In a significant ruling that clarifies the evidentiary value of income tax documents in employment and compensation disputes, the Punjab and Haryana High Court has held that a firm’s income-tax records cannot be relied upon as standalone proof of an employee’s salary in the absence of foundational evidence such as appointment letters, salary slips, or bank statements.
This judgment—delivered in Santro and Others v. Bittu and Others (2025)—reinforces the principle that while tax filings may reflect an employer’s declared expenses, they do not automatically establish an employee’s income or the exact amount actually paid.
Case Details
- Case Name: Santro and Others v. Bittu and Others
- Court: Punjab and Haryana High Court
- Coram: Hon’ble Justice Nidhi Gupta
- Date of Judgment: 16 October 2025
- Key Issue: Whether a firm’s income-tax records can, by themselves, serve as conclusive proof of salary payment to an employee.
Facts of the Case
The dispute arose in a Motor Accident Claims Tribunal (MACT) proceeding, where the claimants sought compensation based on the alleged monthly income of the deceased employee. To prove the salary, the claimants sought to summon the employer’s income-tax returns and audit reports, arguing that these documents reflected salary disbursements by the firm.
The Tribunal had allowed such summoning of the employer’s income-tax documents. Aggrieved by this direction, the employer approached the High Court, contending that income-tax records, by their nature, are general financial documents of the firm and do not necessarily identify or prove salary payments to a specific employee.
Issue Before the Court
Can income-tax records or returns of a firm be used as independent proof of the salary received by an employee in the absence of direct and foundational evidence such as salary slips, bank statements, or appointment letters?
Court’s Observations
Justice Nidhi Gupta made several important observations:
- Income-tax returns are not personal records of employees.
The Court noted that a firm’s ITRs, audit reports, or ledgers reflect aggregate business expenses, including salaries, but they do not identify individual payees or prove payment to a specific employee. - Foundational evidence must precede tax record reliance.
The Court clarified that before asking the Tribunal or Court to summon employer or tax records, the claimant must first produce basic proof of employment—such as:- Appointment or engagement letter;
- Salary slips or payment receipts;
- Bank account showing regular salary credits.
- Proceedings before MACT are summary in nature.
The Court emphasized that MACT proceedings are not intended for wide fishing inquiries into business records. Allowing the summoning of an employer’s income-tax returns without foundational proof would unnecessarily complicate summary proceedings. - Income-tax records are merely corroborative.
Such documents can at best support existing evidence of salary; they cannot create that evidence by themselves.
Judgment
The Punjab and Haryana High Court set aside the Tribunal’s order permitting the summoning of the firm’s income-tax records. The Court ruled that:
“Income-tax documents of the firm alone cannot prove payment to a specific employee without direct correlation. Such records cannot be summoned or relied upon as primary evidence in the absence of foundational documents.”
The Court directed that the claimants first establish a basic link between the deceased and the employer through admissible primary evidence before seeking further corroboration from tax records.
Legal Principle Evolved
The decision reinforces an important evidentiary principle applicable across contexts — whether in civil disputes, MACT cases, or income-tax assessments:
“Entries in tax records or accounts are relevant but not conclusive. They require corroboration by direct evidence of the fact they purport to prove.”
This aligns with Sections 34 and 35 of the Indian Evidence Act, 1872, which state that entries in books of account, including those maintained for taxation, are admissible but do not alone suffice to charge any person with liability.
Implications of the Ruling
- For employees and claimants:
Claimants relying on employer’s ITRs must also produce personal evidence like salary slips or bank statements. - For employers:
The ruling protects employers from unwarranted intrusion into confidential tax documents unless a prima facie case is shown. - For tax and compensation proceedings:
Tax filings can be used as corroborative evidence but not as a standalone basis for determining income or liability. - For income-tax disputes:
Where salary discrepancies arise between an individual’s ITR and Form 26AS or employer records, this judgment supports the view that employer-level tax data cannot, by itself, fix or alter an employee’s declared income.
Conclusion
The Punjab and Haryana High Court’s ruling in Santro v. Bittu draws a clear line between primary evidence and supporting documentation in proving salary or income. Income-tax records may reflect a firm’s declarations but cannot, in isolation, establish what an individual employee earned or received.
In essence, the judgment underscores that financial transparency in taxation does not override the fundamental rules of evidence. Foundational proof remains indispensable whenever salary or income needs to be legally substantiated.