of the claim petition till realization.

Accordingly, while the appeal filed by the Insurance Company was dismissed, the award passed by the Tribunal stood modified to the above extent.

Case-Title: The Oriental Insurance Company Ltd. Vs Prem Gupta & Ors., 2026

Click Here To Read/Download Order