Delhi HC Upholds SCN Based on Income Tax Intelligence and Warns Dept Against Using AI-Generated Fake Citations

The Delhi High Court has upheld the validity of show cause notices issued after independent scrutiny of income tax records, while cautioning against reliance on AI-generated legal citations.

The Court, in a writ petition, has upheld the Show Cause Notice (SCN) which was issued by the GST Department based on intelligence shared by the Income Tax Department.

The Division Bench held the challenge to SCN as 'premature' and noted the existence of a clandestine server that revealed a parallel accounting system

The court emphasized that proper application of mind by tax authorities justifies such notices, but warned that artificial intelligence tools cannot replace judicial precedent analysis in legal proceedings.