Rashmirekha Tripathy v. Sriram General Insurance (2026): how to read ITRs when fixing accident-compensation income

For years, tribunals and High Courts have differed on a deceptively small question: when a family produces Income Tax Returns to prove what a road-accident victim earned, which years' returns govern? Some courts averaged the last three years; others took only the latest return filed. In Rashmirekha Tripathy v. The Branch Manager (Legal Claims), Sriram General Insurance Company Ltd., a Division Bench of Justices Sanjay Karol (who authored the judgment) and Nongmeikapam Kotiswar Singh set out to resolve that inconsistency, aided by two amici curiae appointed for the purpose.

The accident and the two lower awards

On 29 May 2018, Manoranjan Pandey, aged 39, was driving from Behrampur towards Bhubaneswar when a truck, driven rashly and negligently, struck his vehicle near Kaliabali Chakka on the National Highway; he died during treatment. His legal representatives filed a claim under Section 166 of the Motor Vehicles Act, 1988 before the Motor Accident Claims Tribunal at Behrampur, seeking ₹2,25,00,000 and stating that the deceased ran his own construction business earning ₹15,00,000 a year as the family's sole breadwinner.

The Tribunal fixed his annual income at ₹15,00,000 on the strength of a single ITR — for Assessment Year 2018-19 — deducted one-third for personal expenses, applied a multiplier of 16, and awarded ₹2,27,00,064 with 6% interest. On the insurer's appeal, the Orissa High Court took a different tack: it averaged the two ITRs on record, reduced the annual income to ₹13,33,226, applied a multiplier of 15, and cut the award by ₹39,24,914 to ₹1,87,75,150. The claimants came to the Supreme Court arguing that both courts had mis-assessed the income.

The question, and the amici

The Court framed the issue precisely: whether, for assessing annual income under the Act, the ITR for the previous year is appropriate, or the average of the past two or three years. Recognising the importance of the point, it had earlier appointed Mr. J.R. Midha, senior counsel, and Mr. Salil Paul, counsel, as amici curiae.

Mr. Midha told the Court there was no uniformity in practice — some courts averaged the last three years, others took the last return filed — and cautioned that while an ITR is prima facie evidence of income, it "does not always reflect the true income", so factors like the business's income pattern, growth pattern and nature matter. Where an ITR is filed after the death, he suggested calling for the past three years' returns along with balance sheets. Mr. Paul pointed to ICICI Lombard General Insurance Co. Ltd. v. Ajay Kumar Mohanty (2018) 3 SCC 686, where the Court had relied on the average of the previous three years' ITRs.

No hard-and-fast formula, but a workable bifurcation

The Bench began from settled ground: the object of a claim under the Motor Vehicles Act is "just and fair compensation", a position it drew from V. Pathmavathi v. Bharthi Axa General Insurance Co. Ltd. (2026 SCC OnLine SC 158), Reshma Kumari v. Madan Mohan (2013) 9 SCC 65, and Anant v. Pratap (2018) 9 SCC 450. Compensation, as those authorities record, is "a rough estimate" — an assessment based on estimation and conjecture, not an exact science.

Against that backdrop the Court held there can be "no hard and fast formula" for computing annual income, while treating the ITR, a statutory document, as an important reference point. It then drew the distinction that supplies the judgment's ratio.

For salaried individuals, the Court held that only the previous year's ITR will ordinarily suffice, because the financial impact of a promotion is significant and may be reflected only in that latest return. Where the deceased had not completed a year in a promoted post, or had not yet filed an ITR for it, the court is to look to the promotion letter and other corroboratory financial statements.

For self-employed individuals and those carrying on their own business, the reference point is the average of the income in the ITRs of up to the previous three years. Because incomes in such professions fluctuate, and because sometimes only one or two returns exist, the Court directed that surrounding circumstances be weighed as well:

Critically, the Court added that the date on which an ITR is filed is itself relevant, because inflated income is sometimes shown after a death or injury; in such cases the surrounding business factors become more important, though a post-death ITR supported by financial statements may still be considered.

Applying the rule to the facts

On the record were two ITRs — for AY 2017-18 (₹11,59,882) and AY 2018-19 (₹15,06,571). The High Court had simply averaged them to ₹13,33,226 without reference to the nature of the business. Noting that the deceased ran his own construction business, and with a view to awarding just and fair compensation, the Supreme Court fixed his annual income at ₹14,00,000 and recomputed the award — applying 40% future prospects, a one-third deduction and the Pranay Sethi conventional heads — to ₹1,97,81,505, a figure between the Tribunal's and the High Court's.

Two companion illustrations decided the same day

The Court applied the new rule the same day in two connected appeals, each carrying its own SLP number, that show the framework in operation. In Rajani v. Mukesh, the deceased was a self-employed insurance agent; the Court held the High Court had erred by averaging the last four ITRs, and instead took the average of the previous three years (AY 2015-16 to 2017-18) to assess annual income at ₹6,87,802. In Smt. Rekha v. Dinesh Porwal, the deceased ran his own wholesale grocery store, and the ITRs for AY 2014-15 and 2015-16 had been filed after his death. Lacking the supporting financial statements to test whether those figures were inflated — and declining to remand in the interest of justice — the Court fixed the annual income holistically at ₹3,25,000. Together the two matters illustrate both the three-year averaging rule and the closer scrutiny that post-death returns invite.

Why it matters

Rashmirekha Tripathy converts a scattered body of tribunal practice into a legible two-track rule, without pretending that arithmetic can replace judgment. Salaried claimants gain the benefit of their most recent — and often highest — earning year; the self-employed are measured across a three-year window that smooths out volatility while remaining open to the realities of a young or loss-making venture. The express warning about returns filed only after an accident gives insurers a principled basis to probe inflated claims, and gives tribunals a checklist rather than an invitation to guess. The overarching command remains "just and fair compensation" — the ITR is a starting point, not a straitjacket.

Related on Valkya

• National Insurance Co. v. Pranay Sethi: the MACT compensation framework
• Sarla Verma v. Delhi Transport Corporation: the multiplier method
• Anoop Maheshwari v. Oriental Insurance: ITRs and functional disability
• Shishupal v. Surjeet: homemakers as nation builders and a new head of compensation

Sources

• Supreme Court of India, judgment in Rashmirekha Tripathy v. The Branch Manager (Legal Claims), Sriram General Insurance Company Ltd., 2026 INSC 661 (1 July 2026)