HC quashes I-T assessment order, flags non-existent AI-generated case laws

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....C quashes I-T assessment order, flags non-existent AI-generated case laws<BR>PTI News<BR>Dated:- 27-10-2025<BR>PTI<BR>Mumbai, Oct 27 (PTI) The Bombay High Court has quashed an income tax assessment while flagging the use of artificial intelligence in the order and noting that the assessing officer relied on non-existent AI-generated case laws to justify additions to a company's declared income. A....

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.... bench of Justices B P Colabawalla and Amit Jamsandekar stated that in the era of artificial intelligence, quasi-judicial authorities, especially, should not blindly rely on AI-generated information and must cross-verify the same. The court, in the order passed earlier this month, quashed the assessment order and demand notice passed in March this year against KMG Wires Pvt Ltd. The court remand....

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....ed the issue to the assessing officer for a fresh hearing. As per the assessment order, the National Faceless Assessment Centre (NFAC) assessed the total income of the company at Rs 27.91 crore, in place of Rs 3.09 crore returned by it. The company also challenged the demand notice issued by the department. The court held that the assessment order was passed in breach of the principles of natur....

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....al justice, as it failed to consider the reply filed by the company to the notice. The court noted that while calculating peak balance, the authority considered the opening balance, and for which purpose, it has relied upon decisions that were "non-existent" and "AI-generated". "In this era of artificial intelligence (AI), one tends to place much reliance on the results thrown open by the system....

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....," the court said. When one is exercising quasi-judicial functions, it goes without saying that such results (thrown open by AI) are not to be blindly relied upon, but the same should be duly cross-verified before using them, the court said. "Otherwise mistakes like the present one creep in," it added. PTI SP ARU<BR> News - Press release - PIB....