“Submission‑Date Irrelevance” Rule: Supreme Court Re‑Affirms the Primacy of Assessment‑Year Income Tax Returns in Motor Accident Claims

Comprehensive Commentary on
Nidhi Bhargava & Ors. v. National Insurance Company Ltd. & Ors.
(2025 INSC 526; Civil Appeal arising out of SLP(C) No. 10664 of 2019)

1. Introduction

This commentary dissects the recent Supreme Court of India decision in Nidhi Bhargava v. National Insurance Company Ltd., delivered on 22 April 2025 by Amarullah J. (concurring Dhulia J.). The judgment restores the Motor Accident Claims Tribunal’s (MACT) award that had been halved by the Delhi High Court and, crucially, crystallises a new rule for the assessment of a deceased person’s income in motor accident compensation cases: an Income‑Tax Return (ITR) for an assessment year that ends before the date of accident cannot be discarded merely because it was filed after the date of accident.

The appellants are the widow and children of late Kapil Bhargava, who died in a 2008 collision with a “Blue Line” bus. The Tribunal had awarded ₹31.41 lakh with 9 % interest. The High Court, on the insurer’s appeal, excluded the latest ITR, pegged income to the previous year, and slashed compensation to ₹16.97 lakh. The appellants sought restoration.

2. Summary of the Judgment

• The Supreme Court characterises the High Court’s reasoning as “erroneous, casual and superficial”.
• Holds that ITRs are statutory documents and presumptively reliable for income determination (Malarvizhi, Amrit Bhanu Shali, K Ramya lines).
• Clarifies that the relevant consideration is the financial year to which the return pertains, not the physical date of filing.
• Restores the Tribunal’s award of ₹31.41 lakh with 9 % interest; imposes additional 9 % if payment is delayed beyond two months.
• Labels the Motor Vehicles Act, 1988 (MVA) as beneficial/social‑welfare legislation; adjudication must be “forward‑looking”.

3. Analysis

3.1 Precedents Cited

1. Malarvizhi v. United India Insurance Co. Ltd., (2020) 4 SCC 228
   • Recognised ITRs as best evidence of income when available.
2. Amrit Bhanu Shali v. National Insurance Co. Ltd., (2012) 11 SCC 738
   • Held ITRs carry presumption of correctness unless proved otherwise.
3. Kalpanaraj v. TNSTC, (2015) 2 SCC 764
   • Relied on ITR to compute multiplier‑linked compensation.
4. K Ramya v. National Insurance Co. Ltd., 2022 SCC OnLine SC 1338
   • Re‑emphasised the MVA’s welfare objective, approved moderate approach when multiple ITRs exist.
5. Sarla Verma (Smt.) v. DTC, (2009) 6 SCC 121
   • Laid down formulae for multiplier and deductions.
6. National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680
   • Established guidelines for “future prospects”.
7. S Vishnu Ganga v. Oriental Insurance Co. Ltd., 2025 SCC OnLine SC 182
   • Recent reiteration of ITR relevance.
8. Shivaleela v. Divisional Manager, UIIC, 2025 SCC OnLine SC 563
   • Cited to underline the MVA’s compensatory, not punitive, objective.

3.2 Legal Reasoning

The bench reasons in a stepwise fashion:

1. Nature of ITRs. ITRs are statutorily mandated under the Income‑tax Act; authenticity is presumed. Rejecting an ITR demands a specific legal basis (fraud, manipulation, etc.).
2. Assessment‑Year vs. Filing‑Date. The accident occurred on 12 Aug 2008. The disputed ITR covered income from 01 Apr 2007 to 31 Mar 2008. Because that span pre‑dated the accident in toto, its filing date (10 Sep 2008) is irrelevant.
3. Discretion with MACT. When multiple ITRs exist, the Tribunal may (a) take the average; (b) adopt the latest; or (c) choose the most realistic year, provided reasons are given. The High Court’s “blanket exclusion” amounted to jurisdictional error.
4. Beneficial Nature of MVA. The judgment emphasises purposive construction: compensation looks forward to the claimants’ future security; procedural niceties must not defeat substantive justice.
5. Restorative Approach. Given the High Court’s sole ground was impermissible, Supreme Court reinstated the original award rather than remanding, balancing expedition and fairness (17‑year‑old accident).

3.3 Potential Impact

The ruling has both doctrinal and practical ramifications:

• New Precedent – “Submission‑Date Irrelevance”. Any court/tribunal handling MVA claims must focus on the assessment year, not the date on which the return was lodged, so long as that year wholly precedes the accident and there is no allegation of fabrication.
• Reduced Litigation on Income Disputes. Insurers frequently challenge ITRs filed close to accidents as “self‑serving”. This judgment narrows their defence unless concrete evidence of manipulation exists.
• Uniform Methodology. Tribunals may adopt the average‑or‑latest approach but cannot discard legally filed returns; promotes consistency nationwide.
• Claimant‑Friendly Tilt. Re‑affirms that MVA adjudication should lean in favour of victims where ambiguity exists.
• Insurance Industry Compliance. Insurers will need to adjust reserves and assessment models acknowledging that ITR evidence carries controlling weight.

4. Complex Concepts Simplified

Assessment Year vs. Financial Year

A “financial year” (FY) runs from 1 April to 31 March. The “assessment year” (AY) is the following year in which the FY’s income is assessed and tax is paid. E.g., FY 2007‑08 (income earned) is assessed in AY 2008‑09.

Multiplier Method

To estimate loss of dependency, courts multiply the annual income (net of personal expenses) by a “multiplier” based on the deceased’s age (per Sarla Verma table).

Future Prospects

An additional percentage (10–50 %) added to current income to account for likely future increments ( Pranay Sethi ). For self‑employed persons aged 40‑50, 25 % is added.

Beneficial Legislation

Statutes enacted to confer benefits or protections (e.g., MVA) are interpreted liberally in favour of the class intended to benefit (victims).

9 % Interest

Interest awarded from date of claim filing to realisation to compensate for delay. An additional penal rate may be imposed for non‑compliance with the court’s timeline.

5. Conclusion

The Supreme Court’s decision in Nidhi Bhargava fortifies the evidentiary status of income‑tax returns in motor vehicle accident compensation and introduces the “Submission‑Date Irrelevance” rule. By emphasising the difference between the period covered by an ITR and the date it is filed, the Court closes a loophole that insurers had exploited to diminish awards. The ruling realigns adjudication with the MVA’s welfare ethos, ensuring that procedural objections cannot eclipse substantive justice. Going forward, tribunals must treat ITRs for assessment years ending before the accident as reliable benchmarks, thereby streamlining compensation determination and reinforcing claimant confidence in the system.