Average Income to be Considered when Variations detected in ITR Filed by Claimant: Karnataka HC [Read Order]

In a recent decision, the Karnataka High Court ruled that the average income is to be considered when variations are detected in income tax returns ( ITR ) filed by the claimant. The petitioner/claimant has filed a petition under Section 166 of MV Act, claiming compensation for accidental injuries sustained in a road traffic accident that took place on 09.04.2019. It was stated that the claimant while proceeding by walk towards Vijayapura Road from their land, a motorcycle driving in a rash and negligent manner dashed to the petitioner, resulting in grievous injuries. The Tribunal on the basis of the material evidence on record held that the accident occurred due to rash and negligent driving of motorcycle and confirmed the liability of the insurer.

The Tribunal awarded a sum of Rs.6,96,704/- along with interest @ 6% under various heads. The counsel for the claimant submitted that the disability assessed at 35% to the right lower limb is to be considered as whole body functional disability, considering the profession carried on by the claimant and that the disability suffered would deprive the claimant to continue her profession. It was also submitted that the income of the claimant has to be assessed on the basis of income tax returns for the Assessment Year 2018-2019 and that the compensation awarded under various heads by the Tribunal is on the lower side. A Division Bench of Justice H.T.Narendra Prasad and Justice K V Arvind observed that “When the income declared by a person engaged in a profession or business is not stable, in order to assess the income of the injured/deceased to arrive at established income, which would be the foundation for assessing the compensation, the average of the income of the years considered would be appropriate. Further the average income would be appropriate in the interest of the claimant as well as the insurer.

If average income is not considered, if an established income of the injured/deceased is reduced in the year of accident or due to windfall the income of the victim/deceased increased in the year of accident, the process of determining the established income would fail.”

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