Tax returns may not be accurate Guide to determining the actual income of parties in a marital dispute: Supreme Court

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The Supreme Court observed that tax returns may not be an accurate guide to the actual income of parties engaged in a marital dispute.

The family court must determine the actual income based on a holistic assessment of the evidence before it, the bench Judges DY Chandrachud and Hima Kohli said.

In this case, the family court ordered a husband to pay alimony at the rate of Rs 20,000 per month to his wife and Rs 15,000 each to their daughters. This was based on finding that he was earning Rs. 2 lacs as monthly income. While considering the petition for review filed by the husband, the High Court noticed from the income tax return (ITR) filed by him that he was earning only Rs. 4.5 lacs per annum. It was further observed that the family court failed to state the basis on which it assessed his income at Rs Two Lakhs per month.

On appeal, the Apex Court Panel observed:

“On the first aspect, it is well established that tax returns do not necessarily provide an accurate guide to actual income. In particular, where the parties are engaged in a marital dispute, there is a tendency to understate income Therefore, it is for the family court to determine, based on an overall assessment of the evidence, what would be the actual income of the second defendant so as to enable the appellants to live in a state corresponding to the status to which they were used during the period they were staying The two children are aged 17 and 15 respectively and their needs must be duly met”.

The seat said the High Court was not justified in quashing the Family Court order on this ground. The court therefore returned the request for review to the High Court file for further consideration.

Case details

Kiran Tomar vs State of Uttar Pradesh | 2022 LiveLaw (SC) 904 | CA 1865 of 2022 | October 31, 2022 | Judges DY Chandrachud and Hima Kohli

Counsel for the Claimant(s): Mr. Ravi Prakash Mehrotra, Sr. Adv. Mr. Nagendra Singh, Adv. Mrs. Akansha, Adv. Mr. Ashish Pandey, Adv. Mr. Sanjay Gupta, Adv. Mr. Prateek Rai, Adv. Mr. Akash Choudhary, Adv. Dr. Sushil Balwada, AOR

Counsel for the Defendant(s) Ms. Priya Hingorani, Sr. Adv. Mr. Sunny Choudhary, AOR Mr. Manoj Kumar, Adv. Mr. Abhimanyu Singh, Adv. Mrs. Monika Rai, Adv. Mr. Sarvesh Singh Baghel, AOR

Summaries

Criminal Procedure Code, 1973; Section 125 – Tax returns do not necessarily provide an accurate guide to actual income. In particular, when the parties are engaged in a marital dispute, there is a tendency to underestimate income. Therefore, it is up to the family court to determine, based on an overall assessment of the evidence, what the actual income would be. (Paragraph 10)

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