Bombay High Court Slams NFAC for Using AI-Generated Fake Judgments

The Bombay High Court rebuked the Assessing Officer of the National Faceless Assessment Centre for relying on three non-existent, AI-generated judicial precedents while issuing a ₹27.91-crore tax demand.

The Division Bench observed that blind reliance on Artificial Intelligence in quasi-judicial proceedings violated natural justice.

The Court held that the officer ignored the taxpayer’s detailed responses and fabricated precedents to justify additions under Section 68 of the Income Tax Act, 1961.

The Court remanded the matter, directing the officer to issue a fresh show-cause notice, ensure a personal hearing, and verify all cited authorities before passing a speaking order.

[KMG Wires Private Limited v National Faceless Assessment]