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Nov 05, 2025
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Tax dept used AI to issue income tax notice; Bombay High Court quashes notice, calls process unfair to taxpayer
The Bombay High Court has observed that the income tax department has relied on AI (artificial intelligence) to reference three non-existent judicial rulings and issued a tax notice for Rs 22 crore income of a taxpayer.
The court noted that there are no such rulings that the income tax department is trying to use for this tax notice. The Bombay High Court questioned how the tax department came across these supposed judicial judgements.
Bombay High Court said: “In this era of Artificial Intelligence (‘AI’), one tends to place much reliance on the results thrown open by the system. However, when one is exercising quasi judicial functions, it goes without saying that such results [which are thrown open by AI] are not to be blindly relied upon, but the same should be duly cross verified before using them. Otherwise mistakes like the present one creep in.”
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